It is predicted that by 2017, alternative payment methods such as e-wallets will be more widely used for online purchases than credit and debit cards.
Currently, PayPal is the most popular of these alternatives, but it is suggested that card-based e-wallets will account for a quarter of all online payments within the next three years.
Visa is counting on it and believes the scale it can offer banks, customers and retailers can allow it to become the dominant player in the e-wallet market. E-commerce is becoming an increasingly important part of Visa’s business and last week it announced it had signed up 15 new European Internet Payment Service Providers (IPSPs),including Verifone, to its V.me e-wallet service.
Currently, V.me is used by 4,000 retailers, but Tash Toothill, Director Retail Engagement at Visa Europe, tells TechWeekEurope that its new partners will allow it to expand this to tens of thousands.
“Customers are really confident using Visa online and Visa is the most preferred payment checkout for retailers,” she says.
Toothill says that retailers are confident that they are going to be paid by their customers, who in turn are more willing to pay online with smaller, less familiar, companies because they know that their card details will not be shared with the merchant.
V.me is an online-only platform, it’s not a contactless or mobile payment system, but Toothill is confident that it will offer everything customers want. She explains that online shoppers want “frictionless payments” that involve one-click transactions and as entering as few details as possible.
But how is it any different to PayPal, the current leading alternative payment method?
“Ultimately when you pay with PayPal, the majority of the time you’re paying with a Visa card loaded into your PayPal wallet,” Toothill says. “I think the difference we bring ultimately is scale. We’re bringing all the banks to V.me.”
Naturally, V.me supports Visa cards, as well as Mastercards, while support for American Express is being developed. Unlike PayPal, the banks will contact their customers asking if they want an e-wallet and its set up.
However Visa is only working with Nationwide in the UK at the moment, with its 4,000 retailers supported by the building society, however support from more should be announced in the “coming months.”
“We have commitment from the majority of the banks in the UK,” claims Toothill, who says Visa wants to make V.me “perfect” before it launches it as a mass-market service.
The support of the banks, and Visa’s protection guarantees, should encourage some customers to make the jump. But on online wallet in which all of your card details are stored is going to give some people security concerns – especially when transactions are so easy to make.
Toothill says this is understandable, but stresses that Visa has them covered.
“We invest about €100 million a year in security innovation,” she says. “We have multiple layers of security in place.”
Visa is not the only payment provider hoping to take advantage of the expected growth in alternative payment methods, with Mastercard also developing its own system, while PayPal is also looking to expand with PayPal Here, a service which allows businesses which traditionally deal in cash to accept card payments.
HSBC, First Direct, Nationwide, Santander and Metro Bank have all agreed to add the Zapp mobile payment system to their smartphone and tablet applications and Barclays ahs its own Pingit application.
Mobile operators are also keen to get in on the action with the Weve joint-venture formed by EE, O2 and Vodafone, but O2 Wallet shut down earlier this week after just 18 months on the market.
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Amazon/Apple/Braintree/Dwolla/Google/Isis/Square/Stripe/Whoever Payments—the facts …
Online or at physical point-of-sale, via plastic or mobile phone—from the merchant payee’s point of view—all of the non-financial institution providers suffer the same serious handicap that eBay’s clunky PayPal suffers: none have interactive access to buyers’ funds held in retail banking debit accounts, nor to retail banking credit accounts (as do have the “bankcards” MasterCard and Visa); their only reliable access to payers’ funds is as retail bank Credit Card Merchant Account operators (which is what “PreyPal” claims to be when it wants to appear not to be operating its unscrupulous, unlicensed, un-FDIC-insured, virtually unregulated, “pretend bank”) via their own retail banker.
Even if any of these middlemen make use of direct debits via the ACH system (as “PreyPal” prefers to do to more cheaply access payers’ funds), the access is not interactive: there is no immediate acceptance of the debit by the bank nor any guarantee that, the following day, the bank won’t reverse the debit due to an insufficiency of funds; direct debit via ACH is not a suitable medium for physical POS transaction payments where the goods involved are going to immediately walk out the door; the only safe route for a merchant for point-of-sale transactions (credit or debit) is via a retail bank Credit Card Merchant Account with its interactive linking to the retail banking system …
These “pretenders” are all parasitic middlemen, a superfluous additional layer that, in the main, rides—precariously—on the backs of the retail banks’ existing systems; they make their money out of the difference between what the banks/MasterCard/Visa charge them and what they then charge their merchant-payee customers; therefore, their services, invariably, are going to be dearer, or are unlikely to be cheaper; anyone that thinks otherwise has been drinking too liberally of all the disingenuous nonsense that continually flows from the eBay Dept of Spin …
“PreyPal”, however, is different in that it will hold onto payees’ funds: “PreyPal” operates an unlicensed “pretend bank”—the “bank” they have to unlawfully hold onto merchant-payees’ receipts, and the “bank” they don’t have when the banking regulator comes sniffing around. That “PreyPal” manages to skirt wholly around U.S. banking regulations while operating this clunky, unlicensed, unregulated, non-FDIC-insured, “pretend bank”, frankly, defies belief; possibly it’s due to the same bureaucratic laziness/corruption that allows eBay to knowingly and calculatedly facilitate, massive, blatant, auction fraud on the consumers of the world … http://bit.ly/11F2eas
Regardless, if any of these middlemen pretenders think that they are going to take other than micro-fractions, if any, of the payments market away from the “bankcards”, MasterCard and Visa, I think that they are pathologically delusional (like eBay’s Johnny Ho), and possibly they have accompanied Johnny Ho on one too many his many trips with Alice down the rabbit hole to Wonderland, from whence he undoubtedly developed his obviously flawed approach to commerce …
For buyers, “digital wallets” undoubtedly are the way of the future, particularly for online payments, and with the recent arrival of the professional mobile/plastic POS/online digital wallets from MasterCard (“MasterPass”) and Visa (“V.me”), all these pretenders—with the exception of where they are mandated/integrated into an online marketplace—are now effectively redundant …
And, with respect to physical point-of-sale transactions by such pretenders (Square excepted, as Square offers unique hardware solutions to particular merchant problems), can I simply invite readers to, next time they visit The Home Depot, ask a cashier how “Pay Here With PayPal” is going—LOL … http://bit.ly/UVXx53
Hello "MasterPass"; goodbye clunky "PreyPal"—it has not been nice knowing you ...
oh, and I left a par out of the previous comment ...
Merchants who receive payments via “PreyPal” also face the additional problem that, unlike MasterCard and Visa, “PreyPal” will not invest in the human resources required to defend a credit card charge-back by a buyer—even if it is defensible; they will deal with the matter in the most cost effective way—for them, and that is to acquiesce to the chargeback and let the payee carry the can. The reality is, anyone that accepts payments via “PreyPal” does so at their constant peril …