Monday, February 27, 2012

Visa provides secure OTA provisioning of mobile payment accounts

MWC 2012, BARCELONA, SPAIN: Visa announced a new service that provides financial institutions and mobile network operators with a one-stop solution to securely download payment account information to smartphones enabled with Near Field Communication (NFC) technology. In reaction, Catherine Haslam, analyst at Ovum has the following comments:

“Visa’s announcement has the potential to fill a significant hole in the current payments ecosystem. A major barrier for many operators is the need to build a relationship with one or several financial institutions in order to offer services. Such negotiations are typically long and complicated and this would replace it with a simple contract with Visa. In effect Visa is doing what it’s been threatening to do for several years and expanding its traditional intermediary role in payments to mobile. The fact that it is also supporting non-Visa payments shows that the payments giant recognises that ubiquity is the key to success in mobile money systems.

“However, Visa is not walking into an open market. It faces competition from international financial hub systems, such as the M-wallet and HomeSend services offered by international carrier BICS, and it has barriers it must overcome. Firstly, Visa must establish a viable business model which operators will accept. BICS already has a well-respected model and many existing operator customers.

“However, Visa’s brand and scale should make this possible, especially if it can offer operators a plug and play solution. A bigger barrier, at least in the short to medium term, is that the system relies on the NFC in the consumer device and PoS, and that is a long way from critical mass.”

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