By Ken Musante
Eureka Payments LLC
When one of the world's top companies and brands rolls out a new payment product, our industry takes note. Industry stocks move. Press releases are distributed from other companies purporting compatibility with the new solution, and sore competitors send out congratulatory Tweets that claim the industry is big enough for all competitors. That's why I was so surprised to completely miss the launch. A friend of mine sent me an email stating he "ran across" Visa Checkout and suggested it might be a good topic for an article.
After doing some research, I agreed.
In July 2014, Visa Inc. launched Visa Checkout with a media campaign and press releases. It quickly signed up a multitude of large online retailers including Neiman Marcus, Pizza Hut, Staples and United Airlines. And the card brand reported that Visa Checkout is now available at nearly 4 million online U.S. merchants.
In addition, anytime Visa launches a product, the top processors are usually on board, so along with large online retailers, Visa signed agreements with processors including Bank of America Merchant Services, First Data Corp., Total System Services Inc., Vantiv Inc. and Wells Fargo Merchant Services.
Visa Checkout replaced and enhanced Visa's prior consumer wallet V.me, which debuted in 2012. Visa Checkout is meant to do much more and avoid even being compared to its predecessor. Mae Anderson's July 16, 2014, Associated Press article stated, "V.me was being used by about 300 retailers like 1-800-Flowers and AutoZone, who are all switching over to the new service. But Visa says its Visa Checkout is an improvement, with a more recognizable name, streamlined functionality and more of a focus on larger retailers.
"It also functions as a pop-up window on a retailers' site rather than directing users to another window. Major banks that issue Visa cards including Chase, Citi and Wells Fargo are also supporting it."
My belief is that Visa realized consumers are not clamoring for a wallet replacement, and for Visa Checkout to capture consumer's interest, it had to be much more than just a digital wallet. As an aside, one of Apple Pay's weakest attributes is its ability to make it easier to pay. I always know my cards are readily available to me and easily accessible. Simply putting them in my phone doesn't make them more accessible.
Visa Checkout is designed for e-commerce merchants, and it competes head to head with PayPal Inc. It eliminates the need for entering card data at the merchant's site, so consumers can purchase without inputting their billing information, card number, expiration date and three digit CVC/CVV code. This is particularly appealing for merchants marketing to consumers using mobile applications (who have a much higher abandonment rate).
Consumers must first load their cards into Visa Checkout, and Visa is hoping issuers will convince their cardholders to enroll. All major credit and signature debit cards may be added. Merchants must integrate into the available application programming interface. Visa stated, "It takes only a few simple HTML and JavaScript tags to add Visa Checkout buttons to your site, and there's no need to change your current programming languages, tools, or techniques to implement business and event logic." Visa provides the Checkbox sandbox testing environment, software development kit and documentation at developer.visa.com/visacheckout.
Once installed on a merchant's website, Visa Checkout displays as a payment button, but instead of entering payment card and billing information after pressing the button, consumers are prompted with a pop-up to log into their Visa Checkout account and select a payment method and shipping address. Ideally, this simplified payment process will enable merchants to convert more of their cart abandonments. Visa Checkout is not a payment gateway but another payment option and does not change merchants' processing costs.
Visa Checkout is designed to reduce fraud by authenticating the cardholder before the purchase, and instead of passing a card number, it tokenizes sensitive data to thwart hackers.
As Andrew S. Ross wrote in his July 17, 2014, San Francisco Chronicle article, Visa is making a serious statement to its potential competitors and a major investment: "In other words, watch out PayPal, Google Wallet and others in the online payment space, here comes the big boy, promising to eliminate the 'consumer pain point' at the virtual checkout stand (e.g., having to enter personal and credit card information at every site).
"The 112,000-square-foot innovation center at tony One Market Plaza is designed to get Visa software developers together with clients and Bay Area techies 'to jointly develop the next generation of commerce applications,' the company said. For example, developers are invited to come up with native in-apps for iOS and Android operating systems."
I know Apple got all the press and made a big splash when it announced Apple Pay. While I would not bet against Apple's success, Visa has been in the payments space a bit longer, and until it is proven otherwise, Visa remains the Master. As for my part, I don't know why I wouldn't want to make this available to merchants. The cost components remain the same, and it provides another option for merchants. 
Ken Musante is President of Eureka Payments LLC. Contact him by phone at 707-476-0573 or by email at kenm@eurekapayments.com. For more information, visit www.eurekapayments.com.
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