In its latest attempt to crack online and mobile payments, Visa has unveiled a system which lets virtual shoppers complete purchases with a couple of clicks.
Visa should be able to do better than that: they can treat e-comm transactions that go through V.me as "cardholder present". That would provide VERY strong incentive for merchants. The same goes for tokenization. If that card is played smart, PP could be
dead in a few years...
"whose mission will be to ensure that every Internet connected device, appliance or wearable computer, can become a secure place for commerce".
What a mission! Good luck Visa. A noble cause. Every node needs to be digitally safeguarded yet open to commerce.
You had me at payment "in a couple of clicks".
You lost me at "enter username and password".
FIDO Authentication would be a friendlier experience.
"Visa should be able to do better than that: they can treat e-comm transactions that go through V.me as "cardholder present". That would provide VERY strong incentive for merchants."
If they do that, which is quite doubtful since interchange is partly based on risk, then the likes of Paypal will also benefit from it.
"The same goes for tokenization. If that card is played smart, PP could be dead in a few years..."
Tokenization... is a big word. But does not quite do the job as we have seen with Bitcoin...
If Paypal's strength was just convenience, then they would not have survived and succeed. Paypal offers more than just convenience to consumers. It was the first to offer ODR (online dispute resolution) which card schemes are just now looking into. Paypal
also has a very sophisticated and effective fraud detection system which a PSP needs if it offers the convenience of just userid/password.
And Paypal is more than a userid/password. It is a wallet where a user can fund his payments from different sources. Paypal's loading costs are lower because they enable and motivate their users to fund their payments with their bank accounts. And finally,
one money-making aspect of Paypal is cross-border / currency exchange. How will this be managed by the new VISA Checkout?
In summary, VISA's initiative to offer the convenience of userid/password is a step in the right direction. But does it offer the same security and guarantees to consumers?
Visa controls its rates and corresponding rules (if we disregard Visa Inc vs Visa Europe) situation. It also has direct relationship with every major issuer. Most importantly, they cover both online and offline (physical retail) payments. PP has none of
PP has good risk management procedures, but that is becoming less relevant - due to the current changes/trends in mobile payments. Funding PP via bank a/c - how is that different from a debit transaction (which Visa can do)?..
ODR vs CP - there is nothing to dispute with the latter... (from liability point of view)
Yes, Visa and MC need to improve UX etc, but that's another matter. From my perspective, it's more about "rails". PP just rides them for now (i.e. is allowed to). That could (will) change...
"ODR vs CP - there is nothing to dispute with the latter... (from liability point of view)"
Yes but these are CNPs not CPs... You can't make them CPs just by changing the interchange fees.
"PP just rides them for now (i.e. is allowed to). That could (will) change..."
PayPal Europe has a Luxembourg banking license. PP is indeed riding the rails and they pay for riding these rails. VISA and MC and their issuing banks earn each time a card payment is done in Paypal. Paypal impacts the acquiring business. VISA checkout is
more to 'placate' acquiring banks and merchants. Given all of the above, I can't see how and why Paypal would be banned from accepting card payments.
"Given all of the above, I can't see how and why Paypal would be banned from accepting card payments."
When cards are tokenized, where would PP be getting tokens from? How much would it cost them? And what value would they deliver?
DM found it hard to teach that old dog a new trick... That tells you (me) something...
"What about ECB requirement of strong 2factor authentication and user ID + password? Does this check out fly in Europe?"
The trend since Paypal and Amazon 1-cick is "LESS is MORE". Note that these 2 apply their own fraud detection and they take responsibility for their own transaction losses due to fraud. One would see that 'transaction losses' is one of the KPI basis reported
in their financial statements. Paypal has been quite transparent with their transaction losses.
Back to your question... ECB requirement? Is this a guideline or requirement? Can this really be required?
"The ECB strong 2factor authentication for internet related payments has been signed by all FSA:s in Europe making it a regulatory compulsion from 2015"
What is a strong 2factor authentication? Given an amazon experience, one can say that their convenient 1-click already has the attribute of a 2FA. userid/password is what I know and my shipto address or ipaddress/geolocation is what I have.
A 'stronger' 2FA that removes this convenience would be a disaster for consumers and eCommerce. Indeed one can compare this to a missile targeting a fly..
Interesting how Apple just completely changed the context of precisely this type of discussion. It has introduced xFA (where we cannot be sure what x vale is yet), introduced tokenisation 'at a stroke', and maybe even reversed interchange - a lot of the
details are unclear, but this will disrupt the market and turn our thinking a lot as details and the market evolves.
Competitive base, double OTENew York City, NY. USA
© Finextra Research 2015