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Friday, May 17, 2024

Visa thinks one card should be all you need

Visa wants to reinvent the way consumers pay with credit and debit cards. A litany of new features and functionality, revealed by the card company this week, aim to change the way consumers use payment cards and how Visa and financial institutions address card fraud.

Key among the changes is a flexible credential that lets a cardholder access multiple payment methods—credit, debit, buy now pay later (BNPL), or even rewards points. Think in terms of one card that accesses all your accounts.

What Visa is calling flexible credential is already live in Asia. Visa said it has been working with BNPL company Affirm in the United States to launch the product here this summer. Affirm, a BNPL leader, claims over 18 million users, who make purchases both online and at brick-and-mortar stores.

The card giant said consumer demand made the case for a single card that accesses multiple accounts. A study by the company found more than half of card users want the power to access multiple accounts through a single credential.

"The industry is at a pivotal point – new technologies like Gen AI are rapidly shifting how we shop and manage our finances," said Jack Forestell, chief product and strategy officer at Visa. He described the new products as "the next generation of truly digital-native payment card experiences."

Visa unveiled its new product plans during a May 15 forum in San Francisco. In addition to the new flexible credential, Visa announced products and/or advances associated with:

  • Tap to pay
  • Authentication by biometrics
  • Greater use of tokenization
  • Pay by bank

Making card payments more secure

A lot has changed since credit cards were introduced to the mass market back in the last century. But the really big changes were ushered in by COVID, as consumers turned away from cash, which by its nature is considered by many to be "dirty" and potentially a carrier of diseases.

Consumers also have stepped up their online shopping. But identifying someone in a digital world can be complex and open the door to more fraud. In fact, according to Visa's data, online fraud is seven times higher than in-person transactions. Visa is addressing this new set of problems with new services, including one it's calling a payment passkey service. It's designed to eliminate the need for passwords or one-time codes, and allow more streamlined and secure transactions, Visa said in a press release.

The service confirms an individual's identity and authorizes online payment with a quick biometric scan, such as fingerprint or facial recognition. (Think iPhones). No need for passwords or one-time codes. The passkey service was built using the latest Fast Identity Online (FIDO) standards. FIDO is an alliance of major companies focused on alternatives to passwords.

Visa's new passkeys "represents a massive paradigm shift in our industry because it confirms identity without interrupting the checkout experience," Forestell said.

Visa is also beefing up its tokenization services. Through its tokenization infrastructure, Visa said, it is creating a new way for people to control their data and receive better shopping experiences with the support of artificial intelligence. At present Visa claims about out three in 10 (29 percent) of all transactions it processes are tokenized.

The idea is for consumers to consent to share with their FIs (provided the FI is part of the program) as they shop online and revoke access by those they don't want having their information.

With data tokenization, Visa and participating FIs can help create better shopping experiences and more personalized offers as they shop, Visa said. If the consumer agrees, Visa, behind the scenes, issues a private data token to the merchant, complete with AI models to deliver real-time recommendations for the shopper. Visa will also help consumers keep tabs on where their data has been shared and revoke access if they choose.

Pay by bank and targeting fraudsters

Visa may be a card company, but that doesn't mean it rejects other payment methods. Indeed, Visa appears to be following the lead of Mastercard, which last year entered into an agreement with JPMorgan Chase to offer pay-by-bank for recurring payments.

Visa described its move as "digitizing and streamlining the account-to-account payments experience."

Visa said it is working with Tink (an open banking company it acquired in 2022) on this new functionality, overlaying decades of experience and applying AI to help mitigate fraud on A2A networks. The functionality is already being used in Latin America and piloted in the U.K. Visa said it has already identified 60 percent of fraud scams previously undetected by FIs on real-time networks. (Think Venmo and Zelle.) end of article

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