Recently, Visa made announcements about mobile payment that looked at least half-baked. Now, we are getting the explanation. And the explanation is very interesting.
The headline is a catcher: A Visa spokeswoman said her company does not see phones replacing cards for in-person purchases; instead, Visa thinks that mobile payment “will be mostly a value-added channel to provide information about a payment instead of replacing the payment itself,” at least in the United States. Now, that explains a lot of things about their recent announcements, which were all on that line of thinking. Another very interesting thing is the reason for the U.S. problem. Visa blames it on the fragmentation of software among carriers (it is not clear whether this targets their network software for deploying the applications, or the handset software for running them. Nevertheless, this is spot on.
This bold statement is softened a bit by stating that other situations may prevail elsewhere. In particular, Africa has more phones than bank accounts, and mobile payments could work very well there. Similarly, in Japan, it has already started, and this could spread to other Asian companies that have widely deployed contactless payment. Europe is not mentioned, so the question is to know whether it is close to the U.S. (an existing payment infrastructure that needs to be replaced, in particular the readers), or like Asia (a country with significant smart card deployment and an infrastructure that can be easily upgraded).
Well, I don’t know. But among all the hype about mobile payment, it is refreshing to see somebody take a position that is not entirely consensual among the lines “it will work, it will work” where all indicator show that there is at least a significant delay before that actually happens.
One last thing, which reminds us that this is corporate communication, and that Visa is working with Google. It seems that they are presenting Android as a way to address the fragmentation problem. Like, I introduce yet another system, and fragmentation goes? That’s an interesting view, but it looks a bit biased to me. I would rather say that fragmentation is here to stay, at least for a while.