The time has come.
Visa is taking the personal payment fight directly to PayPal in the U.S. For 50 years, Visa has relentlessly been working on improving its processes to make payments easier at the merchant point of sale.
Now, Visa has made the process really simple. With improvements to VisaNet, Visa’s payment processing network, U.S. customers can transfer from or receive funds directly to a Visa credit, debit or prepaid card. The sender won’t even need a Visa account.
Visa has entered into agreements with the providers CashEdge and Fiserv, which will help Visa increase the speed of the delivery of payments and give the two smaller providers access to VisaNet. Banks should start offering the payments by the second half of 2011. While this is new in the U.S., the concept of digital money is old news abroad. More than 70 programs exist that allow customers to send funds to Visa, thus enabling a new generation of personal payment services.
While nobody knows exactly what type of fees Visa will charge for the service, we do know that the number of transactions will keep increasing. Visa’s transactions have already been on the rise, reaching $47.6 billion in 2010. Should PayPal be worried? Competing with PayPal, the online payment leader, is certainly not going to be easy.
At the end of last quarter, PayPal’s total payment volume reached $26.9 billion. PayPal has 95 million registered users. PayPal’s parent company, eBay, told the Wall Street Journal that it did not feel threatened. “As the leader in global online payments for the last twelve years, PayPal has unmatched advantages that we believe put us ahead of the competition,” the company said.Venmo and the Square also are in the market for personal payments.
The Square, a mobile credit card reader that can be plugged into a smartphone, processes $1 million in payments a day.
If Visa is not successful with this initiative, it has other projects at work. Visa is leading the path in the mobile payment service in Europe and is working with near field technology, which enables mobile payments, via the iPhone.
It will be interesting to see how this plays out. The game may even change by the product comes out, in the second half of 2011.