Member Profile: Visa USA

This month Smart Card Talk spoke with Niki Manby, Vice President of Market and Technology Innovation, for Visa USA. Manby joined Visa USA in 2001 and is currently responsible for evaluating opportunities and devising strategies to open new markets for existing and new Visa products and technologies. Her responsibilities include market opportunity analysis, technology assessment, consumer research, and product concept design and testing.   Manby is specifically engaged in supporting Visa's cash-to-card and check-to-card strategies, working to design ways to make payment cards more ubiquitous.   

Before joining Visa, Manby served as a manager with the global consultancy Mitchell Madison Group.   At MMG, she worked with clients to build market entry strategies for a range of new products. Manby received a master's degree in business administration from the Yale School of Management and a bachelor's degree from the University of California, Los Angeles.

1. What are Visa USA's main smart card initiatives?

Visa USA's main smart card initiative is the deployment of Visa Contactless, a flexible and secure payment platform that raises the level of speed and convenience for both cardholders and merchants. Visa has been involved with proximity payments for several years, conducting successful trials around the world that informed the deployment of Visa Contactless in the United States last year. Among the benefits for cardholders and merchants is that Visa Contactless transactions are up to 25 percent faster than using cash. In addition, consumers are comfortable using contactless payments because they keep control of their card, and merchants benefit because it enables employees to focus on customer service and other operations.   Visa Contactless is based on RF (radio frequency) technology and uses the ISO 14443 standard.

As part of this initiative, Visa expanded the Visa Smart Breakthrough program last year to include a new contactless chip solution. The program makes cards, terminals and personalization solutions more cost-effective for financial institutions, merchants and consumers.   Features of the new contactless card include a smaller than usual antenna that provides more flexibility for card embossing, design, and shape, allowing issuers to differentiate their products in the marketplace. In addition, the enhanced card and chip performance boosts card-terminal read capabilities, leading to a more consistent cardholder experience at the point of sale.

2. How do you see the new contactless payment initiatives changing the US financial payments industry? What trends do you see developing in the market that Visa hopes to capitalize on?

Traditionally cash-heavy merchant categories, such as quick-service restaurants, movie theatres, and convenience stores, now accept electronic payments. Visa is driving acceptance in additional merchant categories with the continued expansion of no-signature programs for small ticket purchases. Visa Contactless fits into Visa's overall small ticket strategy by targeting similar cash-heavy merchants where speed is essential. By making payments faster and more convenient than ever, Visa Contactless supports the overall trend toward a "cashless society" where consumers can get through an entire day without touching cash - from paying for parking to getting a burger at McDonald's.   Consumers make over $1.2 trillion in cash payments annually, and contactless payments provide another opportunity for Visa to capture some of that spend.

3. What obstacles to growth do you see that must be overcome to capitalize on the new contactless payments opportunities?

Like any new technology, education is a key driver for cardholder and merchant adoption of contactless payments. Visa research reveals that the value proposition is clear for both stakeholders. For cardholders, the concept of contactless payments is easy to grasp, and they cite convenience and speed as key advantages. For merchants, faster transaction times, greater frequency of purchases, and reduced cash handling translate into increased revenue and reduced operating costs. Security is also top of mind with any new payment technology, and Visa has adapted standard RF technology to meet the stringent security requirements of the payments industry. Visa Contactless features industrial strength encryption technology - 128-bit and triple DES encryption - the highest level encryption that is allowable by the federal government. In addition cardholders are always protected by Visa's zero liability policy.   Visa's role in educating the industry and its continued focus on the security of all payment methods has started to pay off - contactless payments have experienced one of the fastest rollouts of any new card technology in the U.S. payment market.    

4. What do you see are the key factors driving smart card technology in the financial payments market? What role does smart card technology play in supporting Visa's business?

Consumers lead increasingly busy lives and are looking for ways to pay that are faster and more convenient. Merchants want to streamline operations and provide more payment choice to their customers. Issuers are focused on driving acceptance in new markets and differentiating their offerings to cardholders. These factors are driving smart card technology and are behind the strong momentum for contactless payments.

Also, payments are continuing to move away from cash toward electronic methods, a trend that Visa already is capitalizing on - year-over-year sales volume increased by 17.5 percent to $1.2 trillion in 2005, surpassing Visa's growth rates during the previous five years.   Smart card technology delivers a new form of electronic payment and supports the continued growth of Visa's business. In addition to driving volume, contactless technology opens up new opportunities for Visa to fundamentally change how consumers pay - from mini cards and key fobs to mobile phones and other handheld devices. Last week, Visa announced the availability of the Visa Contactless Mini Card - the industry's first alternative form factor for contactless payment ready for large-scale commercial deployment. The Visa Contactless Mini Card, about half the size of a standard-sized card, is issued as a complementary card to a Visa credit or debit card.

5. How do you see your involvement in the Alliance helping Visa become successful?

The Alliance has played a critical role in driving the acceptance of smart card applications across industries, and as Visa's stakeholder universe continues to expand beyond the traditional payment chain of member financial institutions, merchants, and cardholders, this multi-industry focus will prove invaluable. Already Visa is exploring the application of its contactless technology in areas such as public transit, and participation in the Alliance provides Visa with a platform for identifying innovations in other markets. The Alliance's role as an educational resource also supports Visa's contactless initiatives.  

6. How does Visa Contactless fit into Visa's overall plans for innovation?

Innovation at Visa means demonstrating value across the entire payments chain. As Visa looks toward the future, this will include combining traditional services with new applications to ensure the Visa payments network is the most flexible, reliable and secure in the world. Visa Contactless is a key component of this vision. For example, at Philips Arena in Atlanta, Visa is testing contactless payments on mobile phones along with content downloads via NFC (Near Field Communications) technology. In addition to paying for hot dogs and sodas with their phones, trial participants can download content such as ring tones and wallpapers from smart posters located throughout the arena.  This type of innovation, which marries payment with additional applications, is where Visa is leveraging contactless as it heads into the future.

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