Payments: Visa Carded on the Net

While Visa International and Bank of America recently demonstrated smart card payments over the Internet, the technology is so new, many question the time frame for consumer adoption. "We think Internet shopping has promise."

A portable smart card that can be used in many ways, including with computers, could help create growth in Internet commerce," says Susan Bauman, vp of smart cards at BofA's interactive banking division. "Consumers need to get comfortable with shopping on-line. When they have the payment vehicle and when the prices are right, then growth will follow," she says.

Diana Knox, vp of chip card products at Visa USA concurs. "Consumers will demand the same payment options in the virtual world that they have in the physical world. And they need to feel confident that they can conduct Internet transactions in a secure environment without their privacy being compromised."

Stored value chip cards will soon give consumers and merchants an on-line equivalent to cash and coins for small purchases. Cardholders browsing Web sites will be able to insert Visa Cash cards into card readers attached to their PCs and, with a click of the mouse, execute transactions. The transaction amount is deducted from the card and captured by the merchant's payment server for settlement.

Several hundred Bank of America and Visa employees are currently participating in a pilot program, using reloadable Visa Cash stored value chip cards and their personal computers to purchase goods on the Internet from participating merchants. Bank of America and Visa jointly conducted their first live, stored value chip card Internet transactions at the CardTech/SecurTech Conference in Orlando. And Visa plans to do other chip card trials in Japan and France. Gaylon Howe, Visa International's svp for chip card products, suggests the trials should produce more acceptance of stored value cards as payment vehicles on the Internet. "Merchants advertising on the Internet are looking for a way to gain some revenue reimbursement, and the consumer is looking for a convenient way to pay for small dollar items," he says. But Howe says it will take more than technology to get consumers to shop on-line. "We've got to get consumers to use the Internet more and learn to trust the quality of products offered on- line."

The move to a cashless society, meanwhile, is actually well underway. A recent Federal Reserve report shows that during the ten-year period ending in 1995, household expenditures in the U.S. made with cash declined from 34 percent to 20 percent. The average cash holding per household declined from $153 to $100.--peterson tfn.com

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