Though contactless payment cards and terminals are increasingly common, they are not most peoples' primary method of payment; some people even carry the cards around in their wallets, unaware that they feature near-field communication chips and need not be swiped to initiate transactions.
Though adding the same NFC chips to phones offers much of the same benefits as NFC cards, doing so can also open the door to additional control over users' accounts, according to Bill Gajda, Visa's head of global mobile products. This control could convince consumers to use a contactless payment in situations where many still use cash and checks, he said.
Based on early feedback, "people think it's fundamentally different," Gajda said. Mobile payments with phones are "a different experience."
Visa is promoting an approach based on a microSD card, which can be installed by consumers in the memory slots found in many phones.
For phones without that port, such as Apple Inc.'s iPhone, Visa offers a special case with the port built in. The microSD card is meant as a temporary system that serves to accelerate the payment method's adoption among consumers in anticipation of the time when NFC chips are built directly into mobile phones, Gajda said.
Besides adding an NFC chip, the microSD card can contain software that allows consumers to decide when to activate and deactivate the payment function, and to lock it with a password. The software could also be used to deliver coupons and other offers. Gajda said these are some of the immediate benefits that mobile phone payments has over contactless cards.
Visa said it is working with Bank of America Corp., Wells Fargo & Co. and U.S. Bancorp to test the technology.
Tara Burke, a spokeswoman for B of A, said that "customers are open to new ways to pay," though the exact nature of B of A's mobile payment strategy is still under development.
B of A's mobile payment test, which Burke said is not limited to Visa cards, begins Sept. 13 and will run through the rest of the year. "We're doing this testing to learn," she said. "We would take the learnings from this trial, and that would help us take this product to the next step."
Wells Fargo confirmed that it is working with Visa but declined to comment further.
Visa thinks issuers will want to integrate NFC payments into their existing mobile banking apps, making the experience more seamless. Though each issuer will be responsible for the distribution of their branded versions of these chips, more than one issuer's software can be run from each chip.
However, it is still an open question as to whether issuers will agree to share space on their chips with other banks.
"It's very easy to put a new account on a microSD" from a technological standpoint, Gajda said, but from a business standpoint, "the model is going to take a while to evolve that way."
Though issuers' apps could be locked with a password or a PIN, it would be separate from the PIN used for debit transactions, and contactless transactions would generally be considered signature transactions.
Visa plans to offer its microSD cards early next year, though it is up to its issuers to decide when the technology will get into consumers' hands.
