e-Visa, the division that Visa U.S.A. set up two years ago to house its Internet-related activities, has been struggling for definition and stability, but now its president is on a publicity tour to tout his belief that the organization has finally hit its stride.
Bond R. Isaacson is the third person to take the helm of e-Visa, which was set up to serve large and small banks, develop digital wallets that banks could brand, and set Internet standards. He has learned it cannot be all things to all people, so it will focus on being the "rails that e-commerce runs on," he said in an interview last week. That means it will develop three things: person-to-person payment options, online payer authentication (with or without smart cards), and business-to-business commercial uses of Visa cards.
Mr. Isaacson, a former IBM executive, joined Visa in April 1999 to take a newly created position, executive vice president of member and merchant relations. He reported to Visa U.S.A. president and chief executive officer Carl F. Pascarella and was responsible for smoothing the company's dealings with merchants, who were angry over interchange fees - and continue to be.
But he only spent a few months in the merchant-acquiring role. That fall, weeks after e-Visa was founded, its president, Michael A. Beindorff, left to become chief operating officer of PlanetRx.com, an Internet drugstore that went out of business last month. William Stewart, a Visa executive vice president, took charge of e-Visa until his retirement at yearend 1999, and then Mr. Isaacson stepped in.
Amid the turnover, e-Visa's strategic evolution has apparently been shaped by Visa member banks' desire to do things on their own without the association's help. Mr. Isaacson said e-Visa, which is headquartered in San Francisco, is redirecting its energy to projects that will give its banks opportunities to make money but that will not intrude on projects they prefer to do themselves.
Mr. Isaacson gave the example of an early e-Visa effort that failed, an attempt to create a small-business portal that would be open to all Visa card issuers. He said the banks liked the idea at first, but they came to believe that such portals were too integral to their business to leave to the association to build - "even though we could do it for less money," Mr. Isaacson lamented.
One by one, banks dropped out of the joint project and set up small-business ventures bearing their own brands. This type of portal business is something e-Visa will avoid from now on, Mr. Isaacson said.
One of e-Visa's main objectives is to promote chip cards. Mr. Isaacson called the six million to seven million Smart Visa cards that he said will be issued in the United States by yearend a good start, but acknowledged that the market will not wait forever before moving on to other technology. A serious shift to smart credit cards must happen within a "two- to three-year window," he said.
Plans are under way to let businesses test accepting smart card payments for online transactions. But Mr. Isaacson called the project a "chicken and egg situation," in which merchants are reluctant to install chip card hardware and software until more consumers have smart cards.
In the offline world, low fraud rates for transactions with magnetic stripe cards mean that there are few incentives for merchants to convert to chip-reading point of sale terminals. Low fraud rates also make Visa less willing to lower interchange, Mr. Isaacson said. Instead, he said, Visa, through its issuers, is trying to put together loyalty programs that will spur merchants to switch.
In the consumer market, Mr. Isaacson sees smart cards functioning as personal-information managers. "With card management software at home, you could put your Social Security number on the card along with your frequent-flier information," he said. Consumers are tired of carrying around so many plastic cards, and that will eventually help smart cards sell, he said.
Meanwhile, online shopping needs fraud relief now, and e-Visa is responding with a payer authentication system that lets cardholders (on an opt-in basis) instruct their banks to request a PIN every time they use their Visa cards at participating Web retailers. The system is only in pilot stage but holds promise, Mr. Isaacson said.
Still on the drawing board is a project to encourage banks to use credit card numbers and the VisaNet authentication system as an all-purpose commercial transaction network. Mr. Isaacson envisions business customers using the 16-digit numbers for everything from international fund conversions to invoice payment.