Visa Uses Olympics Sponsorship to Drive Transactions, Demo New Products

Visa (NYSE: V) will devote more than a quarter of its marketing budget this fiscal year to its sponsorship of the London Olympics and related activities — and company officials insist it is worth every penny.

An estimated 4 billion viewers worldwide are expected to tune in to the Games, and hundreds of thousands of spectators are expected to attend events at venues throughout London over the next two weeks. Visa sponsors many sporting events but none rival the Olympics for sheer exposure.

"The partnership is a perfect opportunity for us to drive our business and build our brand, and also gives us an opportunity to showcase new products and innovations," said Kevin Burke, global chief marketing officer for core products at Visa.

He adds that Visa's decades-old partnership with the Olympics - the London Games will be Visa's 12th as official payments sponsor — has given the company a chance to create detailed metrics for measuring the impact of the sponsorship, including looking at transaction data and brand perception.

"We're able to drive transactions" on Visa products versus cash or alternative cards, and "enhance the way consumers perceive our brand," Burke said Wednesday, adding that the sponsorship also helps "our clients drive their own business."

For example, Citigroup (NYSE: C) ran a contest offering three free trips for two people to London for users its Hilton HHonors Visa credit card, according to a Visa spokesman.

Visa will be the "exclusive payment services sponsor" and the only card accepted at the Olympics through 2020, the company says on its website.

Still, the company's exclusive agreement has some critics concerned that customers trying to use alternative forms payment will run into problems. Attendees at the games will have to use a Visa credit or debit card, purchase a Visa prepaid card or take out cash from a Visa-only ATM, according to press reports. The company is also reported to have shut down 27 ATMs at the venues and replaced them with just eight Visa machines.

"Visa is tasked with building and maintaining the entire payments network at the Games. It's a complex business and to do this, a small number of ATMs are temporarily switched off (not removed) so we can manage the overall payment network," said Visa spokesman Ryan Donovan in an email. "ATMs outside the games, including those at the adjacent Westfield shopping center, are unaffected. We are installing eight ATMs and this year for the first time, we are making contactless payments available at the point-of-sale through the Park and in select retailers in London."

There will be over 140,000 contactless payment terminals equipped with Visa payWave in place around the United Kingdom, including 5,000 London taxis and 3,000 locations at Olympic venues, according to a company press release.

Visa is also distributing several hundred Samsung phones to athletes and others that can also be used at contactless terminals.

"By providing this [mobile] device to selected users, we're really going to get a chance to show off what's coming in the future of mobile commerce," Brad Greene, a senior business leader for strategic partnerships and business of mobile products at Visa, said in an interview Monday.

"Any time people use new technologies, it gets others excited. I do think we have an opportunity at the games to have people use this product and have visibility around that," he adds.

The company is also going to host demonstrations for its mobile prepaid application, introduced last year, which can be used in developing countries on a variety of cell phones, including those with relatively low-end features.

"In terms of our mobile payment system, we really have a bifurcated strategy. In established countries the focus really is enabling people to use their smartphones to shop and pay," says Greene. "For the developing markets, the Visa mobile prepaid is really a centerpiece of our product strategy and that's enabling folks who don't have smart phone or broadband data plan" to be able to make payments.