For nearly two years Wells Fargo & Co.'s merchant acquiring business shied away from offering Verified by Visa because of what it saw as growing pains in the product, first introduced in 2001.
But on Monday the banking company announced that it had built the online security program, which can secure with a password any e-commerce transaction made with a Visa card, into the process through which consumers buy from Wells' merchant customers.
A Wells executive said her company changed its mind about the much-touted product for several reasons: growing fears and more frequent incidents of identity theft, a Verified by Visa interchange price break that has increased merchant interest, and the feeling that Visa U.S.A. has improved the program.
"I think Visa has done a good job of working the bugs out," said Debra Rossi, Wells' executive vice president of business Internet services.
Early on, she said, Verified by Visa added precious time onto e-commerce transactions, but today the response times are faster. "Merchants said, 'Don't delay the transaction by one second," Ms. Rossi said.
A Visa executive said that only around 1% of eligible Visa cardholders have actually signed up for Verified by Visa, and that fewer than 1% of Visa transactions are authenticated through the program. But those numbers will rise when more merchants sign up, he said.
A push by acquirers like Wells is an important step, said Jim McCarthy, Visa's senior vice president of emerging products. "I believe we are on the cusp of driving adoption to where … we are like ATMs," he said. "Now it is a matter of the merchants showing up."
According to Visa's Web site, more than 200 merchants now offer Verified by Visa transactions, but most are niche marketers. Few are well-known brands. Walmart.com, the online division of Wal-Mart Stores Inc., has joined the list, alongside such retailers as XylaSea Body Sculpt, which offers a therapeutic wax treatment.
An even bigger nudge to merchants may be the interchange price break of 5 basis points that Visa announced in August for Verified by Visa transactions. Ms. Rossi said that should help boost Verified by Visa's sluggish growth.
Wells' acquiring business processed the first consumer Internet purchase in 1995, according to the company, and has since made acquiring Internet merchants a focus of its merchant business. It now processes Internet transactions for around 55,000 of them and expects to process around $12 billion worth this year, twice last year's total. Its market share is around 12% of all Internet transactions.
"A lot of acquirers don't focus on the Internet, because they call it high-risk," Ms. Rossi said.
The Verified by Visa offering is part of a general redesign of the banking company's merchant interface into what it calls Wells Fargo Global Payment Gateway, which allows merchants to choose the services they want cafeteria-style. Wells merchants that opt to offer Verified by Visa can be up and running in a few days, Ms. Rossi said.
"I hope we will see a lot of merchants move to Verified by Visa," Ms. Rossi said. She said Wells' biggest online merchant, eBay Inc., has expressed some interest.
Forrester Research Inc. analyst Penny Gillespie called the Wells' offering a step in the right direction, but "the proof is in the delivery," she said. "As far as I can tell, Verified by Visa has not been widely embraced."
