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Visa Inc. is pushing forward with plans to make the mobile phone an important financial tool by offering its first commercial application to link handsets with U.S. payment cards.
Visa has been testing a variety of financial applications for phones in the United States and elsewhere. The card brand announced Monday it is offering a tool that enables consumers to manage their credit and debit cards through phones that use Google Inc.'s Android operating system.
Though the Visa Mobile for Android application notably lacks payment capabilities, it shows that Visa has both a long-term vision and a plan to make the mobile phone a widely used banking device, analysts say.
"I like how Visa is thinking strategically about mobile and not taking a one-size-fits-all approach," says Bruce Cundiff, a research analyst at Pleasanton, Calif.-based Javelin Strategy and Research. "They are jumping right in on the platform."
Nick Holland, a senior analyst at Aite Group LLC of Boston, calls the application a step in the right direction as mobile commerce evolves, but he says making potential users aware of it and promoting adoption will be a challenge. "There's a lot of noise out there and not necessarily a great deal of signal," Holland says.
The Visa Mobile for Android application offers transaction alerts, marketing offers and location services.
"We believe this has the ability to enrich the payment experience for customers in the United States," says Pam Zuercher, Visa vice president of product innovation. "It's a milestone for us."
Visa for the next four months plans to offer the application exclusively to customers of JPMorgan Chase & Co., Zuercher says. "After that exclusivity period is over, we absolutely intend to offer this up to other issuers in the United States," she says.
Visa has said it expects consumers eventually to use their phones to store information about multiple card accounts and to initiate transactions at the point of sale or online.
The application will bring the payments company a step closer to that goal, and Visa is trying a variety of approaches to gain a foothold in the early stages of this still-developing market, analysts say.
Only one handset on the market uses the Android operating system, the T-Mobile G1, which was introduced in October. Consumer demand for the handset has been strong, with 1.5 million units presold, and more models that use Android are expected to hit the market soon.
"The Android operating system is going to become pretty prolific pretty fast" because handset makers are not charged for using it, Aite's Holland says. "With an open operating system, it's likely to expand fairly quickly to other devices and other networks."
Visa started offering the application last week through Google's Android Market, an online service that enables consumers to download applications to their Android phones.
Other Visa mobile initiatives involve domestic and cross-border person-to-person funds transfers and contactless payments using Near Field Communication chips embedded in handsets and tied into the phones' operating systems.
In the longer term, some of these capabilities are likely to converge, enabling mobile contactless acceptance for merchants such as home-based crafters, Zuercher says.
Visa Mobile for Android provides three services to the handset, she says: alerts and notifications sent by Visa, marketing offers from its merchant partners and an integrated locator function that links a phone's GPS system with the Google Maps service.
After downloading the application, users enroll their cards by entering the account numbers and other information. Users also can set preferences such as thresholds for alerts.
Issuers send the alerts to users' phones after a transaction almost immediately, Zuercher says. "Because this runs off our authorization system, these notifications can appear on your handset in near real time, practically before you walk away from the point of sale."
Visa says it has signed up 14 merchants, including 1-800-Flowers.com, Bonefish Grill, Jos. A. Bank, Lenovo, Overstock.com, Planet Hollywood and Shoes.com, to provide offers and virtual coupons users may redeem at stores or online.
Visa and Chase recently completed a four-month trial in Phoenix during which 50 merchants made 100 different offers to consumers through text messaging, Zuercher says. ATM
