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This story appears in the September 2009 issue of Cards&Payments.
A growing number of financial institutions and service providers now offer smartphone applications for mobile banking, balance inquiries, transaction alerts and other functions related solely to information, but not to payments.
In such countries with well-developed card-acceptance infrastructures as the United States, Canada and Australia, mobile will continue to be "mostly a value-added channel to provide information about a payment instead of replacing the payment itself," Elizabeth Buse, global head of products at Visa Inc., said in October during SourceMedia's ATM Debit & Prepaid Forum. SourceMedia owns Cards&Payments.
Perhaps that is why Visa in December made its smartphone-application debut with a tool that enables consumers to manage their credit and debit cards using cell phones running on Google Inc.'s Android operating system. The Visa Mobile for Android application offers transaction alerts, marketing offers and location services.
During the first four months Mobile for Android was available, Visa offered the application exclusively to JPMorgan Chase & Co. customers. Now it is available to any Visa issuer in the United States.
Visa has signed up several merchants, including 1-800-Flowers.com, Jos. A. Bank Clothiers Inc. and Overstock.com, to provide offers and virtual coupons users may redeem at stores or online. Visa expects consumers to use their phones eventually to store information about multiple card accounts and to use the phones to initiate transactions at the point of sale or online.
"On Android, when you download the application, you choose which offers you're interested in hearing about," says Pam Zuercher, head of Visa's global mobile initiative. When Visa cardholders make a purchase based on the offer, Visa credits their card statements with discounts or freebies, so store staff require no training, she adds.
Though representatives of card networks and financial institutions say they are equally dedicated to text messaging and mobile Web browser access to enable account information access, alerts and offers, some services do not work as well via text or mobile Web sites.
"There are certain services you really are only able to deliver on a smartphone," says Josh Peirez, group executive, innovative platforms, at MasterCard Worldwide.
Unlike conventional cell phones that support text messaging and mobile Web browsers, smartphones have the memory and processing speed to handle larger, more-sophisticated applications, and many smartphones enable global positioning system tools that can offer information based on where the phone is located.
MasterCard's ATM Hunter mobile application, which MasterCard released in April for Apple Inc.'s iPhone, is one application that needs the benefit of a smartphone, Peirez says. The application helps cardholders find nearby ATMs that will accept their cards without surcharges using GPS tools on users' smartphones. Banks pay MasterCard a small fee for displaying their ATMs within the search.
"It's seamless and free to the consumer, but we are able to make revenue off it," Peirez says.
As smart-phone ownership proliferates along with applications, mobile banking is continuing to lead the way, Zuercher says. "We're seeing the extension of that to payments," she adds.
