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Debit card spending remains steady even as economic conditions continue to deteriorate. Based on the latest year-over-year U.S. debit card data from Visa Inc. and Master-Card Worldwide, the struggling economy has not affected debit card sales volume and transaction activity.
As a result, the card networks are moving forward with their objectives. Late last year, Visa signed a joint processing venture with Singapore-based Yalamanchili Software Exports Ltd. to provide financial institutions, processors and other payment companies with prepaid and debit-processing products. Visa Europe, a separate organization that works closely with Visa Inc., also is moving forward with debit card initiatives.
Stacey Pinkerd, head of global debit products at Visa Inc., addresses some of the issues affecting the debit card market.
Q. Barclays recently decided to issue Visa-branded contactless debit cards in the United Kingdom starting in March. Is contactless technology making enough progress at this point, and can the card networks and issuers do more to promote the technology?
A. We have seen progress in both the issuance and acceptance of contactless products around the globe. In particular, the Asia-Pacific and the U.S. markets have seen growth over the last two years. The benefits of speed and convenience are certainly driving the growth of contactless acceptance at small-ticket merchants, including quick service restaurants, convenience stores, transit and vending.
We have also seen growth in issuance, as evidenced by the recent Barclays announcement. Visa's new contactless specification, Visa payWave 2.0, is based on EMV [chip-security] technology, thus delivering enhanced security and global interoperability of all Visa contactless transactions, regardless of where the card was issued. Visa's contactless technology can also be embedded in a variety of payment form factors, including cards, minicards, microtags, stickers and mobile devices, providing the issuer with the flexibility to provide payment products that best meet their customers' needs.
Q. Visa has showed a plan to make the mobile phone a banking device with the introduction of the Visa for Mobile Android application. How will mobile banking and mobile payments affect debit card use?
A. Visa's mobile strategy is to extend its existing products and services to the mobile channel and deliver both payment and related services to consumers around the globe. Those services include mobile payments, transaction alerts and mobile offers, as well as mobile money transfers.
Over the last two years, Visa has actively engaged with financial institutions, wireless operators, handset manufacturers, and technology providers to develop and test innovative mobile services and ensure those services are secure, scalable and deliver value to all stakeholders.
In developed nations, like the U.S. and Canada, where the majority of consumers use card payments everyday, Visa has the opportunity to enhance the payment experience through the delivery of mobile transaction alerts, mobile offers and locator services, guiding consumers to nearby ATMs and merchants. This will enable cardholders to better manage their Visa accounts while also benefiting from offers that are relevant to them. Visa Mobile on Android is the Visa's first commercial launch of these services in the United States.
In developing nations like Brazil, India and China, Visa views the mobile device as a potential leapfrog technology, enabling us to deliver electronic payments and money-transfer solutions. Visa is working closely with financial institutions in those markets to deliver Visa debit, credit and prepaid solutions to consumers.
Q. Regarding Visa's debit-marketing campaigns, what has been successful with consumers in the past (television, radio, etc.) and how can Visa portray its debit card success in future "Life Takes Visa" campaigns?
A. For obvious reasons I'm going to speak in generalities as our marketing plans are highly confidential. That said, our global marketing efforts for Visa debit have been successful because they combine the global prominence of the Visa brand with consumer messaging that evolves to remain most relevant within local marketplaces.
In some marketplaces, messaging is largely educational and focused on driving awareness and understanding of the value of Visa debit products, while in others the focus is on highlighting specific product attributes like security, convenience and acceptance. As marketplaces change in terms of level of maturity and product penetration, our marketing also changes to keep pace.
Our leadership position in debit provides us with a significant advantage from a business-analytics standpoint. Using our proprietary data as well as consumer research, we continually evaluate demographic target audiences, media mix and messaging for optimum alignment.
Q. Regarding debit growth in regions such as South America, how do Visa's debit efforts compare with those in the United States?
A. In countries where debit usage and banking are in earlier stages of development, our strategies are different, but the basic principles that led to success in the U.S. are applicable. Think back to ATM cards in the U.S. years ago. We're seeing the same trends in countries where payments are still emerging, essentially, debit cards are primarily used at ATMs for cash, especially in emerging economies that rely heavily on cash for transactions.
We focus on converting those cash payments to debit transactions at the point of sale in a number of ways, including educating cardholders on the benefits of using a debit card versus cash, working with issuers to expand debit card issuance, helping issuers expand debit usage through promotions and cardholder incentives, and increasing merchant acceptance.
Q. Any thoughts on the year ahead for Visa's debit portfolio?
A. I can't speculate on Visa's future debit performance but would reiterate that we'll continue to build on the successes we've had to date by focusing on opening new categories for acceptance, migrating nondiscretionary spending to electronic payments, and building on our processing capabilities and debit strength outside of the U.S., as we did with the processing joint venture announced recently [with Singapore-based Yalamanchili Software Exports Ltd.] ATM
