Two years ago Sam Shrauger worked for PayPal.
Today he’s senior vice-president of digital solutions at Visa and presiding over its newly launched digital laboratory where the company is developing a blueprint for the future of payments.The disruptors are taking over the incumbents.Visa’s blueprint suggests that a car’s onboard computer may in the future be used to facilitate a payment at a drive-through restaurant, or an internet-connected fridge could order and pay for groceries to be delivered, or a biometric such as a fingerprint might be used to initiate a secure payment.The company last week unveiled Visa Digital Solutions, a technology agnostic suite of tools, including software development kits that can be used by developers to turn any internet connected device into a payments system.For Visa, it’s about taking the friction out of payments according to Shrauger – and that extends to making payments part of the internet of things.
“We are now seeing connected thermostats and cars and everything – our view is that a lot of those things will become points of transaction,” Shrauger says.“Our job is to allow that innovation to occur in way that is safe and secure and with the same characteristics as cards allow in the physical world today.”A precursor to adding payments to the internet of things is to ensure that payments information held in a car or a wearable – or on a merchant’s website – can’t be easily compromised.ISSUES OF SECURITYIt’s why Visa is pushing tokenisation which will replace the 16-digit number on a credit card with a unique transaction-related 16-digit token that can be used only once, for a specific transaction, and cannot be used for any other purpose.If that token is hacked it can’t be used for anything else.Tokens linked to lost or stolen mobile devices can be reissued without changing account numbers or reissuing plastic cards.
While the cloud-based token issuing system will be launched in the US this September, Australia won’t have access to the tokenisation service until late 2015.Not that the future is waiting. Visa last month opened a digital lab and collaboration centre in San Francisco where it is demonstrating to banks and merchants what the payments future might look like.Among the systems being prototyped in the lab is an augmented reality application that can be used to allow merchants to trial store or shopping centre layouts, accessing anonymised data from Visa to see how different layouts might attract different customers at different times of the day.
It has also developed a smartphone app that can be coupled with a virtual reality headpiece to provide a realistic walk-through of different purchasing scenarios.Researchers are also working on visual big data analytics tools that will allow banks and retailers to identify consumer spending patterns and then run “what if” scenarios to see how behaviour might change if they changed their offers or products.While Visa is investing in facilitating online and mobile payments, it’s no longer interested in digital wallets.The company recently replaced its V.me digital wallet with Visa Checkout which it describes as an online payments experience.
Shrauger said consumers didn’t appear to want a wallet – they just want to pay and be done. “PayPal can be called a wallet – but it’s not necessarily the initial intent which was to let people pay each other.”“When you drill down to what consumers see as pain in payment – payment works best when it is a non-event, it works, it’s fast and nothing goes wrong.”Asked whether Visa had any virtual currency plans among its payment blueprints Visa chief executive Charles Scharf said the company was open to facilitating the growing use of Bitcoin and others that may emerge.
“Visa is not a currency, it’s a network. We can process real or virtual currencies to the extent that it makes sense,” Scharf said.“So it is possible but we are not thinking about it today.”Nor he said was Visa interested in building a Visa-branded virtual currency itself.
