Visa is launching a centralized electronic payment system designed to make online shopping as easy as pulling out a wallet.
Visa hopes its "digital wallet," set to launch this fall in the U.S. and Canada, will make it possible for consumers to pay with any of their credit or debit cards using a single click or a tap of their cellphone and a single password, the company announced Wednesday.
"What that comes with is a place for customers to be able to centralize their credit, debit and pre-paid card information in a single secure location," said Mike Bradley, head of products for Visa Canada.
A customer could add any card they choose to the wallet, including competing cards such as MasterCard or American Express, Bradley said.
Unlike an old-fashioned wallet, Visa's system won't hold identification such as driver's licences or health cards or photos of your loved ones — it's not much more than a central customer account stored in Visa's network that contains information about the customer's payment card accounts.
Merchants can sign up to link into an electronic system through their website so they can accept payment from the wallet. Bradley would not say what kind of fees would be involved for merchants, consumers or the institutions that issue cards placed in the wallet.
If the merchant accepts both the digital wallet and the payment card that the customer wishes to use, the customer enters an email address or username and a password to pay. There is no need to enter a billing address and payment information.
Extra authentication for big buys
However, Bradley said higher levels of authentication may be needed for big purchases like a stereo system.
The Visa system is similar in some ways to PayPal, which links an electronic payment account to a credit card or debit card, and Google Checkout, which allows people to use multiple credit cards in a single account to enable one-click buying online. Both services require retailers to sign up and pay transaction fees and have limited reach compared to regular online credit card payments.
For now, Visa's system targets online shopping and games, but Visa eventually hopes to link the digital wallet to a chip in a cellphone that would allow consumers to pay by tapping the phone near a receiver in bricks-and-mortar stores.
So far, in Canada, Visa has partnered with Royal Bank of Canada, Scotiabank and TD Bank — financial institutions that already issue Visa cards — to launch the system.
Visa is promising that the wallet will be well-protected by security and users won't be accountable for fraud involving Visa products.
However, Bradley would not specify what would happen if a user has their password stolen and a non-Visa card in their account is used to commit fraud.
Catherine Johnston, president and CEO of the Advanced Card Technologies Canada, the payment card industry association, said her members feel there is clearly a need for a solution that lets people carry a number of payment cards securely on a mobile device like a cellphone.
She suggested that in the future, consumers might end up putting multiple apps similar to Visa's digital wallet on a single mobile device.
"I imagine we could see multiple wallets in the way that today we see multiple cards," she said.