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With one click, Visa steps toward digital wallet

With one click, Visa steps toward digital wallet

Posting in Technology

Visa's new one-click electronic payment scheme allows customers to pay for online goods quickly -- no credentials required -- ushering in the age of the digital wallet.

Electronic payments giant Visa on Wednesday announced a new electronic payment scheme that allows the company's customers to pay for items online with one click (or tap).

The system works by allowing Visa customers to essentially gain pre-approved credentials, doing away with the familiar point-of-scale requirement to input a card number and personal information.

Instead of requiring a billing address, account number and expiration date, Visa will ask only for an email address and password, much like PayPal.

It's the next logical step for Visa, which is looking at the ubiquity of Internet-enabled smartphones as a way to facilitate payments for goods. It's not far-fetched to think that plastic could soon be obsolete.

It's not just a customer play, either. Visa looks at the payment system as a way to gain new customers, not to mention facilitate more payments, from which it takes a cut of the merchant's profits.

The company also sees the system as a way to implement financial services infrastructure in places that don't have it. Mobile phones are owned by people with incomes high and low; Visa sees a chance to maximize its reach in the market.

In countries with established electronic payments infrastructures, expansive Internet usage and broad mobile network penetration, Visa says it will introduce a "digital wallet and services platform" that stores Visa and non-Visa payments accounts and supports NFC payments (using the company's payWave application).

In countries without maturity in any of these three areas -- India, Russia or countries in Africa and the Middle East -- Visa will try to drive account activation by linking accounts (prepaid in many cases) to existing mobile accounts, closing the loop on the mobile money services market worldwide.

Visa's platform play will allow users to customize and save preferences, such as which account (note that I didn't say card!) to use for which merchants. It will also allow Visa to channel personalized offers from merchant partners to customers.

Expected use cases include e-commerce, mobile commerce, micropayments, social networks and -- most interestingly -- person-to-person payments.

(That's right -- no more scrounging around for cash to pay back your best bud.)

Visa has a significant team of partners going into the launch. Among them: Barclaycard US, BB&T Corporation, Card Services for Credit Unions, ICBA Bancard, First Financial Bank of Ohio, Nordstrom fsb, Pentagon Federal Credit Union, PNC Bank, PSCU Financial Services, Regions Bank, Royal Bank of Canada, Scotiabank, TD Bank and US Bank.

Visa will launch the digital wallet in the U.S. and Canada in fall 2011.

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Andrew Nusca

Editor Emeritus

Andrew Nusca is editor of SmartPlanet and an associate editor for ZDNet. Previously, he worked at Money, Men's Vogue and Popular Mechanics magazines. He holds degrees from the Columbia University Graduate School of Journalism and New York University. He is based in New York but resides in Philadelphia. Follow him on Twitter. Disclosure