Visa Perceives Visa Checkout as Olive Branch To Retailers

by Tim Sloane 0

This articlein Digital Transactions indicates that Visa believes that merchants will forgettheir anger regarding interchange fees and will broadly accept Visa Checkout asa service that offers significant new value:

“Inthe wake of an important Supreme Court decision early last week, Visa Inc.’schief executive Thursday afternoon sounded a conciliatory note on the company’soften fraught relations with merchants and touted Visa’s digital-paymentsinitiatives as a way of bringing more value to retailers in return for the feesthey pay for card acceptance.

Speakingduring a conference call on the card network’s quarterly results, Charles W.Scharf said Visa is “pleased” with the high court’s decision not to review anappeals court’s action in upholding the Federal Reserve’s interchange caps androuting rules for debit cards. Merchants and merchant trade groups argue theFed rules favor financial institutions’ interests and don’t follow the languageof the Durbin Amendment to the 2010 Dodd-Frank law.

TheSupreme Court’s refusal to hear the case was “an important step in bringingclarity to the debit-interchange landscape,” said Scharf during Thursday’s callwith analysts.

Insteadof arguing over how transactions should be priced, Scharf said Visa is focusedon bringing added value to merchants through services such as tokenization andVisa Checkout, the company’s digital wallet launched last summer. “We’relaser-focused to drive cash to digital payments,” he said, ticking off Visa’swork with Checkout, Apple Inc’s Apple Pay mobile-payments service, and VisaDigital Solutions, a new unit set to launch next week. “There’s much more tocome,” Scharf promised.

The article goes into further depth on the legal frontbefore diving into how Visa will address the larger Android market:

“Backon the legal front, Scharf and chief financial officer Byron Pollitt reportedthat Visa has now paid out $335 million to settle with merchants that hadearlier opted out of the 2012 settlement of a massive antitrust case in whichmerchants challenged credit card interchange. That’s out of some $1.7 billionthe company has set aside in escrow for these settlements, Pollitt said, thoughhe added he didn’t have a number for how many opt-out cases remain.

Scharfalso reported that 43 Visa issuers have enrolled in the network’s nascent tokenservice, a prerequisite for participating in Apple Pay. The issuers representabout three-quarters of Visa’s U.S. payment volume, he said. Another 500-plusissuers have signed Apple Pay contracts and will adopt the token service. Tokenizationtechnology masks actual card-account numbers by replacing them with randomlyderived proxies and is seen as a key defense against card fraud.”

The Scharf discussed a browser version of tokenization anddiscussed availability of Android solutions in the next several quarters:

“Scharfadded that Visa will introduce “some tokenization solutions” for browser-basedpayments products this spring.

Inresponse to an analyst’s question about Visa’s work with other handset makersbesides Apple, Scharf said “we would expect to see a number of these solutionscome to market in the next several quarters,” without giving specifics. Visa iswidely thought to be working with Samsung on a payments service called SamsungPay for the new Samsung Galaxy S6 smart phone, expected to launch in March.”


Overview by Tim Sloane, VP of Payments Innovation for Mercator Advisory Group

See full story in Digital Transactions