Vipps is collectively owned by 110 Norwegian banks and is used by 3.7 million Norwegians on Android and Apple phones. Developed by DNB, the app is used for both in-app and e-commerce purchases.
Initially the Vipps app is provisioned and secured on the customer’s phone. Then when making an in-app purchase, the shopper is re-directed to the Vipps app and asked to authenticate the payment. When making an e-commerce purchase, the shopper is redirected to a Vipps-hosted web page where they enter their phone number. The payment request is sent using a secure encrypted channel to the Vipps app on the device, and the purchase is completed when the shopper is authenticated.
This approach is far more secure than using SMS for a One Time Password. Entersekt and others offer similar technology that is also combined with the back-end systems banks need to implement the full technology stack, but as Mercator Advisory Group identified in May of last year, Visa has made a concerted effort to enter the authentication market and may decide to use Vipps with EMVCo 3D Secure to help smooth its market entrance.
Here’s more coverage from a Finextra article:
“Under the arrangement, Visa’s clients and partners will be able to take advantage of the Vipps platform to create their own digital wallets and offer customers new ways to to send, pay and receive money via their mobile phone.
Antony Cahill, managing director European regions at Visa says: “Our partnership with Vipps will make it possible for our bank partners to develop and create easy to use digital payment products and wallets, meeting the growing demand for contactless, online and mobile payments.”
Collectively owned by 110 Norwegian and launched in 2015, Vipps has achieved 85 percent market penetration in its home territory, attracting 3.7 million users in Norway.
Rune Garborg, CEO at Vipps, says: “Our approach to international expansion is through collaboration. Together we are enabling issuing banks to offer smarter and simplified digital payment services to their customers in Europe and beyond.””
Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group