Until 1958, consumer credit worked on a one-off basis. Banks convinced merchants, one by one, to accept a consumer's personal line of credit, which the financial institution confirmed over the phone by checking its phonebook-like records. It wasn't until Bank of America introduced the BankAmericard--an entity later spun out and renamed Visa--that the plastic credit card and the now-familiar interactions of swiping and signing were introduced to the general public.
Visa hopes to once again reshape the way shoppers pay for their purchases--this time as commerce increasingly moves online and on mobile. The credit card company on Wednesday launched Visa Checkout, a secure way for consumers to purchase items without having to re-enter their credit card information for each new site. It also opened the doors to a new 112,000-square-foot innovation center in San Francisco.
"We recognize that the same degree of simplicity and ease of use for payment cards in the physical world does not exist for payment cards in the online world," senior vice president of digital solutions Sam Shrauger told Fast Company. "When consumers check out online, they don't want to spend a lot of time in payment."
With Visa Checkout--what Shrauger considers "almost like the online version of swipe"--users can pay for products across different platforms by logging in with their usernames and passwords. "We kind of view it more as a form-factor shift" for credit cards, he noted.
A competitor to PayPal, Visa Checkout works with Visa, MasterCard, Discover, and American Express cards, providing an added layer of security to online shopping. When cardholders are ready to pay for their purchases at stores that accept Visa Checkout, they'll be prompted with a pop-up overlay to log into their accounts and select a payment method and shipping address. Unlike PayPal, Shrauger said, Visa Checkout users never leave the merchant's website. "We've taken every bit of friction out," he said, noting the high shopping-cart abandonment rates online: 68% for a typical e-commerce site, 86% on mobile.
Visa uses more than 500 data points, such as whether a purchase originated from a trusted device, to flag suspicious transactions. "There's triple encryption of data that's flowing back and forth between the merchant" at the network, data-transmission, and account access levels, he added.
Merchants aren't charged additional fees aside from the interchange fees credit card companies levy to process transactions. The company already has 180 financial institutions and a growing list of retailers--United Airlines, Neiman Marcus, Pizza Hut, and Staples, to name a few--on board. New merchants can integrate with Visa Checkout within weeks or possibly days, Shrauger noted. "We will be everywhere you want to be in the digital world," he said.