Visa's Gajda: Mobile payment space is not fragmented, and NFC will rule the market
with Bill Gajda, global head of mobile product at Visa
Visa has had a busy couple of weeks. First the company announced the Visa Ready Partner Program, which certifies that devices, software and solutions used to process Visa transactions, such as mobile point of sale readers, are compatible with Visa's requirements. The company also unveiled a partnership with Samsung to include Visa's payWave technology on all next-gen Samsung handsets.
Bill Gajda, Visa's global head of mobile since 2010, sat down with FierceMobileContent's Sandhya Raman at last week's Mobile World Congress trade show to talk about these announcements and Visa's mobile strategy at large. The following is a lightly edited version of that conversation.
FierceMobileContent: On Feb. 23 you announced that payWave was coming to all next-gen Samsung devices. Could you talk a little about that?
Bill Gajda: Samsung approached us--because we've got a very good relationship--and started talking about the fact that they're going to put this embedded secure element on their next generation of devices and suggested that we could work together to take some of the friction out of the whole NFC provisioning process.
So, we talked about two programs that are part of a broad relationship with Samsung that I think will go in many directions over the years, but it started with two key things. The first is instead of consumers having to find a payWave application in an app store, how can we pre-provision that on devices to take that step out of it to make the consumer experience that much easier for the bank or the mobile network operator because the app is already on the device.
The second piece was that we watched the early pioneers in the space go through the technical complexity of OTT provisions, the TSM [Trusted Service Manager]. We work with Overture to create an issuer-centric TSM that really considers all of the use cases that a bank would have when they roll out these use cases. So, in addition to putting the applet in the device, Samsung realized that that embedded drill is going to have the secure keys--the ability to manage that secure element within Samsung--and we said why don't we connect it globally to our OTT provisioning system. So again a bank, who wants to work with Samsung with rolling out NFC, can say see the Visa applet is on the device. Visa is already connected with the master keys for Samsung, so we can also solve OTT provisioning, and the whole intent is to make it easier for consumers and easier for banks to roll out these programs.
FierceMobileContent: Isn't that adding to fragmentation if a user with several different cards will need a new app for each of them?
Gajda: I think that while payWave, the Visa NFC application, is different from the MasterCard or the American Express, they're based on the same global standards. So, for example if you're a merchant, you just need one terminal because all those applications will work with that same terminal. If you take a look at the wallets as they roll out, say Isis in the U.S. We licensed them the payWave application, but they also have a license agreement with MasterCard, American Express and Discovery and have all those applications sitting side-by-side on their secure elements. I'd say that the practice has been well established, and while we do treat the application a little bit differently than MasterCard does, it's based on the same standard. I'd say that hopefully that's not adding to the fragmentation. So I'd say that model is pretty well understood.
FierceMobileContent: Earlier this week MasterCard made its own announcement about MasterPass, its new digital commerce platform that will support NFC and other types of mobile payments. Do initiatives like this make the space more crowded and competitive or do they just expand the base of possible mobile payments users?
Gajda: I think it's the latter. We compete with MasterCard, American Express and others, but we compete on brand and our relationship with the issuers, and that'll continue in the physical world, and that will continue on phones, right? We'll continue the old fashioned way. The real competition for Visa is cash and checks. When we think about MasterCard and their announcements, or everyone else playing in the NFC space, we see that as just growing the ecosystem.
The more consumers that move what's on their physical wallet including cash onto a phone, it's going to help us really get at that cash and check base that's left as they move and use it for purchases that they would have used cash for previously because it's so convenient to use your phone and they won't use cash anymore. That's good for everybody. And we'll get our fair share because we can beat them the old-fashioned way.
FierceMobileContent: We've talked about the Tier 1 carriers and the relationships you have, but is there anything in place for prepaid phones?
Gajda: We are seeing because the cost of NFC chips have come down and are being deployed across so many phones, you're going to see a broader range of devices across all the manufacturers to include NFC. The analogy I use is from when I worked with Ericsson: We were talking about making a phone that would have four radios in it, so you could use it in any country in the world. We said, "Oh my God it's going to be tremendously expensive. We'll only sell like 1 million of these things." Now you can't buy a phone that doesn't have 6 radios.
It's a matter of time before every single device that is sold is going to have NFC. That is going to happen. It will be driven by consumer demand. It'll be driven by further cost reductions in the chips, and it'll become the point where it will be more expensive not to include it that it would be to include it
FierceMobileContent: Do you see the point of sale type of mobile payments catching on faster than NFC? Or will one's progress hinder the other?
Gajda: I think that NFC will be the most broadly used technology for mobile at the point of sale, merchant terminal manufacturer or software developer; we can kind of develop a certainty because it's a global standard that has been developed for over 10 years. That being said, some of the alternatives like QR codes, there will be some verticals where this will make sense--Starbucks uses QR codes. There will be some verticals where they are trying to eliminate the traditional point of sale and put everything on a tablet.
We're going to see continued innovation around the point of sale and I think that in some retail environments and in some verticals, alternatives to NFC may make sense. But NFC is going to be the most broadly adopted. And they can coexist; they'll live side by side.