Visa's Gajda: NFC will allow mobile payments to hit the mainstream


Bill Gajda

     Bill Gajda

with Bill Gajda, global head of mobile product at Visa

Global financial services provider Visa has its skin in the mobile payments game. The turning point in Visa's mobile strategy came in 2011, when the company acquired mobile payments platform Fundamo to accelerate its mobile wallet efforts. Then, in November, Visa's digital wallet exited beta and is expected to come to market this year. The company is also involved in a variety of partnerships with banks, startups, carriers and retailers around the world.

At the helm of Visa's mobile strategy is industry veteran Bill Gajda, Visa's global head of mobile. Gajda, who has been in the position since 2010, previously served as a chief executive at the GSMA. FierceMobileContent's Sandhya Raman recently spoke with Gajda about the future of mobile payments and the importance of NFC. The following is a lightly edited version of that conversation.  

FierceMobileContent: Currently the mobile payments market is fairly fragmented. We have carriers, merchants and financial institutions like Visa all fighting to gain a piece of the market. How do you plan to address this?  

Bill Gajda: When we take a look at our assets and some of the capabilities we've acquired more recently, we think Visa is going to play a number of various roles depending on who the provider is--a mobile network, a carrier, Foursquare, etc.--and the role that we play will be different depending on who we're partners with but still very consistent with the role Visa usually plays. We take the complexity out of payments and scalability and play that important network piece in the middle.

You can think about Isis as an example. We already license them our payWave application, which is a Visa application that you need to make an NFC payment with a Visa card. We've helped them certify their devices prior to their launch. We've worked with them to make sure the merchant acceptance terminals work in Salt Lake City and Austin--their pilot cities--and we've also worked with Isis and one of our important issuers, Chase, to provide the prepaid account element that is in every Isis wallet. We have a number of roles to play to support the mobile network operator and the issuer.

FierceMobileContent: Mobile commerce is a huge space, encompassing mobile registers, mobile wallets, independent payment apps, etc.  What types of mobile commerce ventures do you see as your competition? 

Gajda: I would say that if you think about our traditional competitors--American Express, MasterCard, Discover--they all have their own mobile strategies, and their versions of payWave. We continue to compete against them as they think about their digital strategies and try to build their digital assets. I would say that most of the new players that have come onto the scene--whether Isis, Google [NASDAQ:GOOG] Wallet, Square or others--we don't really find ourselves competing with them, but we find ourselves partnering with them or providing solutions that can help them with scaling.

If you think about Square or the companies like it, they are now allowing millions of merchants around the world to take electronic payments for the first time. Very small or casual merchants that only took cash or checks before can now take Visa cards or other cards. And that's not really competition for us. It is actually a key driver of growth in reaching merchants that we weren't able to reach before... Most of the innovation in this space actually supports the electronification of payments.

FierceMobileContent: NFC has been the big buzzword in this space. Is NFC necessary for mobile payments to succeed?  

Gajda: I would say that NFC has the best chance of allowing mobile payments to hit the mainstream and here's why. Today most payments that people make with their Visa cards or other cards are made at the point of sale. While we see e-commerce continue to grow very quickly, by far the greatest volume of payments comes from cards used at the point of sale. That is really where the focus is if you want to bring something to the mainstream. I think the second thing is that the NFC standard was worked on in collaboration with the card companies, the banks and the mobile industry. They worked for years to develop a global standard that everyone can develop to whether you're developing software or handsets that can use NFC, new merchant acceptance terminals that can accept NFC, etc.

As an example, while they're slightly different, you only need one merchant terminal to accept Visa, MasterCard, American Express and Discover NFC payments because it's all based on the same EMV standard. With that kind of certainty, the fact that it is standards-based, that nine of the 10 largest handset manufacturers now put the same NFC radios in their devices etc., I think NFC has the best chance to scale and to provide that point of sale experience. I think there will be other technologies that come across in the future, and we look at all of those very closely. But I think NFC has the best chance to reach scale.

FierceMobileContent: Could you talk about how you see mobile banking and mobile payments progressing? Going forward, do you think they'll remain separate entities or will there be some consolidation?

Gajda: I would say that we're still seeing the proliferation of wallets, and we'll see that for the next 18 months or so whether it's Starbucks and individual merchants launching their own wallets; Isis and different consortiums of mobile networks launching their wallets; new players in the space like Google and their equivalents around the world launching their wallets; and our traditional competitors launching their wallets. I think that we're going to see a continued expansion for the next 18 months, but as I said earlier, I think we're going to see consolidation around a handful of wallets that really provide that level of security, scalability and the trusted brand that customers are looking for.

I think in the medium-term you should look to the banks working with Visa and the wallet and some larger scale traditional players in the space. Most of these wallets out there are going to have challenges defining the level of scale or the level of trust around consumers. I think we're going to see consolidation around a handful of wallets and that banks will play an important role.

FierceMobileContent: Last year, in an interview with CNET, you said you see mobile payments hitting the mainstream in the U.S. in the next 2-3 years.  Has your opinion changed since then?

Gajda: No, I think that the 2-3 year time horizon is about the right one. I think that there will be other markets outside the United States--Australia, Hong Kong, Singapore, Japan, Korea, Canada--that may happen sooner than in the U.S., but in the U.S. we're starting to see building blocks that I think will hit some kind of scale in that 2-3 year time horizon. Nine of the 10 handset manufacturers are providing devices with NFC. I think the Isis launch was something like 18-19 devices that customers can choose from. You cannot buy a merchant acceptance terminal that doesn't have both chip and contactless capabilities. They have to turn that on once they get it in their stores, and then that'll take some time. But at least the technology is there. There is still some consumer education that needs to be done, and banks need to get behind this with their marketing programs, which is going to take some time. The building blocks are in place for the first time, and I think the 2-3 year time horizon that you're talking about is the right one.

FierceMobileContent: Visa helps fund a lot of these companies that we've talked about. Going forward, will it be a problem as these consolidate as some of them are competing with each other?

Gajda: By design Visa has supported a number of wallets or digital commerce efforts, not just ours, and that's to support our issuers and customers who ultimately are going to choose. And while I think there will be consolidation around a handful, it doesn't mean that everyone is going to consolidate around When we think about our payWave application as an example, we're going to license that as openly as we can so we can let customers and issuers and other partners really drive the growth and the scalability as we provide that kind of key enabler. We'll have our own wallet because issuers have told us that they think we are going to be one of those players that can grow and be sustainable, but we placed a number of bets because it's just too early to tell where consumers are going to coalesce around. We'll continue to support other digital wallet activities. We're talking to Google, Square, Isis and the equivalent of Isis in many other markets, and we'll do that and watch the market consolidate. But I also think it's important that we have our own solution in the market as well, and that's why I think will play an important role.