Standardization of card payments
A new initiative of the Schemes is approaching us – so far in Europe still “unnoticed” in the USA but already coming. It is a last rebellion of the Schemes to “bite down” at the customer and to save their separate initiatives Masterpass and Visa Checkout (Ex V.Me) on the one hand and at the same time “put their backs into it” against PayPal and Apple/Goolge Pay. The basis will be EMVCo’s Secure Remote Commerce Specification.
What does that mean in concrete terms?
Visa, Mastercard and in part AMEX are trying to simplify the online checkout process on the one hand and to standardize it for card payments on the other.
At the same time they try to push the “Scheme Tokenization (VTS & MDES)” in the context into the market. With the background to push out the propietary tokenizations of the PSP’s/ACQ and to gain control over the tokens themselves. To ultimately increase the network lock-in and unite more transactions on your network. Also with the background of local debit schemes – which are not part of the tokenization – to “keep out” in order to reduce the choice for the end customer and finally take “pressure” off the fees. (using EMVCo/VTS/MDES tokens the merchant can no longer determine the routing within the network – he has to go via Visa/MC)
They even want to go one step further here – there should not only be the “possibility of payment” – they want “customer ownership”. Especially about the provision of data – as known from the online checkout – delivery address, billing address – more and more a PayPal Copy Cat. The needs of merchants are at the forefront here.
Have Visa Checkout and Masterpass been a success so far?
According to Visa and Mastercard, the existing strategies continue unchanged – even with numbers and “success stories” being thrown around:
The following figures can be found for Visa Checkout on the Internet
a) 33 million users
b) 350,000 Merchants
c) 1,600 FI’s
sounds a lot and big – but from my point of view we noticed “little” about it. But this could be due to the geographical focus on the USA.
Masterpass cites Expedia as a new major customer and pushes integration at the POS via Oracle. Visa launches the “Visa Digital Commerce Program” (VDCP).
What is the “Visa Digital Commerce Program”?
“Visa Digital Commerce leverages EMVCo’s Secure Remote Commerce (SRC) technical framework that eliminates the need for passwords and streamlines and standardizes the end-to-end digital payments process flow across browsers and devices – existing and emerging.”
i.e. the VDCP is the technological implementation of the EMVCo standard. No more and no less.
Interestingly, the POS is understood here as a blueprint of the payment experience – interesting above all because here the proprietary hardware infrastructure is stylized “to the modern measure of things”.
“Everybody knows how their cards work today in a store, we want to support that experience online and extend it to any connected endpoint that consumers may want to use in the future to buy something from a merchant”.
is quoted as Visa’s Global Head of Payment Processing, Products and Solutions, TS Anil.
This in combination with the Omnichannel trend to use customer payment data for cross-channel identification. As is already the case with PayPal and other payment methods, device fingerprinting is used to identify customers. In the context of PSD2 and SCA, however, this will not help much. Rather the “American Way of Payments”.
What happens with Visa Checkout and Masterpass in this context?
At the moment there are no concrete statements about whether SRC replaces the brands, but with some common sense, what else should happen? Of course, we talk more about “migration” than “switching off”.
What is confusing is that Visa talks about offering its “checkout merchants” a migration. But from the merchant’s point of view two levels are mixed. The checkout has positioned itself as a payment method. The SRC is a technical feature. Shows that it is not yet clear to the merchant how to structure the argumentation.
Of course you don’t want to talk about a fundamentally new strategy – think the statement would also be wrong
“Our Masterpass efforts over the past few years have shown that consumers and merchants want an easy one-click experience to be consistent across all digital ways to pay.” – but somehow you capitulate to PayPal in the sense of the online user experience – just like PayPal never made it to the POS and is now looking to join forces with Google.
What does that mean for the customer?
Hopefully a merging of the currently somewhat fragmented world of number types – the tendency goes rather in the direction of “few relevant number types”, because for many – the rush (or pawns) wisdom – each number type brings more conversion is no longer correct, from 4-5 number types on there is a marginal benefit, this has also been recognized by the schemes.
And that combined with the Learnings from the PayPal world, which the customers really understand by an optimal Checkout, leads it also finally in the world of Visa/MC to the customer focusing (in the range of the Checkout).
The customer should not notice anything or only successive slight improvements.
Masterpass and Visa Checkout have not yet really arrived on the European market. Therefore “the broad masses” will not notice it. Which is good, because then the acclimatisation is easy.
Conclusion and assumptions for the future
- the two services are “merged” – in the end it stays as it is – there is a single “authentication” and the rest are simply “card payments
- Amex comes along, too. Visa and Mastercard seem to agree on direction and strategy, with Visa believing itself in the “leading position”. Furthermore, the situation in the online card world is similar to that at the POS, because none of the big brands can assert themselves alone, you can only survive together.
- it will be a PayPal Copy Cat: innovations are not in sight – (almost) followers than (first) movers
- The schemes in the online channel long for the dominance of the POS, but they won’t reach you anymore, not even in close cooperation. PayPal is the strong top dog – Google and Apple will come to it….