In the not-too-distant future, Visa credit cards may merge with cell phones. The card giant announced Friday that it is developing applications for Google's Android operating system and upcoming Nokia smartphones.
Visa's Android application will allow the holders of Chase Visa cards to make mobile payments and receive real-time financial information.
Greg Sterling, founding principal of Sterling Market Intelligence, said there two reasons why Visa is willing to write an application for a mobile operating system with a small market share. First, Sterling said, Visa will not have to put its software through a vetting process, as it will when it creates an application for Apple's iPhone. And second, since the deal with Google is not exclusive, it can experiment more easily and apply what it learns to other platforms.
"Visa will be able to develop and test this application very quickly," Sterling joked. "Given the parameters of the test -- Android phone users with Chase Visa cards -- we're talking about a universe of about five people."
Potentially Big Market
All kidding aside, Sterling said he believes the consumer market is ready for mobile payments. He noted that consumers in Japan and Europe have been using their phones to buy goods and services for some time. Similar uses in the United States have been slower to catch on, he said, because consumers are not enthusiastic about processing such payments through their telecommunication carriers.
At this stage, it's a little unclear how the Android phone might be used for mobile payments. The initial focus will be on notification of card activity, the delivery of coupons and other targeted offers, and the location of the nearest ATM or Visa-accepting business.
Actual phone-based payments may have to wait until the release next year of Nokia phones equipped with Near-Field Communication (NFC) chips, wireless smart cards that communicate with compatible readers over short distances (about four inches). Similar technology is already in use in Mobil's EZPay and Visa's payWave programs. The first NFC-equipped phone, the 6212 Classic, is scheduled for release in October 2009.
Google: It's Everywhere You Want to Be
Visa's decision to begin rolling out location-based financial services on a Google-driven mobile operating system adds more fuel to the privacy concerns swirling around the search-engine company. Whether consumers balk at targeted advertising remains to be seen.
Sterling said that right now, no one really knows what the attitudes of cellular users will be toward location-based advertising.
"For consumers," Sterling said, "privacy is a foggy and complex question. It depends on how and what you present. As a general rule, however, the people who buy feature phones or smartphones are people who are engaged in technology, involved in trying new applications, and willing to accept advertising as part of a service environment."