Visa developing mobile payments apps

Card company Visa is collaborating on mobile payments system with two vendors, Nokia and Google Android.

The idea of using the mobile phone as a payment device has been around for along time, but has not yet encountered widespread success. With more than 3 billion mobile devices already in the market today, though, Visa sees a big opportunity to extend its reach, according to Elizabeth Buse, global head of product at Visa.

For future owners of the T-Mobile G1 and other upcoming Android phones, Visa will at first include three services, Alerts, Offers and Locator, which will be available for download before the end of the year.

With Alerts consumers will receive what Visa calls "near real-time" notification of purchase activity, based on rules defined by the cardholder.

Offers and Locator will make it possible for users to receive targeted offers, based on for example previous purchases, and show consumers nearby locations of shops or ATMs that accepts Visa. The two functions can also be combined. Consumers would opt in to the services, only activating those they choose, and would be able to opt out at any time, according to Visa.

The services will at first be offered to Chase Visa card holders in the US and Visa says it plans to add more banks later.

Visa is also developing a payment application that will enable consumers to make mobile payments with Android phones.

Visa's work with Nokia is also about making payments possible using the mobile phone. Using the Nokia 6212 classic, expected to be available starting next month, users will be able to make contactless payments, remote payments, money transfers, as well as receive alerts and notifications, according to Nokia.

What makes all that possible is built-in support for a technology called NFC (Near-Field Communications), which lets consumers simply wave the phone within a few inches of a special point-of-sale reader to complete a transaction.

Nokia and Visa will first do trials with financial institutions, but for it to really take off the retail sector has to get onboard, and that is currently a blocking point, according to Richard Webb, directing analyst at Infonetics Research.

"Mobile payments are a good thing for the mobile sector, but there is no real gain for the retail sector, which would have to upgrade its systems for payments to work," said Webb.

Companies such as Nokia and Visa have to explain what's in it for retailers, but there are also other aspects that need to be addressed before mobile payments can take off, including security and trust, according to Webb.