1 Major Question for Visa Inc.

Visa has a little-discussed program that extends across the globe and partners with banks like Bank of America. But far too little is said about it.

Jul 11, 2014 at 7:04AM


Think PayPal is going to takeover the payments industry? It turns out there's one area of Visa's (NYSE:V)  business that isn't discussed often, but could be exactly what it needs to further ensure its industry dominance: V.me.


V.me, like PayPal, is a digital wallet service which allows individuals to simply and securely type in their username and password to pay for goods online without ever having to type in their credit card number, address, or any other information. 

Through it, Visa has partnered with financial institutions such as Bank of America (NYSE:BAC) and websites including Fandango -- and more than 50 merchants in total -- to provide seamless checkouts online while also ensuring its host of security features makes it an encrypted and secure option for Internet transactions.

Put simply, it could be a game changer for Visa.

"We look at everything through the lens of the customer and continue to prioritize security, privacy, and fraud protection above all else," said Bank of America's online and mobile solutions executive, David Godsman, when the partnership was announced. "We believe our customers shouldn't have to forgo security for convenience when using a digital wallet. V.me offers customers a greatly simplified and secure checkout process when shopping online without sharing their financial information."


An example of V.me at PacSun.

V.me is available to Visa users in Canada and Australia, and last November it was introduced across Europe -- including the U.K., France, and Spain -- as "the first pan-European digital wallet service to be offered by banks and financial institutions."

Knowing its partnership with major banks and major brands offers both convenience and security to Visa card users, it's easy to see how V.me could be a major avenue of growth for the company.

The major problem
However, unlike what we learn about PayPal, Visa's latest annual report provides almost no information on the program's successes or failures. All it offers is one sentence explaining V.me and this remark: "In mature markets, Visa continues to expand in digital channels."

And that partnership with Bank of America was first announced in November 2012, but few updates have been provided on its progress. 


When Visa CEO Charlie Scharf was asked at a recent conference to provide an update on V.me, he noted it had been "retooled" since being launched because it "did a series of things that were not friendly" to both sides of the payment network -- the issuers (banks that issue cards) and the acquirers (the companies which process payments) -- but it now does "exactly what it should do." 

Although Scharf optimistically added, "We would anticipate seeing a lot of progress between now and the end of the year with merchants becoming live and ultimately issuers integrating it into their banking platforms as well," he provided no details.

V.me seems like, in theory, it could be a revolutionary product, but there is no concrete evidence that reveals its progress, or lack thereof. 

Looking ahead
Visa and the other major credit card companies are doing all they can to defend themselves against the onslaught of competition. And V.me appears to be a compelling option to further support Visa's position in its highly profitable industry. Yet more information is needed for investors to feel easy about what the future may look like for Visa.

Your credit card may soon be completely worthless
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Patrick Morris owns shares of Bank of America. The Motley Fool recommends Bank of America and Visa. The Motley Fool owns shares of Bank of America and Visa. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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