Tuesday, August 09, 2011

Visa as iTunes for credit card phones.

This shows the incredible power of a dominant market player to force innovation upon its customers:

As of October 1, 2015, Visa will shift liability of fraud to merchants instead of card companies. Since dynamic card authentication offers better fraud protection, most merchants will opt to upgrade their terminals instead of having to deal with fraud charges. Fuel merchants will have an extra two years before liability will shift for terminals at self-service gas pumps.
Visa controls risk allocation within the payment system, which allows the company to be very flexible when new business models emerge. For example, to get a foothold in e-commerce, Visa promised web merchants that it will absorb credit card fraud losses. This approach let Visa enter a growing market for internet transactions and accelerate consumer adoption of the technology. Now, that it is in a controlling position, the company can start shifting risks back to merchants. Or at least Visa can make a very credible threat of the action because it knows, due to its access to all information about transactions, where the actual risk is.

With the right application on the wallet-phone, it can easily implement elements of social commerce too, including special deals, coupons, location-specific services, etc. - either directly, or as a backend service to merchants and banks.

tags: business, model, commerce, control, deontic, payload, risk, value, mobile

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