Visa Checkout reaches over 20 million accounts
(BI Intelligence)
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Visa announced that Visa Checkout, the card network's one-click buy button, reached more than 20 million enrolled accounts, which will only increase as the platform continues expanding in 2017.
Visa Checkout has been able to add some of the world's biggest companies to the platform, including, FIFA, Marriott, and Walmart, in addition to over 300,000 other merchant partners. Visa also plans to expand the checkout platform, which currently operates in 22 countries, to more foreign markets in 2017, including Saudi Arabia and Ukraine. Visa Checkout's success is likely due to its clear value add that it offers consumers and merchants.
Visa Checkout has been extremely successful in reaching both consumers and merchants, because it is able to solve a major pain point. Entering payment information when checking out online is an arduous process for consumers, but this becomes even more difficult when having to type in information on small screens associated with mobile devices — US conversion rates for smartphones in Q4 2016 only reached 1.5%, according to Monetate. In turn, this friction in the checkout process can lead to low conversion rates for merchants. However, Visa Checkout’s one-click solution solves these pain points, which has led to impressive conversion rates — enrolled customers completed 69% of their purchases in Q1 2016.
The platform will see its ability to onboard new users and partners strengthen with the addition of new and attractive features. Visa Checkout just recently announced that it would be partnering with Samsung Pay to allow users of the mobile wallet to confirm payments by simply using their phone's fingerprint authentication. Added features like this will help make the checkout process even simpler for shoppers, and thus will attract more of them to enroll in the platform, which in turn will force merchants to add the payment option in order to appease consumers and to take advantage of higher conversion rates.
In the US, when customers make payments via banks, they’re completed in two ways: via wire transfer, or through the Automated Clearing House (ACH). ACH transactions, which are less expensive for customers and which accounted for 18% of total noncash US payments volume in 2012, can take up to five days to settle because of the way that they are processed.
That’s problematic, because it interferes with consumer demand for convenience and could slow the supply chain or make it more challenging for banks and businesses to get paid in the way they need to conduct operations. As a result, the US Fed looked into the ACH system in 2013, and found that there was no “ubiquitous, convenient, and cost-effective way for US consumers and businesses to make fast payments between banks.
In response, the Fed, NACHA, and private institutions have begun to find ways, together and separately, to modernize the US payments system in order to increase convenience and catch up to many of the country’s trade partners. The Fed has formed a task force, which will resolve potential solutions, while NACHA and private institutions are pushing banks to hit a set of three same-day settlement deadlines through late 2016 and into 2017. Such a system will particularly benefit high-growth spaces in the electronic payments ecosystem, like P2P and B2B payments, which could magnify its impact over time.
Though it’s likely the system could grow ACH volume by making it a more appealing option in these high-growth areas, it could become a hindrance to banks. That’s because the implementation is costly and time-consuming — the Fed find that the business impact is net-neutral to negative for these firms. Instead, the parties that reap these benefits are providers of services in these high growth areas, like mobile bill pay firms or P2P vendors, which means that banks are actually aiding their competitors. That means that Faster Payments could ultimately enhance the impact of digital disruption in the payments ecosystem, rather than mitigate it.
Jaime Toplin, research associate for BI Intelligence, Business Insider’s premium research service, has compiled a detailed report on faster payments that looks at why the US needs a Faster Payments system, explains how the country plans to implement it, evaluates the different areas that are most likely to be impacted by Faster Payments, and determines which parties benefit from such a system and which are hindered by it.
Here are some key takeaways from the report:
Sluggish settlement of payments in the US is pushing NACHA, the national electronic payments trade group, and the Federal Reserve to reform the system. US payments made via ACH can take three to five days to settle.The Fed's Faster Payments Task Force and NACHA are looking to implement a same-day settlement program in the US by 2017 in order to increase consumer convenience.
The number of transactions affected by faster payments will increase over time.Four key areas — P2P, B2B, C2B, and B2C payments — will gain the most from such a system. And these areas, which comprised 12% of US payments volume in 2014, will grow rapidly over time, therefore magnifying the impact of such a system.
Faster payments implementation will be a mixed bag for banks, because of additional costs associated with the burden of implementation. And the platform is likely to actually boost third-party providers, like P2P app vendors or mobile bill pay firms, by giving them an easy way to increase efficiency, engagement, and volume, without a substantial rise in transaction costs.
In full, the report:
Explains how the US payments system works and why it needs to be modernized
Defines Faster Payments and lays out how the country plans to implement such a system
Explores different high-growth areas in the payments ecosystem and the impact Faster Payments could have on them
Evaluates whether or not such a system will be useful for banks and financial institutions
Determines the beneficiaries of Faster Payments and the impact it may have
Interested in getting the full report? Here are two ways to access it:
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