Who needs cash? Visa says it will soon allow U.S. consumers to send and receive payments using their Visa credit and debit accounts. Consumers will be able to use plastic to pay each other.
It's not exactly a new concept. PayPal has been doing that for years, though a lot more consumers have Visa cards than PayPal accounts. Also, there are additional steps required for receiving and using the money with PayPal.
The new Visa consumer payments service was made possible through technical enhancements to VisaNet, Visa's global payments processing network, and through the introduction of a new Visa transaction type that allows financial institutions to accept incoming funds.
Visa also said it will work with CashEdge Inc. and Fiserv Inc., two providers of electronic person-to-person payment, account transfer and bill payment services to U.S. financial institutions.
CashEdge and Fiserv will have access to VisaNet, enabling them to integrate the Visa personal payment service into their respective person-to-person platforms - Popmoney and ZashPay. This will allow a participating bank's customers to send money directly to a Visa account.
"For fifty years, Visa has worked to simplify payments at the merchant point of sale; we are now evolving our network capability to make it easier for our account holders to pay one another," said Jim McCarthy, global head of products at Visa Inc. "Through our agreements with Fiserv and CashEdge, we can accelerate the delivery of new and innovative Visa payments services, and better enable financial institutions to extend these services to customers."
If you are a customer of a participating financial institution, you'll have the option to select a Visa account as the destination for funds when making a personal payment. Just by entering the recipient's 16-digit Visa account, email address or mobile phone number, consumers can send funds directly from their bank account to a recipient's Visa account.
Fees not disclosed
In its announcement, Visa did not disclose how much consumers would pay to transfer money to each other. PayPal charges members a fee of three percent to accept credit card purchases. While the new service may be seen as a major challenge to PayPal, that company appears unconcerned.
PayPal's eBay unit issued a statement saying it connects to 57 different financial networks and 15,000 local banks in 190 markets. That, and its head start in the personal payment space, will give it an advantage with consumers, the company said.