Card networks’ buy button goes global as competitive threats rise
At a time when many have shifted to digital payments to weather the coronavirus pandemic, the four main U.S. credit card brands are aggressively expanding their own take on digital commerce.
Widely known as Click to Pay, the 'buy button' standard has attracted more than 10,000 U.S. merchants since its launch in 2019. Visa, Mastercard, American Express and Discover chose to forgo distinct branding in favor of a single experience that uses EMVCo’s Secure Remote Commerce (SRC), a standard designed to limit the exposure of payment credentials. That allows consumers to use a universal button to pay instead of entering personal account numbers and other information at checkout.
On Wednesday, the U.S. card brands began technical preparations for international usage of Click to Pay, adding Australia, Brazil, Canada, Hong Kong, Ireland, the U.K. and about a dozen other nations — with numerous others expected to follow given the brands’ goal of universal access.
“Ultimately we would like to have to have Click to Pay that way anywhere where Mastercard is accepted,” said Pablo Fourez, executive vice president of e-commerce solutions at Mastercard. Visa, Amex and Discover did not return requests for comment by deadline.
Other merchant service companies and acquirers will also support Click to Pay, including ACI Worldwide, Blackbaud, Braintree (a unit of PayPal), Global Payments and Square. International partners include Checkout.com, Noon Payments and Wind Cave. The agreements add more industry stakeholders to the initiative, including firms that would have originally been positioned as rivals to the card brands' goal of a single online experience.
These partners will help the card networks scale Click to Pay, and will also provide support such as hosting payment pages for merchants, Fourez said.
“The networks can’t do this alone, and this is where the long and growing list of partners come in,” said Zil Bareisis, a senior analyst at Celent.
The networks’ buy button is designed to address merchant concerns that the card brands or other parties would compete against each other for card not present transactions or to try to use SRC to gain “top of wallet” status. The design addresses this by an even representation of logos, with merchants only displaying logos for the cards they accept. That’s designed to be similar to traditional plastic cards, so most consumers will likely use the card they prefer for e-commerce.
The card brands also moved away from their own digital checkout services, with products such as Visa Checkout giving way to the universal buy button.
There will be challenges to make SRC work across all of the brands involved as the initiative moves beyond the U.S. The network access control server has to recognize cardholders’ ability to participate and quickly determine if the cardholder is already enrolled, according to Tim Sloane, vice president of payments innovation at Mercator Advisory Group. That’s more complicated than the card networks’ 3-D Secure fraud prevention standard, for example, which sends a message to an issuing bank.
The SRC international transaction must take place between the card holder, merchant and access control server, Sloane said. “Maintaining a global list of every card and its status is hard, both from a server technology perspective and from the data management perspective,” Sloane said.
The card brands’ technology partners will provide support on the work needed to integrate stakeholders, Fourez said, adding existing tokenization projects and APIs would be helpful. “It’s quite scalable, and what happens in one market can be leveraged in another,” Fourez said.
The announced expansion of Click to Pay comes a few days after European banks made a renewed push to form their own payments network that’s designed to dilute the influence of the U.S. brands and other large U.S. companies like Facebook and Google.
U.S. brands are also trying to expand into China and India, though they have faced regulatory pushback. Amex recently announced it plans to clear domestic payments in China by the end of the year, and Visa and Mastercard are also pursuing that market.
Other card alternatives such as point of sale credit apps are expanding globally, looking to pick up support from merchants and consumers worried about accumulating revolving debt during the coronavirus-spurred economic downturn. Some point of sale credit firms reported triple-digit percentage jumps this spring as the virus took hold.
"If anything, this should strengthen the [European] banks’ resolve to build an alternative,” Bareisis said. “If SRC becomes widely adopted in Europe it would reinforce the position of existing networks and card rails.”