Visa Inc. attracted 50 banks and credit unions to its V.me digital wallet by offering a system that did not distance issuers from customer relationships and transaction data. But does the wallet hold the same appeal for the merchants that accept it?
Visa now has 25 merchant partners accepting V.me, which allows consumers to make e-commerce payments from a pre-enrolled credit or debit card (including non-Visa cards) by typing a username and password at a merchant's site. Visa's newest partners are the daily-deals site LivingSocial.com and the computer hardware seller Newegg.com, which both announced their participation this week.
Visa's other partners are seeing some early signs of success with the digital wallet. ZooStores.com, which aggregates specialty items from 250 stores, launched V.me Sept. 28. That day, 10 consumers signed up for the service at ZooStores.com, says CEO Nikhil Behl.
"This shows that people recognize the Visa brand and are willing to accept it and use it," he says. Merchants like ZooStores.com "get the word out and let consumers know it's not just a consumer-driven adoption but a retailer driven adoption," Behl adds.
Merchants, which have helped Visa test V.me for months before banks started enrolling consumers, are a driving force for V.me adoption, says Tricia Phillips, V.me's senior business leader for product design and strategic solutions. "We're getting the most adoption through that," she adds, though she would not provide specific consumer enrollment numbers.
Another V.me merchant, StudentUniverse.com, offers students daily deals mostly for discounted travel.
Transactions using V.me on StudentUniverse are growing slowly, says Atle Skalleberg, CEO of Student Universe. Skalleberg expects more use in the upcoming months, when Visa puts more promotional muscle behind V.me and consumers learn of the system's benefits by using it across devices.
StudentUniverse targets young adults 18 to 27-years-old, who Skalleberg says are early adopters interested in innovative and convenient technologies.
"Needless to say [Visa] is a big name, a trusted name, and they have a big grow-out plan," Skalleberg says. "We wanted to be a part of that at an early stage. It's a good fit for our target audience."
Other V.me merchants LivingSocial, Newegg, Buy.com, Cooking.com, 1-800-Flowers.com, MovieTickets.com and BlueNile either did not respond to interview requests or did not provide an executive by deadline.
Visa chose to partner with e-commerce merchants such as these because of their commitment to innovation and their work on cross-channel payments, Phillips says.
Newegg, for example, is "on the cutting edge on technology," she says.
Visa's early success with V.me can be attributed to the card network's brand recognition among consumers, says Todd Ablowitz, president of Double Diamond Group LLC of Denver, Colo.
"Visa has a tremendous position in the marketplace so with the No. 1 position in the card business everyone takes notice when they do something," he says.
But, Ablowitz says, Visa's challenge will be educating consumers and making sure they understand other card brands MasterCard, American Express and Discover can be loaded into its wallet as well.
V.me wallets already have a healthy population of non-Visa cards, Phillips says.
Visa, with its existing market penetration, stands a chance at gaining prominence over competitors, says Ablowitz.
Digital wallets "will be the ubiquitous way people are paying online," he says. V.me "will be one of the prominent wallets."
Zilvinas Bareisis, senior analyst at Celent, says V.me has promise but its long-term fate is unclear.
"Consumer responsiveness and merchant take-up of new wallets, such as V.me, is yet to be tested in earnest," he says. "But the proposition makes a lot of sense and is attractive to both parties."