Visa‘s appointment of industry veteran Bill Gajda is an important signal, but structural challenges to innovation will have to be addressed.
Ever since its Initial Public Offering prospectus Visa Inc. (NYSE:V) has made no mystery of the importance it thought mobile payments would have in its future. Yet, judging from its press releases over the last 18 months, the company was struggling to define and implement a vision of why and how. Interestingly, the only significant allocation of resource to mobile payments came from Visa Europe, which announced earlier this month its intention to invest 200 million Euros.
Far from me to belittle the efforts of the payment leader who finds itself caught in a classic innovator’s dilemma. In general mobile innovation – not unlike web innovation ten years ago – had to start out of the mainstream payment industry, as was demonstrated by the likes of Paypal, the GSMA, Nokia, Obopay, Monitise, and, as recently reported by the NFC Times by top telecom operators.
The appointment of Bill Gajda marks a turn. It echoes the realization of the importance of mobile in the delivery of mainstream consumer services and highlights the importance of building business innovation more so than developing technology and pilots. I worked with Bill during my tenure at Visa and do believe his recruitment is a coup. Having been a force behind the GSMA’s NFC and mobile money transfer initiatives, Bill brings a global perspective, a wealth of experiences and contacts, and the ability to open meaningful discussions with the executive suites of operators around the world. Furthermore, with the very structure of the GSMA mirroring that of Visa prior to its IPO, he should adapt rapidly to the culture of the organization, a critical success factor when trying to sell new ideas.
However, we shouldn’t underestimate the challenges that he will have to face. Just considering the following should have anyone applaud Bill’s courage:
> Visa, like MasterCard, makes a significant portion of its revenue through branding and transaction switching fees. Not so long ago the position of the brand on the front or the back of the card was a cardinal issue, and, Visa and FDC fought a legal battle over transaction processing rules. Yet in the mobile world the brand will have to co-exist with the equally powerful marks of the handset makers and the operators. Furthermore in an IP driven data infrastructure the very role of the network will evolve from switching to value add services.
> The payment industry’s culture is steeped in the notion of “the card”, as demonstrated by the “Card not present” denomination for e-commerce transactions. With handsets such as the iPhone, or the Droid embodying the electronic wallet of the future, many business processes have to be re-invented.
> The telecommunications industry has been far more adept at rolling out new infrastructure and services than the payment industry, as proven by the four generations of mobile technology deployed in the time payments technology was partially upgraded to chip. Energizing and motivating Issuers and Acquirers to move at a different pace is a formidable task in of itself.
> Mobile innovation was unleashed by the likes of Apple and Google, yet, possibly with the exception of PayPal and its new open platform, no such catalyst has occurred in the payments industry which is deriving much of its continued success from deploying more acceptance along with more debit and prepaid products.
Operators, handset providers, payment networks and banks, will all play a crucial role in the advent of mobile commerce. Bill has the diplomatic skills and the industry experience to bridge their differences and propel Visa forward. I wish him the best all the while looking for a spandex suit with a big “B” upfront. Now the question is, what will MasterCard and American Express do?
Patrick Gauthier, is a senior payment industry executive with 20 years of experience in developing, selling and deploying new technologies for payment and commerce, on a international basis, in private and public companies ranging from start-ups to global organizations. Patrick is a former Visa employee and a current shareholder of Visa.