"There’s a part of me that looks at what’s going on in the industry and thinks, ‘We are inventing so much new technology so quickly on a historical time scale, but human behavior – that is, the way people relate to their money and the caution they exercise in using it – hasn’t really changed that much in a million years.’"
That’s Sam Shrauger, Senior Vice President of Digital Solutions at Visa, discussing mobile wallets and the approach he’s taking to the adaptation of Visa’s products and solutions for today’s digital and mobile consumer.
Of the mobile payments “tipping point” he says: “It’s only out one, in the top of the first inning.”
Of a game that’s likely to go into extra innings.
Shrauger, a former PayPal executive, has the online payments chops to back up his assertions. He remembers eight years ago or so, when eCommerce began to emerge as a viable channel for consumers and merchants. Yet here we are, he contends, still talking about the same frictions associated with transacting online, but with one big addition to the conversation: Mobile, and its influence on how online commerce is happening today and will likely evolve.
"I think it’s just a matter of time before people will become comfortable conducting a payment transaction with a mobile device,” says Shrauger, adding that the technology can be built quickly, but it takes time for the average consumer’s comfort level to adapt.
Shrauger is leading the group at Visa that created Visa Checkout, the digital payments solution that he says offers consumers the best shot at getting “comfortable” with making payments online and on mobile devices. Why? Because it doesn’t ask them to deviate all that much from what they are accustomed to doing already.
Checkout launched in July of 2015, replacing V.me – Visa’s 2012 entry into the mobile wallet horse race. Checkout enables a consumer to take any network branded card and register it to their Visa Checkout account and then transact online anywhere it is accepted in, more or less, one click. Whether it’s mobile Web, mobile app, or traditional desktop browser, “that’s the universe we’re targeting,” explains Shrauger, “because that’s really where the payment problem is.” Like the Visa-branded plastic card, Shrauger says that Checkout is just another form factor of that same card for consumers to use when shopping.
"I think one of the most challenging things in online payments…historically has been the consumer understanding of the value proposition of a digital wallet solution,” Shrauger offers. “When you get a consumer in a room — even the most technically savvy ones — and say, ‘How would you like a digital wallet?’ And they’re like, ‘I don’t even know what that means.’"
Shrauger calls that disconnect “a big encumbrance,” and it’s something that heavily influenced Visa’s decision to redesign Visa’s digital experience away from a “wallet” and to something much simpler.
He says that he and the Visa team looked at the basic reality that everybody has credit cards; everybody knows how they work, what they do, how to use them. So, rather than attempt to undo 50 years’ worth of widespread consumer understanding of Visa products and how they are used, Shrauger and co. instead decided to leverage that understanding and create, as he describes it, a new way to use a card online that’s more efficient.
"Rather than try to reeducate the world about a [mobile] wallet,” he continues, “and try to get [consumers] to put everything they have in their physical wallets today — including loyalty and offers, essentially turning the digital product into the equivalent of a mailbox full of coupons — we decided to take a step back to create a simpler, cleaner solution."
With “simple” being the operative word, or, as Shrauger describes it, the digital equivalent of a “card swipe online.”
"The fundamental problem consumers have with payment online is it’s hard. And it could be a lot simpler. We felt that if Visa could take the friction out of payments the same way we did in the physical world, all the same benefits should accrue to the merchant: higher purchase conversion, higher sales, new customers to file."
UNDERSTANDING CONSUMER BEHAVIOR
In the process of building the new Checkout, Visa also took into account something else that they felt consumers also valued: their connection not just to the familiar Visa logo, which Shrauger says consumers often associate with attributes like security and trust, but also the way the card looks, or the bank’s “card art.” A brand that consumers also relate to and which today appears prominently on the physical, plastic card that they carry around today in their leather wallets.
So, Visa found it to be “a pretty natural” conclusion that one of the best things it could do to help consumers understand the product and the value proposition is to not just put the Visa brand in front of them, but to actually put the card art in front of them, “because that’s the thing that they recognize,” as Shrauger puts it.
"We all know,” says Shrauger, “whether we know it or not, when we go to checkout, that little image of the card is dancing around in the back of our head somewhere, saying, ‘This is how you’re going to pay.’"
EVERYWHERE CONSUMERS WANT VISA TO BE
A year or so since its launch, Shrauger says that Visa Checkout is at a “critical point” in its merchant acceptance — which they don’t characterize by the numbers of merchants, but rather how much spend they control. “Eighty-plus percent of the eCommerce spend is happening at [something like] a thousand or fewer retailers. Our focus has been on the top of the pyramid, and I think you can see that in the portfolio of the merchants that we’ve signed up,” said Shrauger, adding that many more of them are “in the pipeline."
And the results, he said, are “undeniably impressive.” In a study conducted with comScore and based on observed consumer behavior, Checkout converts at a rate “much higher” than card on file solutions and many of the most popular alternatives, he said, including PayPal.
“Our existing user conversion rate is quite honestly the highest that I’ve seen in my time in the industry,” Shrauger noted.
Looking to the future, Shrauger, for his part, is very confident about Visa’s prospects to add value to the digital payments experience.
"We’re in the very, very early stages,” he reiterates. “Like anything else, it’ll take time to play out. But there’s a real problem that needs solving. We’re there very early, and I think that as the online-to-mobile channel shift continues, that’s going to be very beneficial for us and our growth."
A fact that Shrauger acknowledges, suggesting that, like any other change, it will likely take a little time for consumers to get into the groove.
"We have a lot of people now who are very comfortable living in that world [of immersive online payments],” he goes on to say, “and if given the choice to not have to carry a wallet, would probably do it. But, certainly not everyone."
As all students of emerging technologies – especially in payments – recognize, there’s a wide expanse between the early adopters and ubiquity, and a veritable wasteland littered with the remnants of technologies that failed to complete the journey. A journey that requires scale to move the needle in any meaningful way.
And it’s a journey that Shrauger says that Visa Checkout is comfortably traveling, one that has a growing merchant and consumer adoption as well as a lot of new features and functions on the roadmap.
"Visa is and always has been absolutely central to the payment process, in every channel. That’s not changing. With Visa Checkout, we’re just making it easier and smarter for people to pay with the cards they already know and love."