Credit card giant Visa is negotiating with New Zealand’s major merchant groups in search of partners for a trial of its Java-based Visa Cash stored-value cards.
A trial date will not be announced until later this year at the earliest, but Visa’s Sydney-based spokesman, Daniel Jeffares, says current discussions have “a good chance of resulting in a very large proportion of New Zealanders carrying a stored-value card within the next couple of years”.
Visa’s merchant-driven plan is quite different from the bank-based Mondex system, which is currently in an 800-cardholder internal trial here. The plan is to launch with disposable, non-reloadable cards in close association with one or two national merchants. Visa would seek to build consumer and merchant acceptance of stored value cards (SVCs) before offering the bank-issued reloadable version of its cards.
“We’re talking to a number of merchant groups and what we’re looking for is a merchant group that has the market power to put a card in the wallets of a large number of New Zealand consumers, for a single purpose that we can then expand to be multi-purpose,” says Jeffares.
“In Sydney, for example, if you were able to get the state rail authority to issue a Visa Cash card as a replacement for its ticketing system, you’d then put a Visa Cash card in a significant portion of Sydneysiders’ wallets.
“Then you’d go to Coca-Cola and McDonalds and say, by the way, one third of the people walking past your shop have one of these cards, would you like to acquire it? You get them on board and before you know it you’re driving consumer acceptance because it’s not only a train ticket, it’s a Coca-Cola vending machine ticket.”
Jeffares says Visa has indeed spoken to McDonalds and Coca-Cola interests in this country, “but that doesn’t mean they are any more or less likely to be the party with whom we ultimately go into a trial.”
Visa’s committment to Java-based card technology also raises an interesting business case, especially as Java and CORBA are drawn closer together. IBM in particular would love to rehabilitate all its old banking iron and ATM hardware by treating mainframe applications as objects under CORBA, and card vendors have begun to swing towards Sun’s JavaCard API.
Visa’s embrace of Java has been approved by its 21,000 member banks. But local banks face the unappealing prospect of running separate back ends for their Visa and Mondex-based Mastercard products if both are launched, something Jeffares admits “was definitely an issue for the banks. They would have preferred to have a single system in this market.”
Mondex has said it will incoporate JavaCard 2.0 into its Multos smartcard operating system, but has given no dates. Such a move would raise further doubts about the ability of Multos to become an industry standard as Mondex has long suggested.
But Jeffares says success for Visa Cash would be good news for Mondex here too, because “if we can put loads of Visa Cash cards into the market that are being used, that’ll drive merchant acceptance, which will then enable the banks to issue reloadable Mondex cards to consumers who want them.
“We’re working very closely with the banks on all this anyway. So it’s looking like there will be Visa Cash cards on the market and I’m sure there will be Mondex cards. They’ll be acquired by the same terminals, and from the consumer’s point of view, it’ll be a matter of brand.”
Jeffares says Visa does believe the greater openess of its card system, which will see chips incorporated into magstriupe cards from early next year will prove decisive. He compares Mondex to the Macintosh and Visa Cash to the IBM-compatible PC.
“What we’re saying is we can’t possibly imagine coming up with applications which will suit everybody. We can’t imagine being the best provider of applications or indeed hardware - let’s just define a specification and allow the free market to compete. That’s the critical difference at the moment.
“In this part of the world we’ve allowed ourselves to become a litytle bit overwhelmed with the Mondex story. The reality is that the chip-magstripe cards which all of the British banks have agreed to issue will be EMV (Europay Mastercard Visa) standard cards, not Mondex chip cards.
“There’s only 17 banks out of more than 20,000 organisations around the world that actually bought equity in the Mondex system. We tended to get overwhelmed by that because there were a few in Australia and New Zealand - and we thought the whole world had gone Mondex.
“The reality is, it’s a fine system, but it’s a proprietary system, that they hoped would become a world standard. It hasn’t, to date. Good luck, but it’s hard work.”