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Visa's motto may be "More people go with Visa," but when it comes to payments between people, Visa and other major credit card associations are largely absent.
The market for P2P payments is instead dominated by newer players, such as PayPal, which has been around for less than a decade and a half. And more recently, a slew of startups is looking to create new markets and take advantage of untapped niches.
But Visa isn't ceding the market for P2P payments just yet. Yesterday, it announced that it will be "evolving our network capability to make it easier for our account holders to pay one another." In a press release, the company details its new personal payments service, which permits payments to be made from a bank account to a Visa cardholder:
Bank customers of participating financial institutions will have the option to select a Visa account as the destination for funds when making a personal payment. By simply entering the recipient’s 16-digit Visa account, email address or mobile phone number, consumers can send funds directly from their bank account to a recipient’s Visa account.
This makes sending money to a niece for her birthday or to a son in college simpler, faster, and more convenient than before.
This type of capability is already available in many parts of the world outside of the United States, but its introduction in the U.S., arguably Visa's most important market, is big news for the company as commerce evolves well beyond the individual-merchant relationship.
The question for Visa, however, is whether the company is doing too little, too late. PayPal is quite dominant, and upstarts like Square are attracting a lot of attention.
Visa's brand and network are powerful assets, but they may not be enough to help Visa compete effectively. After all, individuals increasingly have flexible means to transfer money and being able to make and receive payments via a credit card may not be ideal when more direct solutions are available.
What's more, Visa's offering won't be available until the end of the year, and it won't be available at every U.S. financial institution.
The challenges Visa is likely to face in the P2P payments market highlights an important lesson for lots of businesses: slow and steady doesn't always win the race.
Had Visa launched a P2P payments solution even several years after PayPal rose to prominence, it still would have had greater opportunity to shape the way consumers think about payments than it does now.
It probably could have evolved the Visa card from a solution for POS payments to a more versatile financial tool, even if it didn't execute flawlessly. But more than a decade after PayPal launched and the internet created a platform for innovative (and not-so-innovative) payment solutions, Visa's new offering is more likely to be too little too late if it hopes to accomplish something big.