In August, I wrote about Visa developing a free “online shopping tool” called Rightcliq:
[Visa] decided they were in the business of making shopping better. Just because the “digital product” isn’t a credit card doesn’t mean it isn’t central to their business.
Pair that with the news that AT&T and Verizon are partnering – mortal enemies that they are – to replace credit cards with smart phones, and you get a better picture of what’s going on.
Visa has presumably looked to Japan, where mobile commerce has already created a “digital wallet”, as the inevitable future of mobile in the United States. According to a June 7 study by Mercatus LLC, a Boston-based consulting firm:
More than half of U.S. consumers, and almost 80 percent of those between the ages of 18 and 34, will use mobile financial services within five years.
Instead of limiting their vision to their competitors for selling credit cards, Visa is aware of their competition for being the “middleman” of shopping. The threats are not limited to their traditional competitive set.
But neither are their opportunities limited to their traditional markets. To me, understanding the implications of this digital behavior is the essence of embracing a digital strategy.
The scale of these businesses is nearly unimaginable. Ignoring the trillions of dollars collected in fees for consumer debt, interchange fees alone – the small percentage of each transaction paid to the credit card company – exceeds $40 billion a year.
To wit, Visa’s annual operating income has grown sixfold since fiscal 2005 to $3.54 billion last year. But Visa is getting ready for the future today, recent success with credit cards be damned.