How Visa wants to turn your debit card into your credit card

By Emily Bary

Emerging Visa technology envisions a world where a single credential unlocks the ability to purchase through debit, credit and more

The wallet of the future could be a lot lighter.

Right now, consumers pack all sorts of debit and credit cards, but newly emerging Visa Inc. (V) technology could enhance what each card is able to do. Specifically, the company envisions a world where a single credential unlocks the ability to purchase through debit and credit, among other options.

In this system, banks would issue a "flexible" credential to cardholders, and users would be able to set their preferences on their mobile-banking apps. For instance, they could choose for payment amounts under a certain level to be funded by debit or for those at a specific type of merchant to go through credit. There could also be options to pay in installments or with points.

"We think there's a way to kind of modernize this credential by simply having a credential card that can do all of those things," Mark Nelsen, Visa's global head of consumer payments, said in an interview.

The technology is already in place in the Asia-Pacific region, where one bank has rolled it out to more than 2 million customers with "really compelling results," according to Nelsen. Visa plans to launch with a U.S. client later in 2024 and then work to "deploy this at scale over the next year or two."

One critical component of the technology is that it's set up to work within a given bank, not with a debit credential issued by one institution and a credit credential issued by another. There are still various components that need to be worked out, such as what banks should do about legacy cardholders who already have debit and credit credentials at a particular bank.

For financial institutions, who are Visa's customers, flexible credentials are "a way to start to extend your relationship with your clients at a bank level," Nelsen said.

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Visa unveiled other technologies at its payments forum Wednesday, including enhanced options for biometrics. Shoppers with iPhones are perhaps used to authenticating Apple Pay payments through facial recognition, "but it's only on an Apple device on Apple Pay merchants and that's a small number of transactions" on a relative basis, Nelsen said.

The new technology will make it so people can choose in their banking apps to use a biometric passkey for payments in any browser and authenticate transactions that way. The option will be embedded in Visa's Click to Pay offering so that once users activate a card, they won't have to manually input a credential to pay with it.

Other eventual features include new ways to conduct tap payments. The vision is for consumers ultimately to be able to tap phones with one another to exchange peer-to-peer payments, for example.

See also: Visa, Mastercard agree to lower credit-card fees in landmark merchant settlement

-Emily Bary

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05-15-24 1711ET

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