The world's largest credit card network is ready to replace plastic with silicon.
Visa International says it will make purchases by cellphones commonplace in the next few years, thanks to a collection of technology it rolled out Monday.
The company's decision to throw its weight behind a concept that has been around for nearly a decade comes as the use of smart phones is exploding.
"Clearly what is happening in the world of handsets is very germane to our business," said Patrick Gauthier, a senior vice-president for Visa. "It was very important that we start to step up."
Visa hopes to turn hundreds of millions of cellphones into electronic wallets that are simply swiped in front of a merchant's scanner to complete a transaction. This form of "contactless" payment won't require a signature or a personal identification number, but will be limited to purchases of $25 or less, Mr. Gauthier said.
A second form of mobile phone payment that Visa hopes to test is transactions between individuals. How such deals would be authenticated remains to be worked out by the card issuers, but they could be much bigger transactions than the contactless ones, he said.
The platform of software and security systems, which Visa rolled out at the Consumer Electronics Show in Las Vegas Monday, is meant to help banks and mobile phone companies around the world start market trials almost immediately.
The technology includes a special chip that will be built into cellphones. Visa has been working with Nokia Corp., the world's largest handset maker, to develop the platform. It has also partnered with IBM Corp., VeriSign and NXP Semiconductors.
Visa expects about $140-billion (U.S.) worth of the transactions it processes will be done with cellphones by 2010. As large as that amount is, it would represent just a fraction of Visa's $4-trillion worth of transactions each year.
Other trials of mobile payments using cellphones are going on around the world, especially in Japan. But they involve a variety of third parties, including Visa. This latest announcement is a more co-ordinated and deliberate strategy, said Dave Wentker, vice-president of Visa's mobile innovation initiative.
Visa has held discussions with Canada's banks and phone companies, which are expected to participate in the trials. The company considers Canada a more advanced market for selling electronic services than the U.S. About 8 per cent of Canadian transactions handled by Visa are e-commerce, said Mike Bradley, vice-president of products in Canada.
Visa's effort to standardize mobile electronic payments comes as several much smaller players have already ventured into the territory. Last year, for example, eBay Inc.'s PayPal unit launched PayPal Mobile, a service that lets consumers buy items from a small group of retailers by entering a short code on their cellphones.
