Visa Seeks to Extend Retail Dominance with Pay-with-iPhone Service

Visa made waves this week by announcing a collaboration with DeviceFidelity, which makes an iPhone case called In2Pay with a near- field communications microSD card embedded in it that will allow iPhone users whose devices lack a microSD card to get in on the action.

To pay at any of Visas swipe-free payWave payment terminals, already found at over 32,000 retailers nationwide, all you would need to do is tap an app in your DeviceFidelity-encased 3G or 3GS iPhone and wave it over the terminal. Retailers like the system because it saves them time on each transaction, according to Visa.

Apparently, swiping a credit or debit card simply takes too long.

Mobile payment is fast becoming a red-hot sector. Square, from Twitter co-founder Jack Dorsey, which allows small businesses to accept credit card payments using an iPhone. Meanwhile, eBays Paypal allows customers to pay in stores using a simple smartphone app no chip required.

DeviceFidelity announced a microSD card version of this system in March, but the iPhone lacks the requisite slot. This In2Pay case adds room for the slot, allowing DeviceFidelitys microSD card to be used with the iPhone, also adding a micro USB slot for charging the iPhone and, according to the company, syncing it to a computer without Apples proprietary cable. DeviceFidelity expects (.pdf) to begin trials of the device and service this summer.

Visa is working to bring the security and convenience of digital currency to mobile users around the world, said Visa head of mobile contactless payments Dave Wentker in a statement. Our collaboration with DeviceFidelity can extend the reach of Visa mobile payments to millions of iPhone users.

With this move, Visa seeks to maintain its strong position in the credit and debit payment system, from which it extracts fees from retailers, who pay Visa about 30 cents when you enter in a PIN code or 75 cents when you sign a debit receipt. Under its payWave system, Visa requires a signature for any purchase over $25. When it comes to these iPhone payments, the fees will be set by banks.

Pricing of the mobile payment services will be determined by the financial institutions, confirmed Visa spokeswoman Carolyn Chiang. Depending on the institution, users could pay transaction fees, enrollment fees, and/or annual fees for paying by iPhone, the same way they do with Visa payWave.