Visa MD cool on banks’ bid to battle Revolut

New money-transfer apps shouldn’t be “a solution looking for a problem” and must solve unmet consumer needs.

That’s according to Mandy Lamb, Visa UK and Ireland managing director, when asked whether an app being developed by a consortium of traditional Irish banks to challenge Revolut’s dominance in the fintech market will prove successful.

AIB, Permanent TSB, Bank of Ireland and KBC Ireland set up Synch Payments in 2020. Their plan was to create a mobile app that could allow consumers instantly send money to friends, family and businesses without needing an international bank account number (Iban) or card number.

The mobile payments service will be available to customers of banks and other financial institutions. However, Revolut (which has more than 2m customers in Ireland) and smaller rivals N26 and Bunq already do far more than just allow instant payments.

Synch ran into competition concerns by early 2021, after the banks notified the Competition and Consumer Protection Commission (CCPC) of their plans. In response to the watchdog’s concerns, the banks agreed to make several binding commitments to the CCPC, and the venture won CCPC approval in June 2022.

Objections to the banking joint venture had been lodged by the Electronic Money Association, whose members include Stripe, Revolut and PayPal.

Mandy Lamb said that while she didn’t have a “predefined view of whether Synch will be successful or not, we’ve seen bank-backed wallets rolled out across the world with varying degrees of success.

“They’re usually only successful when they are solving a consumer need,” she said. “It can’t be a solution looking for a problem.

“I don’t know where the business case [for the Synch app] is going, but it’s important that it is an unmet need or use case that is solved.”

Revolut is one of the users in Ireland of the Visa Direct technology, which allows people and businesses to send payments around the world in real time, Lamb said.

“There are a lot of remittances to and from Ireland, and Visa Direct is growing really nicely in Ireland,” she said, though declined to quantify its growth.

“You can move money from any source, like cash or debit. It’s got many, many use cases, such as doing business payouts – like Uber paying money to its drivers at the end of the day. The gig economy is a classic example of its use.”

Visa is also partnering with Irish banks on “more exciting technologies coming down the pipeline” to meet the needs and demands of consumers.

​Lamb said Visa aims to provide “as much protection in the digital environment” to the expanding number of consumers using digital payments to shop online – a trend accelerated by the pandemic – as they have using chip-and-pin technology.

Almost €17.9bn was spent using contactless methods last year. That’s up almost a third from 2021, according to the Banking and Payments Federation Ireland’s (BPFI) payments monitor. Indeed, the volume of contactless payments carried out each year has more than doubled over the past four years, to 1.1bn transactions.

However, the number of scams doing the rounds in Ireland is also constantly growing – and Visa is mindful of the need to ensure consumer confidence in digital payments isn’t eroded further. Visa is using AI and machine learning to be more “predictive” about trends in fraud.

“Fraudsters are getting highly sophisticated, and we have to remain a couple of steps ahead,” she said.

She cited Visa’s token service, which replaces 16-digit Visa account numbers with a token that only Visa can unlock. The security technology gives consumers access to frictionless, card-free payments. In August, Visa said it had issued more than 4bn network tokens worldwide, surpassing the use of physical cards in circulation.

“Tokens are the quiet heroes in the background when comes to online shopping,” Lamb said. “It’s powerful. You wouldn’t really know it as a consumer, but all your sensitive data is taken out of the experience.”

Lamb was speaking ahead of the launch on Wednesday of Visa’s She’s Next grant programme, which supports female entrepreneurs to grow their business by offering five €10,000 grants, and one year’s worth of business coaching.

The payments giant is bringing the programme to Ireland for a third year.

Research commissioned by Visa found that while 98pc of male owners of small businesses in Ireland were optimistic about the future of their business, the figure was 87pc for female entrepreneurs.

Of men, 43pc see “marketing and lead generation” as their biggest challenge, but 47pc of female entrepreneurs cited “access to capital”.

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