Visa goes all P2P in US

Americans with Visa cards will soon be able to transfer money to any other Visa account worldwide, just by entering the amount, the recipient's card number and an email address.

The service isn't unprecedented - Visa already offers something similar in several countries. However, the US roll-out has the scale and branding to change the way customers think about credit cards, and squish the upstart competition which had the insolence to try and step into international money transfer market.

Visa's service will be fronted by CashEdge and Fiserv, though, both of which already offer more limited financial transfer services. They will provide competing brands through which users can manage transfers to any Visa card in the world just by entering the card number along with a mobile phone number or email address.

That arrangement is important as it shows how Visa still sees itself providing enabling technologies to others, rather than a brand with which customers interact directly. The new service might change how customers use credit cards, but it won't change the value chain.

Money transfer services have been popping up all over the world, often linked to mobile telephony or even run by mobile operators. The killer app is migrant workers sending money back home, but the service could be valuable to anyone who's ever given money to anyone else - from a child's allowance to lending a mate a tenner for the next round, P2P transfers are an essential part of any system that hopes to reduce the use of cash.

Such services are open to abuse in the form of money laundering and tax avoidance as much as fraud, but the threat can be reduced by recording the travels of every virtual penny and capping the amounts that can be transferred. To what extent Visa's partners will cap transfers, and the critical issue of how much the companies will charge for every transaction, remain to be seen.

Current users of the Popmoney service from CashEdge might pay $1 per transaction, depending on the bank through which they access the service, and the rates will no doubt vary between suppliers (with Visa collecting an undisclosed fee in the background).

Whether that's cheap enough to get normal people to give up cash is open to debate, but it will make payments by electronic transfer standard practice - the first step towards getting rid of the metal slices and bits of paper we all carry around these days. ®