New Visa Merchant Service Solves Problem of Updating Payment Card Information; Visa Account Updater Strengthens Merchants' Customer Retention Efforts

Business Wire, June 18, 2003

Business Editors

SAN FRANCISCO--(BUSINESS WIRE)--June 18, 2003

Visa USA today announced the availability of Visa Account Updater (VAU), a new service for merchants that will automate the process of updating their customers' Visa card information. The service increases customer retention by reducing disruptions of the payment process that result from outdated account information thereby increasing approved card transactions. For merchants that bill customers on a recurring basis or that retain Visa payment card data "on-file," the service will greatly reduce the manual process of maintaining up-to-date cardholder information.

Visa Account Updater can be used by online retailers, car rental and hotel preferred customer programs, and recurring bill providers such as Internet Service Providers, cable TV, cellular phone, and insurance providers. Due to the convenience over checks, consumers made $140 billion in Visa card transactions at account-on-file merchants and recurring bill providers last year. Visa USA's volume in the recurring bill payments category grew 26 percent last year.

More than 55 percent of Visa cards have account information changes annually due to expiration date changes, closed accounts, card replacements, upgrades to Gold or Platinum, loss or theft, and portfolio acquisitions or mergers. This can be especially problematic for merchants because if they do not have the most current information on file, their transaction authorization requests may be declined. Through VAU, merchants now have a simple proven solution that enables them to provide better service to their customers and experience fewer transaction declines due to incorrect account information.

Consumers doing business with account-on-file merchants will no longer experience the annoyance of interrupted service due to outdated card information. A merchant is less likely to receive a decline message or experience payment delays from banks utilizing VAU.

"Our members expect a high level of service and efficiency as they enjoy AOL's many communities and services, and updating their card information with us should be the furthest thing from their mind," said Steve Holland, Director of Collection Measurements at AOL. "Visa Account Updater has made the task of updating card information quick and simple so that we can focus on our core business and keep our members happy."

"Visa Account Updater is particularly attractive to merchants in the recurring payments segment and provides us with an opportunity to support our merchants and their clients," said Thanassis Mazarakis, president at Chase Merchant Services. "VAU has allowed us to strengthen our merchant relationships by automatically providing them with the most current cardholder information, resulting in reduced cardholder declines due to changed account information."

Issuers and Acquirers Benefit Too

For banks, VAU increases sales volume from the account-on-file merchant segment by facilitating seamless acceptance. Visa estimates that recurring bill providers alone represent approximately $800 billion in total billing volume. By providing a simple solution to the problem of updating account information, VAU helps issuing and acquiring banks access this large market opportunity and replace consumer usage of checks and cash.

"Customer retention is a high priority for both banks and merchants. When a credit or debit card is declined during the purchase process, the consumer will often provide a different card and may even stop using that card altogether," said Laura DiGioacchino, vice president of Acceptance at Visa USA. "Similarly, from the merchant's perspective, if the customer is inconvenienced, he or she may cancel the transaction, or terminate the relationship completely. For banks and merchants, this means lost revenue. Visa issuers and merchants share common customers, and VAU creates a win-win situation by enabling both to better serve the customers in their respective portfolios."

"We are pleased with the benefits that Visa Account Updater provides to our customers," said Dean Nolan, senior vice president of emerging payments at Bank of America. "By securely and automatically updating card-account information with merchants, the service not only helps our customers pay their bills on time, but also helps them preserve the continuity of the products and services that they rely on everyday."

VAU has been devised in compliance with consumer privacy regulations, to help consumers maintain account relationships with trusted merchants. Cardholder information is only provided to merchants with whom consumers have provided their account information as part of their relationship.

Fifteen issuing and acquiring banks and 40 merchants participated in the pilot program for VAU. VAU will be rolled out to additional banks and merchants throughout 2003.

Connecting with Visa Account Updater

VAU is a software product consisting of a Visa-managed database of account information, daily file updates from issuers, and a daily match/response processing function to merchant inquiry files. Banks can connect to VAU via Visa Direct Exchange, an Internet-based network that is part of VisaNet, the world's largest private financial payments system. VAU does not interfere with a bank's normal payment processing routines. It runs on a dedicated in-house server at Visa's central processing facility. Visa's Direct Exchange enables banks to provide consumers and merchants with highly reliable and secure payment information transmission, ensuring the highest levels of privacy for this critical data.