Visa tests tech that turns smartphones into point-of-sale terminals

Visa is bringing technology to the U.S. that turns merchants’ smartphones into contactless payment systems. The first users will be Black small-business owners in Washington, D.C.

Tap to Phone has launched in 30 countries since October. Small-business owners can download an app via Google Play on an eligible Android device. The app will turn a smartphone into a point-of-sale acceptance device that customers can tap with a contactless card or pay via their mobile wallets.

“We were working on this for several years in multiple countries and felt like it was the right time to bring it to the U.S. to address some of the challenges independent businesses had related to recovery from the pandemic,” said Mary Kay Bowman, global head of buyer and seller solutions at Visa.

“Customers are saying they will continue to want more expedited touch-free checkout in-store, even after the pandemic,” said Mary Kay Bowman, global head of buyer and seller solutions at Visa.

Banks that provide payment technology to merchants have a role to play in this scheme. Tap to Phone requires a bank merchant acquirer to enable acceptance. Banks can also create their own Tap to Phone app with Visa specifications or work with one of 22 Visa Ready for Tap to Phone solution partners to implement the capability in the app.

This system builds on the fact that contactless payments are becoming more popular. On Visa’s most recent earnings call, Chief Executive Alfred Kelly stated that in the U.S., one in 10 face-to-face Visa transactions are now done with a tap, more than twice as many as at the beginning of the pandemic. The system is said toaccommodate the realities of small businesses, which typically don’t have big information technology departments or the budget to buy expensive hardware and may have otherwise been limited to accepting cash or checks.

“Businesses have changed the way they support checkout,” said Bowman. “Customers are saying they will continue to want more expedited touch-free checkout in-store, even after the pandemic. We hear from sellers that these changes are here to stay.”

Visa’s Black Women-Owned Business Report found that 35% of entrepreneurs surveyed in Washington would invest in more technology if they had additional funding, while 31% would opt for new products and services.

While Visa provides the underlying program, it relies on partners to operate the entire experience. In the U.S., the first device that will operate the Tap to Phone software is the Z1 from the smartphone provider ZmBIZI, which Visa will initially provide to 50 Black-owned small businesses in Washington. The software company Global Payments will process payments.

The ZmBIZI Z1 comes preloaded with a number of apps beyond the Tap to Phone software, including a visual search feature, file-sharing and business tools, and is sold unlocked directly to consumers. Visa says its goal is to make Tap to Phone available to whomever may want to use it, however they may want to. It is available on Android devices in other countries with near-field communication technology that reads the encrypted data embedded in customer mobile wallets and other devices.

This campaign to bring Tap to Phone to small businesses in the U.S. will continue in five cities after Washington: Atlanta, Chicago, Detroit, Los Angeles and Miami. But Visa is starting this initiative in Washington because it has the highest percentage of Black-owned businesses in the U.S., according to the small-business finance website Fundera.

Beyond equipping small businesses with a ZmBIZI Z1 device, Visa separately awarded 60 Black women entrepreneurs, 10 per city in its campaign, with $10,000 a year of coaching through the funding marketplace IFundWomen and offers from Visa partners such as Intuit QuickBooks, financial software Finagraph and accounts receivable software company Invoiced. Finally, Visa distributed 500 “commerce in a box” kits around Washington, which include offers and discounts from Visa partners, a $25 prepaid Visa card and a wireless charger.

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