Recently, card processing giant Visa Inc. (V) unveiled an upgraded data security service – Visa Merchant Data Secure. This security service will be knotted with point-to-point encryption (P2PE) technology.
Visa Merchant Data Secure will help the company to deliver a higher level of card data security to acquirers and merchants. The latest service is expected to be launched beginning in 2013.
P2PE technology highly complements the EMV technology and likewise aims to reduce card data fraud as far as possible. This is also a critical requirement at this moment since the card industry solely operates on chip cards that hold all the customer information, while interchanging various hands, such as retailer, merchant and acquirer, before reaching the end source.
Hence, the latest P2PE technology will enhance security by encoding sensitive cardholder information, which can only be decoded and deciphered by Visa as the end acquirer. Moreover, P2PE allows for encryption and decryption at multiple points to ensure a security check wherever required. The new technology will also help the company maintain a strict security protocol, thereby adding an easy and reliant defense mechanism into the payment system.
The Visa Merchant Data Secure initiative is in sync with the company’s strategy of driving growth through increased payment volumes along with a consistent increase in processed transactions. Visa’s innovative payment solutions are also aimed at increasing the company’s brand loyalty while adding an incremental revenue stream. The company is also generating strong cash flow and maintains a healthy capital position.
Overall, Visa is making vigorous attempts to augment its core processing capabilities and maintain its competitive position, primarily against its arch rivals, MasterCard Inc. (MA) and American Express Co. (AXP), in an increasingly complex payments environment, primarily through strategic technology acquisitions and product innovations.
Visa currently retains a Zacks #2 Rank, which translates into a short-term Buy rating, while the long-term recommendation remains Neutral.
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