Bank of America (NYSE:BAC) continues to mount its attack on technology firms with the bank offering its online banking customers access to Visa’s (NYSE:V) V.me digital wallet service.  The announcement comes within a fortnight of the bank launching its Mobile Pay on Demand service to offer small businesses a cheap, mobile-based payment solution (see BofA Is Sick Of Square, Rolls Out New Mobile Payment System). It is no coincidence that V.me and Mobile Pay on Demand compete with similar offerings by the same set of technology giants - Google (NASDAQ:GOOG) and PayPal among others – as financial firms are keen on battling it out to grab their share of the growing payments market. V.me boasts of support from more than 50 financial institutions across the country, including U.S. Bank (NYSE:USB) and PNC (NYSE:PNC). 
We stick to our $9.80 price estimate for Bank of America’s stock, which is in-line with current market prices.
The Online Payments Industry Is Huge, And Growing Fast
The Advanced Payments Report 2011 published by Edgar Dunn & Co. estimates the combined size of global online, contactless and mobile payment systems to be $976 billion for 2012.  Online payments contribute to well over 95% of this figure, representing a near-trillion dollar industry currently. But it is the promising growth prospects that continues to attract small and big players, as the market size is expected to more than double within four years. The report estimates that online payments will swell to almost $2.1 by 2016 – with online commerce being solely responsible for this boom.
This Is Where Innovation Comes In
The scope afforded by the industry has brought in key technology players who have seen ready acceptance by customers for their offerings like digital wallets and secure check-outs. These services, like Google Wallet, provide customers with convenient payment options while significantly alleviating their fears of fraud and identity theft which online card usage is prone to.
This prompted Visa to come up with its V.me service which simplifies online payments by removing the need to constantly enter card details or address information. The payment system continued beta testing for nearly a year, and is now gaining acceptance among banks and e-merchants largely due to Visa’s reputation.
Bank of America is the first among the U.S. banking giants to embrace V.me, which it is piloting to its online banking customers. The bank is expected to expand the offering to all customers over time. The decision should help raise the bank’s card fee income captured in the chart below, as V.me is essentially a more convenient way for the bank’s customers to use their Visa-branded cards online.Notes:
- Bank of America® Piloting V.me by Visa to Online Banking Customers, Visa Press Releases, Nov 28 2012 [↩]
- More than 50 Financial Institutions Adopt V.me by Visa, Simplifying Online Holiday Shopping, Visa Press Releases, Nov 13 2012 [↩]
- Advanced Payments Report 2011 [↩]