How Visa plans to change loyalty programs and online shopping

AI is set to transform the way we shop – with bots able to buy birthday gifts and write cards in the background – while big changes are coming to loyalty programs, Visa says.

Visa exec Antony Cahill says the company is using the potential of AI to expand its business. Picture: Mark Wilson

Artificial intelligence is set to dramatically change the way we shop, with bots running in the background, not just sending birthday reminders but even buying gifts and writing cards, a Visa executive says.

Loyalty programs are set to change too, with Visa supporting the federal government’s crackdown on surcharges – a move industry insiders expect will crimp frequent flyer credit cards.

Antony Cahill – a former executive at ANZ and National Australia Bank who now runs Visa’s value-added services division – said generative AI was rapidly presenting opportunities for buyers and sellers, and reshaping Visa as it pivoted away from being known just as a credit and debit company.

Visa, which is worth $US615bn, has spent $3bn on data and AI in the past decade, and $11bn on technology generally in the past five years.

Antony Cahill is Visa's president of value-added services.

“We’re absolutely a payments and commerce company. A lot of the services we are now offering, particularly in VAS (value-added services), are now what we call multi-scheme,” Mr Cahill said, adding more than third of Visa’s revenue came from VAS.

“So our solutions work not just on Visa but they’ll work on competitor’s schemes … because we can use all that intelligence and expertise we build and start to apply that to those networks. The actual mission of value-added services is to power our clients’ businesses.”

In this respect, Visa can be likened to Amazon Web Services, which was developed for third-party retailers to build their own online stores using Amazon’s technology.

At Visa, this includes offering a suite of products that encompass issuing, acceptance, risk, identity and loyalty programs as well as an advisory service. It also means Visa has to contemplate the future of e-commerce, and this is where generative AI takes centre stage.

“We spend a lot of time on this because we want to ensure that we help our clients. And it’s absolutely possible in coming years that AI will be my own personal assistant that operates in the background,” Mr Cahill said.

“I may have forgotten my daughter’s birthday, and AI will recognise that. AI will scan all my bank accounts and payment records. It will know typically what I’ve been spending for the last four or five years. It will know what I bought my other daughter for her birthday – you don’t want to spend more on the other.

“It’ll know what my daughter likes or scanned or social media posts to see what clothes she likes to wear etc. It would have picked out a garment that she likes in her size. It will have ordered that in the background. It’ll have actually written a note in my handwriting that will be attached to the present. It will select which payment method should be used with the merchant.”

Mr Cahill said this could be done without a customer doing anything.

“In some ways, you just think, wow, could that really happen? There are companies that are working very hard on this right now, and we’re working with a number of those companies to understand how that plays through.

“I think as we continue to change as individuals, as society, thinking about an interaction with technology … if that becomes widely accepted that technology is absolutely coming through.”

Loyalty programs are also ripe for disruption, with frequent flyer credit cards set to be a casualty of the Albanese government “cracking down on unfair and excessive card surcharges”.

The Reserve Bank has opened the door for banning surcharges by 2026, sparking the biggest shake-up of the payments industry in years but potentially crippling a fruitful partnership between the banks and airlines that began more than 30 years ago.

Visa says it doesn’t support surcharges, saying “Australian consumers should not be penalised for choosing to pay in a manner that is a fast, seamless and secure experience for all parties”.

Visa is contemplating the future of eCommerce, where generative AI takes centre stage.

Mr Cahill said loyalty programs were changing to become a more direct relationship between a merchant and a customer, delivering more curated offers.

“There is this question of individuals today, how they feel about their data. When you look at young segments coming through, I think they are certainly increasingly comfortable to share their data.

“And they expect merchants now or the companies that they’re interacting with to know them, to understand them, to put intentionally relevant ideas and opportunities in front of them. If you think about what’s happening with Google as they start to think about using AI – people don’t want to scroll through 400 search results. How do you put the relevant answer, the really relevant answer, in front of somebody?

“The regulatory piece is one thing, and I think that’s clearly having an impact on the economics and so what you’re seeing increasingly now, with these newer loyalty programs, is the merchants say I can see that as a way to actually communicate with customers and to derive the new business.”

Visa has developed its Web3 Loyalty Engagement Solution to help merchants build their own programs. Australian smart receipt platform Slyp has developed a similar product called Go Rewards.

Slyp co-founder Paul Weingarth, who said Go Rewards allowed loyalty points to be funded not from credit card surcharges – a traditional model that’s being upended – but the supplier or retailer, if a customer opts in.

“Merchants are more than happy to fund those rewards. It’s a form of a cash-back to the customer. They want it to be spent back with them. And they have to give even more incentive that the money is spent back within their store network,” Mr Weingarth said.