Visa Turns SMB Phones into Card Terminals, Targets Unbanked

Visa rolled out new smartphone-based payment tools for small businesses in emerging markets, aiming to capture the roughly half of the world's 1.3 billion unbanked adults who already own a phone.

The capabilities, announced Tuesday, sit across three existing Visa products – Visa Pay, Visa Accept and Visa Direct – and let microsellers accept card payments without extra hardware, the company said in a release.

Visa Accept turns a smartphone into a card terminal. A seller with a Visa debit or prepaid account can take payments through the phone itself. Visa Pay links wallet providers and payment apps to the Visa network, so users pay with credentials they already have. Visa Direct, the real-time money movement platform, lets SMB owners send fast payouts to staff, contractors or drivers, issue refunds, or move funds across borders to eligible cards or digital wallets.

“Financial institutions, wallet providers and platform partners play a critical role in helping small businesses participate in the digital economy,” Rubail Birwadker, senior vice president and head of growth products and partnerships at Visa, said in the release. “With Visa Pay, Visa Accept and Visa Direct, we’re helping partners expand acceptance, speed up payouts and deliver trusted payment experiences for their business customers all through their smartphone.”

The push comes as retail shifts from physical storefronts to mobile-first commerce. PYMNTS reported last month that 48% of consumers worldwide buy via smartphone. Visa's own research found 99% of small- to medium-sized businesses use at least one digital finance tool, and 85% said it helped their business.

The read-through for payments and fintech stocks is straightforward. Visa (V) is extending its network deeper into the long tail of merchants that have historically been cash-only. That expands total addressable transactions without requiring the same per-merchant economics as a full POS terminal rollout. For Mastercard (MA) and American Express (AXP), the competitive pressure is indirect but real – Visa is effectively lowering the cost of acceptance for the smallest merchants, which could pull share from cash and from competing networks that lack a comparable smartphone-based acceptance product.

For payment processors and terminal makers like Block (SQ) and Global Payments (GPN), the risk is more direct. If smartphone-based acceptance scales, the hardware-rental revenue stream that terminal companies depend on for sticky SMB relationships gets thinner. Block's Square terminal business already faces margin pressure from software-only competitors; Visa's move adds a network-level alternative that bypasses the terminal entirely.

Visa's bet is that the smartphone replaces the POS terminal for the smallest merchants, and that the network captures the transaction volume before a competing wallet or local payment scheme does. The company did not disclose rollout timelines or target markets for the new capabilities.