Visa USA on Wednesday said it has completed the rollout of Direct Exchange, a system used by merchants and banks to connect to its VisaNet processing network. The system, which has been deployed in stages over the past two years, has reduced the average time needed to authorize card transactions from 2 seconds to 1.4 seconds, eliminated costly communications links, and enabled new services such as a Web-based dispute-resolution process.

VisaNet last year processed $1.3 trillion in transactions on behalf of U.S.-based financial institutions.

Visa embarked on the Direct Exchange development program five years ago in response to the need to replace a proprietary mainframe-based system called Visa Access Points. Before Direct Exchange, Visa had some 2,000 Visa Access Points deployed at banks and merchant processors in the United States, each requiring a dedicated leased line. Through the use of high-speed Cisco Systems routers, Visa has trimmed that down to 375 Direct Exchange access points.

"We realized we had to make changes in how members and processors accessed the network," says John Partridge, CEO of Visa's Inovant technology subsidiary.

Direct Exchange runs commercially available software components, including IBM's Tivoli systems management software and WebSphere application server. Visa estimates the system will save banks and merchants hundreds of millions of dollars in telecommunications costs. The system has reduced by 90% the time needed to deploy new payment services, such as Visa Resolve Online, a Web-based service that has cut the average time needed to resolve disputed transactions from 60 to 28 days.

It also has enabled Visa to speed processing of commercial-card transactions. When a transaction enters Direct Exchange, it gets split into payment and "third-level data" components such as cost per item; once the transaction is approved, the components are merged back together. "Instead of sending all that information through the authorization system, we bifurcate it at the point of entry, then marry it back together in a form that's useful for both merchants and commercial-card customers," says Mike Dreyer, senior VP of processing and emerging products at Visa U.S.A.

Direct Exchange has been deployed within the United States, and Visa ultimately plans to extend it globally.