Visa Acquires PlaySpan and Takes a Bite of the Digital Goods Market

Visa yesterday announced its acquisition of Silicon Valley based PlaySpan, a payment processor in the digital goods space.  Visa will pay $190 million cash, plus an additional performance based element.

So what are digital good; these are products or services that are purchased, delivered and consumed in its digital form.  Most common examples are software, music files, online movies and e-books.

Although these categories are experiencing rapid growth, the most exciting category are purchases made on social networks or within online games.  This has become an incredibly attractive space where PayPal has taken an early lead.

PayPal launched micropayment solution last year, with a number of high-profile partners onboard, such as Facebook, the FT, Autosport and Justin.tv.  What sets PayPal’s solution apart is its frictionless, two-click convenience and open APIs that enable merchants to customize the solution to their needs and easily integrate with their systems.

Importantly, micropayments also require a different pricing structure, as the traditional structure is not economical for smaller payments.  PayPal has therefore introduces a different structure that reduces the fees from a $1.00 transaction from $0.33 to $0.10.

And it is exactly this that PlaySpan provides to Visa.  Like PayPal, PlaySpan has developed a frictionless e-wallet that enables consumers to complete transactions across social networks and online games without interrupting their online experience.  It also operates with open APIs, so that merchants can easily integrate the PlaySpan with their application. 

Within four years to launch, PlaySpan is already the number two company in this space, with 28 million users, only after PayPal with its 80 million users.

As TV producers, online game developers and mobile operators increasingly seek to monetize their content through digital goods and micropayments, PlaySpan’s market potential is rapidly expanding.  This acquisition could consequently provide Visa access to entire new markets.  Let’s see how other networks such as MasterCard, American Express and Discover respond!

SNAP: Linking Social Media and Loyalty

With so many entrepreneurs trying to enhance the offline shopping experience by integrating online features through the mobile phone, it was inevitable that a company would link loyalty rewards and social media at the point of sale.  SNAP does that, and after a year-long pilot, it officially launches today. 

Customers receive a rewards card that they link to their Facebook, Twitter and Foursquare accounts on the SNAP website.  Once a customer uses their reward card at a SNAP partner, the purchase is automatically updated on their social media accounts.  In return, the merchant rewards the user with additional loyalty points, Facebook Credits or Foursquare-like badges.

Based on all this activity, merchants receive reports on customers’ visits and profiles.  This allows them to adjust their customer proposition and loyalty program to better target customers.

Although this is all interesting, what makes SNAP really exciting is its open APIs.  Not only does this enable merchants to integrate SNAP with existing reward programs, it also allows them to introduce their own innovations on the SNAP platform.

One could imagine merchants partnering with each other to offer combined promotions; bars could partner with restaurants to offer customers bonus rewards if they go to both in one night or bookshops could partner with coffee shops.  

Another opportunity would be for merchants to base their reward programs not only on a customer’s individual purchases, but also on their friends’ purchases.  E.g. customers would receive incrementally higher rewards according to how many of their Facebook Friends have visited a merchant.

Clearly, SNAP is a young startup and its product is still a work in progress.  However, the opportunities in this area are undoubtedly very exciting and SNAP seems to be going about it in the right way by sharing its API and enabling merchants to develop innovative twists on their platform.

Assa Abloy: NFC Enabled Keys

Last week, I posted a video that showed BMW's NFC key solution.  Below I have included an animated demonstration of Assa Abloy, the key manufacturer, vision for NFC enabled keys - very cool!

Below, I also included a demonstration of a pilot that Assa Abloy ran at Clarion Hotel in Stockholm towards the end of last year.

Mobile Banking: Who's Driving the Innovation?

According to a Forrester study, 12% of the US online population, or 10 million Americans, currently use online banking.  Usage has more than doubled since 2007 and is expected to reach 50 million people by 2015.

The numbers illustrate that mobile banking is still very much in its infancy.  Most banks offer only standard features, such as check balances, transfer funds and pay bills, and 37% of respondents say they don't see any value in mobile banking.

To move the needle, the industry must figure out how they use the features of mobility to make mobile banking a unique experience.  This could come from mobile payments, location-based offers and coupons, peer-to-peer transfers, etc.  However, there is a lot of value in delivering these services, and we see new companies enter the space on a daily basis - posing the question of what role banks will play.

Increasingly we see banks put the faith of their mobile banking solutions in the hands of specialist providers.  Monitise is the most prominent example and has shored up much of the UK market, is growing fast in North America and expanding in Asia and Africa.

Although Monitise and similar companies have developed impressive solutions, it is clear that  innovation in mobile banking is unlikely to come from the banks, which may be ceding control of this very important customer service channel.

Square: Great Interview !

Square's great-looking POS device and simple sign-up process is attracting 50-60,000 new merchants every month and recently helped raise $27.5 million in fresh capital.

However, it is their vision of re-imagining the payment processes and providing merchants with analysis and marketing programs that makes Square one of the most exciting companies around.

Read the great All Things D interview with founder Jack Dorsey in the below link.

http://emoney.allthingsd.com/20110207/squares-jack-dorsey-wants-to-replace-everything-from-the-receipt-to-the-register/?mod=twitter&utm_source=twitterfeed&utm_medium=twitter

TSYS & CASSIS Partner to Provide Mobile Solutions

TSYS, the world's second largest credit card processor, and CASSIS, a mobile payment and NFC technology provider, has announced a partnership to provide secure mobile payment, loyalty and commerce functionality.

This will enable TSYS to provide its bank and merchant customers a full range of mobile solutions, from NFC payments to loyalty programs to coupons.

http://www.thestreet.com/story/10998316/1/tsys-and-cassis-international-enter-into-mobile-nfc-partnership.html

Shopkick: Re-Inventing Retail and Rewards?

As I described in Friday’s entry, the online deals business has taken off and will transform a number of industries, from retail to marketing to payments.  Groupon has achieved nearly 50 million subscribers and a $15 billion valuation in just over two years and is being joined by Google, Facebook and Amazon (Living Social investor), which are all entering the market.

My prediction would be that the next big opportunity would be to overlay traditional offers with location-based services – this would make offers more immediate and relevant.  Imagine walking out of the gym and receiving an offer for a freshly squeezed orange juice from the café next door or leaving the cinema and being offered a 2-for-1 deal at the restaurant across the street.

Still, the most prominent location-based service providers, Foursquare, Facebook Places, Gowalla and Scwngr, have mostly focused on social and gaming features. 

Shopkick, on the other hand, is taking a far more retail-focused approach – it aims to be “the Foursquare of shopping”.  However, what makes Shopkick so interesting is not only its commercial focus, but its approach to rewards and shopping.  Unlike traditional reward programs, it does not only reward the actual purchase, but every step the customer takes towards the cash register, from entering the store, to checking out merchandise to trying clothes on. 

Shopkick addresses the challenges of the retailer in a far more fundamental way than traditional reward programs, by enabling them to engage with the customer at every step of the purchase process and could be the beginning of a re-invention of retail and rewards.

The enabling factor behind Shopkicks approach is the precision of its tracking technology.  Traditional GPS tracking has a relatively large error margin and does not give the precision required.  Shopkick’s tracking technology relies on small boxes that it installs in retail locations.  These boxes emit an audio signal that is inaudible to humans, but is picked up by mobile phones on which the Shopkick app is installed.  Using this technology, Shopkick is able to determine if someone has entered a certain store or changing room.

This technology saves the customer from having to check in, as they do with other location-based services, and automatically rewards them with loyalty points, or Kickbucks.  Kickbucks can then be redeemed across all partner stores for gift card rewards or for Facebook Credits.  Retailers can also install several Shopkick trackers within their stores and reward shoppers for browsing, while they provide promotions and information about products along the way.

Since launching in August 2010, it has made some very impressive progress.  It has entered partnerships with national retailers, such as Macy’s, Best Buy, Target and Simon Malls.  It’s installed at 1,100 stores and 100 malls across 18 US markets and has reached 750,000 customers, doing more than 1 million check-ins per day.

Still, the most encouraging metric relates to walk-in promotions.  By boosting the rewards that users get when they walk into the stores, Shopkick has been able to increase walk-in by 50-100%.  This is particularly encouraging as tripling Kickbucks awards only costs the retailer 50 cents to $1.  With single transactions in specialty retail being worth $10 – 15, this could be a very good investment.

So, Shopkick can continue on this trajectory? To a great extent, this will depend on its ability to develop its product to engage customers during the shopping process.  Can it introduce features that make products come alive, suggest additional products based on the customer’s taste and connect them with friends while shopping?  Will it make shopping a more exciting experience and help us make better decisions along the way?  If so, Shopkick will surely be a transformational force across retail, marketing and rewards.