Will Google Commit to their Moves in Mobile Payments?

In a fun feature, Business Insider logs Google's 10 weirdest investments.  These include wind farms for $40M, Shweeb, a $1M human-powered monorail and a prototype for a new solar panel technology.

With Larry Page back at the helm of the company, Google is likely to continue making these type of weird and wonderful investments.

"What does all this have to do with payments?", you may ask.  Nothing, really.  But, as we watch Google enabling NFC on Android and investing in payment pilots in New York and San Francisco, it is worth keeping in mind that the company has a history of making ambitious and visionary investments without executing.

http://www.businessinsider.com/google-weird-uses-of-money-2011-5#

Visa & the Gap Roll Out Location-Based Mobile Offers

Fast Company recently did a piece about Visa the Gap teaming up to offer low-tech location-based deals.  The system does not require NFC-tags, check-ins or smartphones. 

The user simply registers with their card details and mobile number on the project home page, Mobile Gap 4 U, and every time he or she makes a purchase that meets certain pre-defined criteria, such as location, day, amount, etc., she is sent an offer via SMS to their mobile.  To redeem the deal, the user simply walks into any Gap store and shows the text to the staff, who will process the deal.

This trial is a good idea for both Visa and the Gap, as they are able to test certain features of location-based deals, without having to roll out a full-fledged NFC infrastructure that will initially probably mostly appeal to first-movers.  Instead, the Gap is able to appeal more broadly to their most loyal customers.  By engaging this audience with location-based deals, they are able to learn about their most important customers and paving the way for more advanced technology when the time is right. 

Apple Drops NFC for iPhone 5

According to a number of newspapers, Apple has revealed to several of the major UK mobile phone operators that it will not include NFC in its iPhone 5.

This is a big blow to mobile payments, as NFC is widely viewed as the most likely platform and Apple was seen as a company that would bring it to the mainstream.

Apple's apparent reason for not including NFC in iPhone 5 is the lack of clear standards.  They have therefore decided to postpone their NFC-launch until 2012, which will enable them to develop a set of proprietary standards in the meantime.

Google, along with a whole host of handset manufacturers and carriers, are are still committed to rolling out NFC in 2011, so it will be interesting to see how much headway they will make without Apple's unique ability to launch new technologies to the mainstream.

Mobile Wallet: the Battle is Shaping Up

The attached article provides a very interesting perspective on the various players that are aiming to build your mobile wallet.

It assesses 3 different groups:

1. Mobile platform providers (Apple, Google, Microsoft, etc.)
2. Mobile carriers
3. Banks

In my view, mobile platform providers will be the clear winners of this battle.  The mobile wallet will essentially be a software solution and Apple, Google and Microsoft are clearly better at building software than carriers or banks.

They will also be better able to leverage platform/network effects than the other players, particularly by triggering innovation through app markets, etc.

This is not to say that carriers and banks will not play a part.  Particularly banks will still be a key provider of payments solutions, but probably through the platform providers' payment interface (i.e. Google Checkout or iTunes/iCash).  This way, Apple and Google will gain a foothold in the payments market, without having to take ownership of the complexity of the full payments value chain.

Read what the author of the article says.
http://snasm.com/article/nfc-2011-whos-building-your-mobile-wallet?utm_source=twitterfeed&utm_medium=twitter

Orange Launches its First NFC Mobile with Samsung

Orange launched its first NFC enabled Samsung Wave 578 at the Mobile World Congress in Barcelona today.  This is Orange first step into NFC, which is slated to be its big theme for the 2011. 

In coming months, Orange is set to launch similar phones from LG, Nokia and other manufacturers, in order for half its phones to be enabled by year-end.

This positions Orange to partner with other players and enter areas that could become important revenue sources in years to come, such as payments, ticketing and transport.

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.

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

Starbucks' Payments App and how it could Disrupt the Industry (SAI)

Business Insider has written an interesting piece about the Starbucks payments app and its disruptive potential for a number of payments players. 

Although, I don't agree with much of what they write, I like the idea of a relatively small change/innovation having widereaching implications for an entire industry (and beyond), illustrating the level of uncertainty and number of moving parts in the payments industry right now.

First of all, I should point out that Starbucks' solution is not NFC - it relies on barcode scanning, a much more basic technology, not dissimilar to what FaceCash has introduced.  Whatever form of mobile payments that eventually wins out, I don't think it will be this, and that Starbucks will soon need to upgrade the technology.

I also think Business Insider over-exaggerates the impact that Starbucks will have on the payment industry overall.

Still, if we were to take the article to be about the emergence of mobile payments, rather than simply about Starbucks, it is absolutely worth the read!


http://www.businessinsider.com/starbucks-mobile-payments-2011-1#first-heres-how-starbucks-mobile-payments-work-its-really-straightforward-1

Great Article about NFC Deployment by Non-Payment Players (Fast Co.)

In the below article, Fast Company lays out plans for NFC deployment by a range of non-payment players.

• BMW: introducing NFC technology in their keys, enabling the owner to open doors with NFC, store train and flight tickets on the car key and receive a multitude of data about the car, such as; is it locked?, how much fuel does it have?, where is it parked?, etc
• LG: developing both NFC enabled phones and point of sale terminals.  By getting involved with POS terminals, it is involved with the whole ecosystem and may better carve out a meaningful role
• Google, Apple and Nokia: as we I have previously covered, these guys are all developing NFC devices

Beyond payments, Fast Company also make some interesting suggestions for the potential use of NFC in retail and advertising.

http://www.fastcompany.com/1723276/companies-battling-to-make-your-nfc-wireless-credit-card-dreams-come-true

Apple: Taking NFC to the Mainstream?

The hottest area of speculation at the moment is around Apple’s entry in the payments market.  Already early last year, it was being reported that Apple was putting together a payments team, while patent applications revealed that they would likely introduce NFC the iPhone 5, which will probably launch in June 2011. 

Now, considering that NFC has been around for a long time and that a flurry of prominent companies, from Visa to the major phone carriers to Google, already have NFC enabled products or trials – why is Apple able to generate so much excitement? 

Simply put, Apple has a remarkable track record of popularizing new technologies with a user experience that seamlessly bridges the hardware and software.  Like they have previously applied their midas touch to the personal computer, the music player, the mobile phone and most recently the tablet, people are eagerly awaiting what they will do to payments.

Most interestingly, people are asking how they will enter the market?  What role will they play in the payments value chain?  Consensus says that they will probably use a version of iTunes as a mobile wallet.  However, it will be interesting to see if they simply have their customers pay with their credit cards through iTunes or if they attempt to link directly to customers’ bank accounts, and essentially do their own clearing and settlement.

Moreover, what features will they offer their customers?  Will they start their own offers and rewards program, similar to what Google is developing?  will they do anything cool with the data they collect?  How will they extend NFC outside payments – e.g. identification and ticketing?

Also, will they enter the merchant side of the industry?  Will they enable the iPhone or iPad as payment terminals by developing NFC readers that plug directly in to the devices?  Will they offer data services?

Another interesting perspective is if they will open up their payments platform (iTunes) for external developers to develop application, similar to what Apple has done for the iPhone and iPad and PayPal has done in payments.  We are starting to see some interesting developments coming out of PayPal X and cannot even begin to imagine where Apple could take this market.

Still, with all this excitement, we should still remind ourselves that not all Apple launches are a success.  Apple TV is a classic example.  The payments industry is probably also more complex than industries Apple has previously taken on.  It is the quintessential network business, which might not be a good match for Apple’s notoriously proprietary and closed approach. 

It would take time for the iPhone 5 to build a user base that is sufficiently attractive for merchants to justify new point of sale investments.  If acceptance is not wide from day one, all the excitement that surrounds the launch could whittle away and slow application innovation, etc.

Despite all the excitement and endless opportunities, we should therefore remember that Apple faces big challenges and stiff competition in this field.  Still, the buzz generated by an Apple launch, along with all the other launches upcoming launches, could mean that 2011 is finally the breakout year for NFC.

PayPal and Bling Nation

Ebay yesterday reported that PayPal tripled its mobile volume in 2010, a clear demonstration of the increased adoption of mobile payments.  To capitalize on this trend going forward, PayPal is increasingly targeting physical payments and has forged a number of partnerships to support this effort.  However, one partner has stood out from the rest; Bling Nation.

Bling Nation was founded by Meyer Malka and Wenceclao Casares in Palo Alto in 2008.  With Bling, they enable mobile phones for NFC payments with an RFID sticker, or Bling Tag, that is distributed for free.  Users simply register their phone number and PayPal account to their Bling Tag and are able to make purchases by tapping the tag on a contactless terminal.

To facilitate merchant acceptance, Bling initially partnered with local banks that would have cardholder and merchant relationships in the local area, to whom they would distribute NFC stickers and terminals.  The advantage of this approach was that transactions were ‘on-us’, which enabled Bling to offer merchants a cost effective solution.  On the flipside, each partnership was relatively small and growth was slow.

To achieve national scale, Bling has entered a partnership with Verifone, in which Verifone’s more than 370 resellers will begin to offer the Bling and PayPal service alongside traditional credit and debit card acceptance to merchants nationwide.  This is the first implementation that combines traditional cards-based payments with alternative payments at the point of sale.

The downside of this approach, is that PayPal transactions are charged at ‘card not present’ fees, and therefore adds unnecessary costs in a physical environment.

Interestingly, co-founder Casares views payments as the “commodity part”.  The value-added of Bling comes from connecting customers and merchants through data services and rewards. 

In the “marketing services” space, Bling has partnered with Facebook, as well as other online communities, where customers register to get access to discounts and rewards and merchants get access to customer data and profiles to drive increasingly targeted offerings.

It is this perspective that differentiates Bling Nation from other mobile payments providers and makes it such an attractive partner for PayPal, Facebook and a host of other companies that will want to leverage Bling’s growing network.

Three Exciting Stories in Payment (Jan 19)

Starbucks has launched a mobile payment application for iPhones, iPads and Blackberry's built on its Starbucks Card platform.  The application will enable customers to make their purchases with a barcode that appears on their mobile phone, check their balance and receive Starbucks loyalty points.
http://www.pymnts.com/mobile-payment-debuts-nationally-at-starbucks-20110119005434/

Softbank Mobile has selected France's Gemalto for their NFC trial in Japan.  The trial will leverage Gemalto's UICC SIM card and N-Flex technology.  Users simply receive a replacement SIM card, which enables a conventional mobile phone for NFC through the antenna.  In addition to a prepaid service, Softbank's trial also enables users to perform NFC transactions from two Japanese credit card issuers. 
http://www.paymentssource.com/news/gemalto-joins-mobile-japan-3004716-1.html

MasterCard has entered a marketing partnership with Transport for London (TfL) to distribute PayPass (MasterCard's NFC solution) branded wallets to Oyster Card users.  PayPass is still not available in London, but the marketing push is in anticipation of TfL putting Oyster on an open-loop network, such as Visa or MasterCard.
http://marketingmagazine.co.uk/news/1049764/MasterCard-brands-Oyster-wallets-PayPass-push/

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