Making Mobile Real
A really nice infographic created by Sharna Brocket over at Intiut.com on the digital wallet and the future of payments
![The Digital Wallet and the Future of Payments [INFOGRAPHIC]](http://www.sepharimgroup.com/wp-content/uploads/2011/12/11.11.04_DigitalWallet-Quickbooks-JMJ-102-581x3000.png)
via: The Digital Wallet and the Future of Payments [INFOGRAPHIC]
Not surprisingly, consumers trust incumbent payment brands when they think about the future of mobile payments. Facebook is the least trusted, despite big numbers of consumer who spend a lot time sharing personal information on the site. [Read more...]
Interesting approach.
One thing is very clear: As the heartbeat of payment over channels like mobile accelerate, new methods of fraud prevention are needed.
Neural seems to doing some interesting stuff.. [Read more...]
PayPal thinks the direction of debate is too focused on tech and not enough on the consumer. We agree.
The current market discussion goes something like the following. Mobile phones, and specifically smartphones, are gaining rapid consumer adoption. Smartphones have become what the first PDAs aspired to be: the center of your life, in the palm of your hand. In effect, they’re meant to enhance all the things you do every day — communication, entertainment, content discovery and shopping. If mobile devices are going to enhance such activities, they should also enhance the act of paying for those purchases. Mobile devices are poised to eventually replace our wallets.
WHEN
April 26, 2011
WHERE
Toll-free Dial-In Number: (877) 273-4202
International Dial-In Number: (213) 289-0155
Conference # : 8060636
WHAT
Join us for our roundtable teleconference on April 26th, 2011 at 12pm PT / 3pm ET with Bob Egan, Thomas Noyes, David Schropfer and Drew Sievers where we will discuss the future of mobile payments.
This roundtable will explore issues such as:
1.) Sustainable business models and industry tensions:
2.) Technology and tactics:
Bob Egan, Founder, Chief Analyst, Sepharim Group
The mobile payment consortium ISIS has signed initial merchants and says the company is focusing on the quick service retailer (QSR’s) market. Isis is looking at adding capabilities to handle private-label retail cards and gift cards. Jim Stapleton, head of sales and account management at Isis, made these remarks during his keynote Wednesday’s at the Smart Card Alliance’s 2011 Mobile and Transit Payments Summit in Salt Lake City.
Isis is a joint venture of mobile carriers AT&T Mobility, Verizon Wireless, and T-Mobile USA. Transactions will flow on Discover Financial Services payment network and Barclaycard, the U.S. credit card unit of London-based Barclays Bank plc, will initially offer consumers Isis accounts. See my earlier thoughts on ISIS: The ISIS Mobile Wallet: Are Visa, MasterCard and PayPal Under Siege?
What we think:
A focus on QSR’s is a wise move for ISIS. Despite much of the hype around mobile payments, and in particular around NFC, sexiness and convenience, not technology, is what’s needed to get this market off the ground.
Case in point is what Starbucks is doing in its own retail stores. Starbucks recently reported one million transactions via its mobile payment application in just fewer than 30 days. For reference see: One Percent of Starbucks Transactions Now Mobile. While the Starbuck application is very primitive (it displays a barcode on a your handset which is scanned) its newness has some sex appeal, and its cool. And if the early momentum is any indication, consumers seem to appreciate speedier check-out (50% faster than cash) and the elimination of the need to dig for debit/credit card or cash. We think that the early success of Starbucks is a positive indicator for ISIS at QSR’s – if you build it they will come. But ISIS must do more.
ISIS must navigate two hurdles: QSR sales are a commodity game. Profits are all about volume. The challenge is how do you make a $10 transaction attractive to everyone from an economic standpoint. PayPal and others have already adjusted their rates for low value payments. ISIS fee structure remains elusive. The second is getting consumers to use the solution. Contactless plastics, which also targeted QSR’s has not seen wide adoption, largely we think, because the majority of consumers don’t even realize the card they are carrying has the capability. Unlike contactless plastic, which is “pushed” to consumers, mobile payment solutions are more likely to require consumers to opt-in. The Starbucks momentum may indicate that when a consumer opts-in by downloading a mobile payment application, they are more likely to use the application capability at the retail point of sale. That may be good news for ISIS.
Starbucks announced today that it has seen one million transactions via its mobile payment application. The full commercial launch took place on January 19th, 2011. The Starbuck application is available on iPhones and selected Blackberry handsets. A barcode is created on the display of a customer handset which is scanned (or entered) at a store point of sale.
While Starbucks does not release formal store visit numbers, my best estimates are that about 4.5 million people make purchases at Starbucks each day.  That means just under 1% (~0.8%) of transactions at Starbucks are now mobile in less than a month. Fascinating.
The company also said, it release an Android version of its app soon.
The fundmental proposition is threefold:
1. Reduced fee’s could be a motivating factor to drive retailers toward mobile payments.
2. An overhaul of the aging payment communication network is overdue.
3. Carriers should band together to challenge incumbents
my take: $1 trillion is a really big number to achieve in 4 years for a lot of reasons, not the least of which are the slow pace of consumer adoption for new lifestyle technology, and point of sale upgrades. Its more likely that mobile payments via e-commerce sites will continue to set the pace in mobile commerce. And the begs the question, will “card not present” fee’s rise on the fears or realities of mobile payment being less secure?
US mobile payments could reach $1 trillion by 2015: exec
Mobile payments will approach $1 trillion by 2015 in the United States if retailers receive lower payment-processing fees based on a more efficient system, according to projections by International Telecom Strategies’ The Luciano Group.
Mobile Commerce Daily’s Dan Butcher interviewed David Schropfer, partner at International Telecom Strategies’ The Luciano Group, Red Bank, NJ, and author of “The Smartphone Wallet – Understanding the Disruption Ahead.†Here is what he had to say:
Who are the primary combatants in the impending mobile payments war, and what factors are bringing the conflict to a head?
Generally, the two sides are in the payment system as we know it today—Visa, MasterCard, First Data, Fiserv, etcetera—and all of the other companies that are either using or contemplating using an alternative to the payment system—PayPal, Isis, EnStream and others.
What are some of the key conclusions and takeaways from the book?
The payment system as we know it today was designed in the 1960s and ‘70s. Technology has improved, but the architecture is the same.
Mobile payments have the potential to create a more efficient and less expensive payment system.
A less expensive payment system could mean much lower fees to merchants, and lower retail costs to consumers.
Consumers need to know that mobile payments and mobile loyalty programs will offer them a chance to regain their privacy.
For retailers, mobile payments may represent a chance to cut their credit card fees in half. The same is true for loyalty and reward programs.
The reduction of these fees is not because mobile payment companies want to survive on thinner margins.
Instead, these fee reductions will be based on a more efficient infrastructure and architecture.
Credit card schemes and processors, however, need to take a serious look at the smartphone, GSM technology, UICC, Trusted Service Management and other technologies to decide if greater processing efficiencies can be realized.
Will 2011 be the birth year of nfc proximity payments through mobile phones in North America?
Maybe, but only if Google’s mobile ad initiatives on mobile via Android don’t become the equivalent of modern day toxic waste.
Google’s Search for a Digital Wallet
The search giant is working on a payments service for smartphones using NFC, or near-field communication, technology
Image via CrunchBase
Two questions are posed on LinkedIn about the future of payments.
They are;
1. Will alternative payments ever take over the majority of payment transactions? Alternative in my mind means phone companies, cash alternatives or any other form of payment which bypass MC and V.
2. Will MC and V issuers have to rethink what they charge as interchange fees?
I though i would share my comment and i am anxious to here your thoughts.
Clearly alternative payment mechanism will continue to gain share. That said its likely to be a very long time before there is significant cannibalization of plastic transactions, expect in emerging economies where plastic penetration is low today anyways.
As you might expect MC, Visa and Amex have significant vested interesta to get on the offense here on several fronts. They include; the slow death of the four party model, the VC $$ being thrown into alternative payment models like mobile, regional interchange pressures from regulatory in Europe and elsewhere, PayPal and of course thee telco’s.
In direct answer to your 1st question, alternative payment systems will not completely supplant incumbent payment systems in our life time and 2 – MC/VISA/AMEX all need to re-think interchange
