2012: The Year of the Mobile Payment?

CEO, Market Platform Dynamics
12:18 PM EDT October 12th, 2011

Mobile. Everywhere. Opportunity. Everywhere. This was the theme of the GigaOm Mobilize 2011 conference held one week ago in San Francisco. Over two days during 50 sessions, participants debated the impact of the mash-up of cloud computing and the mobile Web for driving new opportunities for everyone in mobile – certainly a familiar theme for sure on PYMNTS.com over the past couple of years. Many of the topics focused on what was possible given the technology advances at the intersection of mobile and the cloud. Three panels, however, tackled the topic of mobile payments/mobile commerce head-on and attempted to drill into whether there was any “there, there,” and as a result, really mixed things up for the audience. What follows is a brief overview of the highlights of those panel discussions.

First up was an interview of Keith Rabois, COO of Square by legendary journalist, Silicon Valley mover-and-shaker and conference namesake, Om Malik. (More: Square COO: NFC Won’t Drive mPayment Adoption) And Keith sure didn’t hold back. Characterizing Rabois as an NFC-naysayer is little like saying that Kim Kardashian isn’t really motivated by being in the celebrity spotlight. After remarking that “I’ve never met a single merchant in the U.S. who says I want this NFC thing,” Rabois went on to say that he’s not that worried about the competition since PayPal, as a brand is “atrophied,” and Square looks inward and not on the competition when thinking about how to develop their product. Well, at least he’s not all overplaying Square’s prospects <jk>.

Rabois also offered another couple of interesting tidbits. Square’s focus, he says, is to deliver a “simple solution” that isn’t a hassle to implement. Hinting at a new service that will launch later this month, Square says it is, ahem, squarely focused on leveling the playing field between big and small merchants who, with Square and according to Rabois, will get access not only to payment enablement but data and other tools that help them run their business and manage sales. What he didn’t say outright, but is clearly an important piece of the Square proposition, is their ambition to build a network of consumers and merchants that can influence spend with other Square merchants by offering promotions that help drive consumers to other Square merchants in the area. He suggested that Square may not open its API to others, which suggests that their network ambition, if truly an ambition, might take on the personality of one that is closed. In the meantime, the proposition that consumers patronize other merchants who “accept” Square is in and of itself is really clever positioning, since Square is nothing more than a POS device – it’s not a card or an acceptance mark or anything to do with “acceptance” in the traditional sense. It’s sort of like persuading customers to shop at stores that use VeriFone terminals, which as ridiculous as it sounds, is exactly what Square is doing in the short term, with its longer run ambition perhaps one in which “accepting Square” takes on a very different meaning.

Next up was the panel that I moderated on mobile payments. (Watch video of panel debate) We had a great conversation, and I was lucky enough to have an all-star cast participating: Laura Chambers (PayPal), Brad Greene (Visa), Ken Miller (Intuit) and Dave Talach (VeriFone). We covered a lot of ground in our 40 minutes together and had a great conversation.

Not surprisingly, the panel was split on NFC – PayPal giving it a big thumbs down (citing the 3-5 years that it will take to get any traction as too long for anyone to wait, least of all, PayPal whose mobile vision includes everything but NFC), Visa and VeriFone giving it the thumbs up but conceding that it will take time to ignite and Intuit suggesting that they are looking at NFC but have been in market for three years with a solution that leverages plastic cards and mobile phones (goPayment). VeriFone’s Dave Talach fought really hard for NFC, suggesting that consumers will love it since it is easy, and hinting that lots of things are going on behind the scenes to drive merchant adoption. I remain a skeptic, or in Dave’s terms, “allergic” to NFC.

On the topic of chickens and eggs and merchant acceptance around mobile generally, PayPal cited that they are getting no push back at all from their visions of mobile payments, citing that conversations with 60% of the top 200 merchants are going well, Visa suggesting that getting merchants on board is the toughest part of ignition and VeriFone commenting that NFC is the only plausible option for merchants, since it is the only technology that supports the kind of robust functionality that will drive mobile payments adoption for consumers. I tried to push hard on the button that if merchants love it so much, why don’t more of them have NFC terminals, with PayPal’s Chambers chiming in saying how less than 1% of all merchants are NFC enabled, but Visa and VeriFone remained steadfast in their belief that (with Visa’s incentive scheme) and other inducements, we will see rapid adoption of NFC terminals. We’ll see – and have it on tape J.

Moving away from NFC, when I asked Intuit asked about the competition from Square, and its intention to create a small business and consumer network, Miller remarked that since they already have a network of many millions of small businesses and consumers who interact with them via a variety of products and have been in the market for three years with a mobile payments solution that works for everyone they weren’t all that concerned. Intuit’s recent deal with Verizon Wireless also gives it a chance to scale via a national distribution scheme that doesn’t rely on putting dongles in the mail.

I asked each panelist for a one word comment on ISIS and Google Wallet – the responses were, in a word, varied.  When asked about ISIS, responses ranged from “complicated” and “interesting” and “confusing” and Google Wallet came in at “Plan B,” “powerful” and “limiting.”

In spite of the differences of opinion on a variety of approaches and outcomes around mobile payments, one thing everyone agreed on was that 2012 was not the year that mobile payments would ignite. All agreed that it was going to take time, that payments alone was not enough of an incentive to drive adoption for anyone  – merchants or consumers. There was general agreement that, at the moment, there is no killer app that will drive mobile payments adoption (NFC or otherwise), with Intuit remarking that cash and check (for them) represent well entrenched competition given the ease of use and familiarity. PayPal echoed that same theme, saying that payments in the United States, at least, works so well today, that there has to be more for anyone to care enough to switch to something new. As I’ve written, we’ve seen what a killer app can do to ignite mobile payments adoption (e.g. Starbucks, goPayment and Square) but in each instance, those solutions leveraged stuff that both consumers and merchants have in hand already (no pun intended) understand how to use and were motivated by solving a problem that had little to do with payments transactions in the first instance.

In spite of that, there was general agreement, enthusiasm and excitement that 2012 will be the year that we all emerge from our PowerPoint visions of mobile payments and really start to see pilots and trials begin to shape the reality of mobile payments in real time and with our own eyes (and, of course, phones).

The last mobile commerce panel debated the merits of the SoLoMo (social, local, mobile) phenomenon. This term, first coined by Silicon Valley VC John Doerr, is the idea of making data available to consumers and businesses who can, in turn, use it to improve the process and outcomes around the shopping and buying value chain for both merchants and consumers. This panel, which included Wal-Mart, Best Buy, PayPal and ThinkNear, discussed how a combination of smartphones, mobile apps, GPS and social media are not only empowering consumers with information but changing the way they shop and buy. There was interesting discussion around the “Digital Signals” that consumers emit as they tweet about their experience, “check-in,” search for nearby businesses and how that is closing the gap that used to exist between businesses that want to reach relevant consumers and consumers that want to be served relevant offers.

Panel moderator Phil Hendrix posited a view that by mining the SoLoMo Digital Signals, companies can reduce the friction associated with using traditional media and advertising channels today to reach customers. The panel discussed how using a SoLoMo combo approach helps them recognize customers as they enter the store and provide them with a personalized guide based on the customer’s interests and even previous purchases; enable shoppers to share feedback with one another (which many online retailers already do); reward consumers in real-time with incentives and reinforcement; and in many other ways.

GigaOm’s Mobilize was an incredibly interesting conference and a lot of rich insights were shared by all of the panelists. You can see the live streaming of the various panels and interviews described above here. Panels were each 40 minutes and worth the listen. As always, your comments and feedback are welcome!


Karen Webster is the CEO of Market Platform Dynamics (MPD), a consulting firm that helps companies find, implement and monetize innovation. She serves as an advisor and member of the board for a number of companies operating in the payment, technology and digital media industries. More info here.


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