Company Profile

Mobile at the Point of Commerce Convergence

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Editor's Note


A number of very large and significant platform industries are converging on a common opportunity – to create and grow consumer commerce. Payments capabilities certainly underpin this convergent trend. Yet increasingly, the power in the world of payments is shifting to commerce enablers and generators, who are highly present in consumers’ daily lives, and with whose platforms consumers are highly engaged.

This month’s business section article will explore the potential role of online and social media, remote commerce mobility and mobile network devices in the coming convergence. (Note: Portions of this article have appeared previously in the author’s lectures for PYMNTS University).



The business of managing payments has become more than just the processing of transactions and the movement of money. For a host of commercial enterprises, payments have become the cornerstone of engagement with their customers, the foundation of predicting customer intent and the linchpin of linking the participants of a networked business in deeper engagement with each other and with the network sponsor. Perhaps most importantly, payments have become a central engine in the monetization of network participant activity across a range of industries.

The new value exchange paradigm in the payments business is informed by interlinked processing platforms and networked business models. This new payments paradigm is one in which convergent ecosystems and the developers that serve them engage in tying together their service capabilities and business models to deliver uniquely valuable and differentiated value propositions to their common customers. Consumers have begun to expect that they can, and will, navigate the full commerce continuum – from the moment they decide they actually want something to the moment they have and are using it, through a singular interface and seamless interaction. They want access to the full range of interactions in real time, from anywhere. Consumer demands are driving the industries who serve them to converge on commerce, and the meeting point for them all is mobile.

Convergent Ecosystems


Electronic payments have become an essential component of business model growth for a host of ecosystems. In retail, competition for facilitating consumer access to deposits among the key traditional players in payments is robust. Retailers have been building payments businesses of their own to deliver deposit access services and payments capabilities directly to consumers in a form of “back to the future” payments management. Only today, instead of private label credit, they are delivering debit payments. While investing resources in controlling the evolution of payments provided by others, retailers are converging on commerce opportunities of their own. Increasingly, that convergence point includes information, payment and mobility.

As they converge on commerce opportunities, major physical location retailers are discovering what eCommerce retailers have known for some time: Building and managing commerce engines may be one of the most important investments a retailer can make to drive new sales, retain customers and control costs. As online retailers built checkout functions to streamline and simplify consumer purchase processes for eCommerce, they learned that payments facilitation through checkout engines can build a strong portfolio of registered consumer identities and transaction histories. In rapid evolution, major eCommerce payments players – both retailers and checkout engine specialists – have begun to drive their customer portfolios and commerce engines into other applications and adjacent ecosystems. Most prominent among these is the convergence of remote “online” commerce with remote mobile information access, with payment investments following closely behind.

For a long time, online advertisers have been seeking the holy grail of new media advertising – the ability to tie an advertising message tightly to a consumer profile and then to prove the consumer acted on the message make a purchase. Online advertising networks learned in the first phase of their explosive growth that the combined power of bringing advertisers and consumers into a networked environment – and bringing better information to each of them in the process – was a powerful catalyst to the revenue growth of the online advertiser. Revenues poured into new media from the “old” channels because of the richness of information about consumers that a new media platform could provide to an advertiser. Matching the right message to the right consumer at the right time drove exponential growth in online media platforms from inception.

While some of those media platforms have stuck with the tried-and-true online advertising network model, others have extended their platform into innovations and investments that are designed to link online messages to online, and hopefully offline, purchases. Investments in checkout engines, mobile device information and advertising platforms and in mobile marketplaces populated by identity management and checkout functions are all focused on driving commerce. With checkout engines and mobile investments, online advertisers are finding a way to divine customer pre-purchase intent, enrich the shopping experience with the information necessary to motivate a purchase, and most importantly, execute the payment transaction at the end of the advertising cycle that proves return on marketing investment to the advertiser. In their efforts to close the marketing-ROI loop, enlightened online advertising platforms are converging on mobile commerce to cover the last mile from digital marketing message to physical transaction sale.

Social media platforms have built large and diverse populations of heavily engaged users who interact on the platform across a wide range of activities, interests and uses. Operating from an “open platform” model of development and distribution, social media networks have become the new darlings of the Tech Age in both their explosive growth of participants and the level of that participant engagement. Consumer share of time online is shifting dramatically from online advertisers to social media platforms, and a host of businesses have taken note. Gaming companies, marketers, advertisers and consumer services application developers have all gravitated to these large distributed networks and their open platform models.

Social media managers are investing in commerce engines to help maintain and extend that user engagement into the commercial transactions that have begun to grow from participant interactions on the platform. Of perhaps greatest interest, the profile of social media users is one of high engagement and remote access. The largest share of social media sessions now takes place through a mobile device, and that share is growing. As social media platforms converge on commerce opportunities in their business, they are increasingly converging on mobile platforms in response to the highly mobile engagement of their participants.

Meanwhile, mobile operators and broader mobile ecosystem participants are converging on commerce as well. Mobile operators are engaged in one of the oldest and most well-understood network platform business models – networked telecommunications. As a result, they are very familiar with the strong fundamental dynamics of driving participants into a networked platform, and once they are there, building as many ways for them to interact as possible. Recently, mobile operators have seen the core revenue and profit growth of telephony challenged by the very ubiquity of access and use in their core businesses. Rollover minutes and all-you-can-eat data plans have challenged the consumer revenues operators’ need to cover the massive capacity investments they’ve made – and one would argue losses they’ve seen – to carry the online advertiser and social media platform traffic consumers demand.

With a core business under siege, mobile operators have watched the major ecosystems listed above begin to converge on commercial opportunities at the intersection of their respective industries. The mobile operators have looked down to find themselves standing, quite literally, at the crossroads. Almost every business model in which the other ecosystems are currently investing has, at its core, a mobile execution of information or value exchange that serves as the catalytic cornerstone of the innovation.

Loyalty and Location-Based Services


As online advertisers and marketers work to deliver customer-acquisition and marketing solutions to their packaged goods and retailer clients, they are increasingly looking to remote mobile communications as the way to deliver timely, relevant and local information to consumers seeking purchase opportunities. Mobile solutions for retail marketing began with the delivery of basic information-only functions through the mobile devices – typically Web-enabled smartphones. Store locator and location mapping services were the first functions delivered to the market, helping that jittery, caffeine-deprived consumer find the nearest Starbucks location for a much-needed fix.

It didn’t take long for marketers to conclude that, if it was possible to help a consumer find a retail location, it might not be such an alarming stretch to drive the consumer from where they are to that retail location with a promotional message or the promise of a benefit. So the business of mobile device location-based coupons was born. In a networked world, in which consumers walk around with smart devices that can be located in space, retailers have jumped at the opportunity to deliver proximate promotions to consumers that communicate and locate benefit for them. Business models, like Foursquare, depend on this capability to deliver local and relevant marketing messages to consumers. Innovators, like shopkick, use this same capability to drive consumers into retail stores, using location services to prove to the retailer that the consumer was there and providing a benefit to the consumer in the process.

Mobile Marketing and Advertising ROI


Taking the application of mobile services one step further, progressive advertisers and marketers have begun to revolutionize their industry by deploying a combination of the following: 1) online advertising to stimulate consumer demand, 2) promotional messages delivered to mobile devices, and 3) registered payment products identified from the point of sale. Although the advertising industry has already seen one revolution as media spend moved from physical print to online media platforms, it is clear that another revolution is coming.

Online media and search companies have created a large and growing technology-driven segment within the advertising industry by providing enriched data about consumer-use profiles and search activity to marketers. At the same time, these companies are providing relevant pre-purchase information to consumers in search. This simple innovation has dramatically changed the landscape for advertising and marketing, creating a fast-growing, multibillion dollar emerging media advertising sector practically overnight. Right along with it, the online advertising sector has created a legion of specialist marketing and advertising advisors to help online properties and product merchandisers spend millions in fees to optimize their performance on new media advertising platforms. Specialist advisors have created an industry to help marketers with refining techniques for search engine marketing management, optimizing organic and inorganic search engine performance, increasing referential links to improve search results, updating/refreshing frequently to enhance relevance, optimizing performance in social media platforms directly and indirectly, etc. All of these tools may improve advertising performance on a new media platform, but they don’t necessarily take full advantage of the change in the commerce landscape that converging remote and mobile technologies create.

New Media? Or Old Media?


Funny enough, the new media and the new advertising industries have begun to look a lot like the old ones. Is an online search engine fundamentally different from a print magazine in any way other than the media platform it rides and the level of detailed subscriber/searcher information it can provide? Yes, an online search engine can tell an advertiser much more about the people who saw an ad or searched a keyword than a print magazine can say about the behavior of a subscriber. Also, those keyword searches can lead to website links that may ultimately generate commerce. But do they? And how can you tell? Is the online advertising industry simply the old advertising industry dressed up for today’s marketplace and technology? Do these new tech platforms truly generate sales in a way you can prove? Is there any way to show that advertising investments online generate sales in stores in a way that is tangible rather than theoretical or inferred? Granted, asking this question here in Silicon Valley is a near heresy. To be fair, emerging media marketing platforms have never been in a position to prove a link between online search and offline sales, until the rise of mobile.

As revenues in the emerging media advertising industry have grown and as the information about consumers has become much more sophisticated, online advertisers have begun to realize that they may finally be in a position to grasp that brass ring on the advertising/marketing merry-go-round. Perhaps they can finally prove that a marketing or advertising message to a consumer actually resulted in a sale. As online advertisers have come to realize that this close-the-loop opportunity stands squarely in front of them and that it comes with an enormous upside potential in revenues, they have begun to invest in solutions that will help them tie online browsing to offline buying. In particular, Google, the leading online advertiser, has invested in building and deploying a mobile platform to take marketing and advertising messages into the consumer’s hands and to tie those messages and discounts to registered card products to prove return on investment to its advertising clients.

Strong forces are at work to drive commercialization across a constellation of network businesses, all of whom appear to be headed on a collision course for a central space where they plan to create commerce. Retailers, eCommerce merchants, online advertisers, social media companies and mobile operators are all converging to provide payments capabilities and transaction processing to their network participants. As they converge, the forces of information, alias management, location-based services and mobility shape the solutions they have begun to build and deploy.

Loyalty provision, mobile marketing and remote payment capabilities are the leading solutions beginning to emerge from commerce convergence now underway. All of these solutions are tied, in some way, to the underlying trend of mobility among consumers – mobility in access to information, mobility in the locus of consumer demand and fulfillment and mobility in the provision of payment.

Which Ecosystems Are Driving?


It’s difficult to predict winners and losers in the coming convergence, and it is not necessarily very informative to try to do so. All of the major ecosystems will grow, change and benefit from the coming convergence of their businesses on mobile commerce creation. Retailers will find ways to stimulate a consumer’s interest, locate that consumer in time and space and drive him into a retail store to stimulate a purchase. eCommerce merchants will continue to drive consumer registration into, and adoption of, checkout solutions as they work to migrate those solutions to the mobile Web. Retailers will begin to facilitate remote commerce transactions over mobile devices in that place where consumers time-slice their lives and multitask their days through a tiny, glowing interface in the palm of their hands. Online advertisers will find a way to further segment and profile consumers on the basis of service engagement, online media consumption, search activity and interest. Social media platforms will continue to work their way toward commercialization of the high level of engagement and activity that consumers exhibit in their environments, taking advantage of the referential benefits to be gained by inferring consumer behavior from the groups to which they belong and the associations they make. In all of this, the mobile operators, platform managers and other mobile ecosystem participants who build, deploy and manage the devices and networks on which everyone else’s business model success depends are working overtime. They’re working to ensure that they have commerce provision capabilities of their own to bring to that middle place in which they find themselves and to which it seems an entire galaxy of industries is headed.

So, how will the players and solutions in the mobile convergence landscape evolve, and what may be the implications for the payments ecosystem in that convergence? How will this play out for the existing payments businesses and established players? We won’t debate whether they will remain relevant. It is almost certain that payments networks and processors, financial institutions and third parties will all continue to exist and provide payments functions of some form in the marketplace.

But what will become of the traditional payments business as the industries it serves become increasingly networked themselves, and as their business models develop to depend more and more on the execution of payments transactions? Will payments as we know them today continue to be independent, branded, distinct functions provided to consumers by financial institutions? Will the payments that matter most to these converging ecosystems, and therefore to their customers, still be managed independently by payments specialist companies? Will payments become a hidden execution function buried inside a new consumer-facing brand and capability? Will the branded global network payment of today evolve to become but a component, or “ingredient” brand, of someone else’s business solution, tied more closely to a piece of a much larger non-payment ecosystem?

So What Becomes of Payments as an Industry?


The answer to this question depends greatly on how payments systems integrate into new ecosystems. Their survival depends not on their fitness so much as on – to quote Charles Darwin – how “adaptive” the payments systems we know and use today are to integrating within the businesses of other industries and ecosystems. Why is this? For one thing, our current payments systems are to some extent victims of their own success. As revolutionary as the ability to access funds electronically from anywhere, at any time, for just about anything seemed at the time it first broke onto the scene a few decades ago, this capability is now taken pretty much for granted by the vast majority of payments participants. All of us expect transactions from our payment cards to work flawlessly, all the time, everywhere. We play straight past it.

As consumers, we are now driven by the solutions that solve the challenges that surround payments: What’s new out there that I didn’t know about? Is someone going to make me an offer on it? Where can I buy it? Is the product a good one? What do my friends think? And who is that texting me while I’m in the checkout line?

Payments companies would do well to heed the lessons taught by the explosive participant and revenue (and, not to mention, valuation) growth of a new generation of network businesses – social media platforms, online advertisers, search engine marketers and group discount organizers. Many of them were born in the past decade or so, have grown users dramatically and have done so by delivering unique value and services to consumers and businesses. These new online media and marketing platforms drive a range of business models in which they: connect advertisers to their marketing targets; deliver Web search and e-mail functions; build and deploy insanely great consumer electronics devices that are networked into a holistic platform and marketplace; create streamlined checkout processes tied to predicting what you might like to buy next and then deploying that capability for others; and build platforms on which you can publish everything you like about yourself, chat for seven hours a day or raise virtual crops with your friends.

Payments are a critical function for all of these businesses as they commercialize the core activities on their platforms. Yet payments are only a piece of the puzzle. The easier a non-payments ecosystem or platform can integrate your payment capability, the greater the chance that the commercial activity generated by that platform will come to you. The drivers of commercialization tomorrow may well be the new consumer engagement networks and not the payments businesses themselves.

Going Mobile 


In this environment, as major ecosystems converge on commerce opportunity, payments companies will need to make themselves available to and flexible for integration into the business models that drive convergence. For payments businesses, that means that opening the edge of a payments platform is not just a good idea but rather is critical to the ongoing relevance and growth of the core payments franchise. This means becoming more present in consumers’ daily lives and in their end-to-end view of commerce by becoming less independent and more connected to others’ business models. It may well mean that to become more essential to the new commerce engines, a traditional payment vehicle may need to become far less visible to the consumer who uses it.  

In any event, one thing is for certain in the coming convergence of major ecosystems on the central opportunity of consumer commerce creation: Mobile will be the linchpin.

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The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.

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