5 Burning Questions: Commerce Fault Line’s Patrick Gauthier

Industry insider Patrick Gauthier answers five burning questions on the mobile platform wars and its impact on the payments industry.

Patrick Gauthier is a senior payment industry executive with 20 years of experience in developing, selling and deploying new technologies for payment and commerce, on a international basis, in private and public companies ranging from start-ups to global organizations. Recently, Patrick launched his very successful blog for PYMNTS.com, The Commerce Fault Line, where he offers great insight on what’s next the payments industry.

What’s the most significant payments application for mobile platforms that you’ve seen in the marketplace and why do you believe it is significant?

In general I think that mobile money transfer has been the most important payment application as of yet. In particular what SMART has done in the Philippines. SMART is significant because:



  • It has found an unmet need starting with bill payment which translated in a significant base of users

  • SMART has found a business model that works (even with micro transactions)

  • It scaled



It is a illustrative of what matters: its not about technology but about user experience, convenience and delivering a solution that couldn’t be done without the mobile, while aligning a business model where revenues are commensurate with the value created for the various stakeholders. Fundamo in South Africa falls in a similar category.

What are the three most important applications that you believe will be developed and deployed for mobile platforms in the US in the next year? In developing economies?

In the U.S., I expect that we will continue to see an explosion of social networking applications in particular in the areas of massive multiplayer games. Already today entertainment apps are consistently occupying the top of the charts in the AppStore. I don’t see any reason this would change. I do expect though an increase in the social entertainment space since it is exploding right now. In developing economies I think we should watch very carefully what Nokia will accomplish with Nokia Money. Given the brand and the reach of Nokia and the goal of bringing modern electronic transactions to cash dominated economies it has the potential of truly changing the mobile and mobile payments eco-systems. I expect that we will see some convergence of “old” solutions and brands (e.g. the payment networks) and mobile platform providers as regulatory constraints collide with the potential of mobile solutions.

Will mobile phones change how people shop at the point of sale and if so how?

Yes, undoubtedly, but with a clarification. People pay at the point-of-sale. They shop in the aisles of the store. I fully expect mobile to have profound implications on shopping and merchandising. The impact on payment (at the PoS) will follow and will be the consequence of either the merchants successfully finding an alternative to the interchange based networks the resent; or the commerce community (merchants, banks and networks) recognizing that they need to stick with the lifestyle of the mobile generation. Where shopping is concerned, I expect a multiplication of offering in the domain of targeted promotion and shopping help. Motorola‘s introduction of a loyalty platform on mobile is a sign of things to come.

How does Google’s Android operating system and mobile strategy stack up to Apple’s iPhone and does Google have any advantages?

Google and Apple occupy very different place in the food chain. Apple has always been about a proprietary approach from hardware to software to service, to ensure an iconic customer experience even if it meant a smaller market share. Google is about information management, connectivity and open platforms to reach the most people. While Android – as an open source platform – does encapsulate what Google stands for, and therefore creates the potential of a real “open mobile garden,” the execution is less than stellar in particular with Nexus One.

I have to confess that when I first heard rumors’ of Google’s plan about six months ago, my first reaction was “I thought these guys were smart.” For Google to encroach in the device and platform space is a big bet, which would be fine if they had truly thought through their product mix and product plan. All the signs though point to something different: the pricing is in flux; the distribution strategy is not set; customer service is not to par; application certification is not mature (as demonstrated by the withdrawing of malware parading as banking applications); the communication around the introduction was underwhelming and didn’t make real use of CES … etc. Even the branding “Nexus One” is overly technological. I fear that Nexus One might “microsify” Google and make them lose their way. The risk is for their phone to become a gadget of “technical innovators” (aka geeks) and miss on the average consumer. It would be a shame since the open model they have always Ichampioned should enable far more innovation in commerce than the iPhone platform.

Will the mobile platform wars make the widespread deployment of contactless at the point of sale more or less likely and why?

It is a little too early to tell. On one hand, Apple has developed a formidable ecosystem and a number of suppliers are building contactless accessories that will be critical to bridge the chasm. On the other hand, Google has the potential of enabling far more services being a truly net centric platform. However, the barriers to deployment and adoption of contactless / Near Field Communication at the point of sale have more to do with the lack of a good business model for the various stakeholders (starting with the merchant, the operator and the bank). Both Google and Apple in their own way can help break the log jam: they have powerful brands, deep pockets and the ability to trigger important changes in consumer behaviors.

Agree / Disagree: Contact Patrick at patrick.r.gauthier@sbcglobal.net or twitter: prgauthier.