Mobile 205 Lesson 3: GPC Mobile Implications

Mobile 205 (required): GPC Payments Value Proposition

Lesson 3 Discussion Board: Which mobile ecosystem participant (type of company or company name) is best positioned to drive the growth of mobile payments? Click here to respond.

Mobile Services: So, while much of the industry has been trying to solve the puzzle of how to ramp onto today’s physical payments infrastructure by adding a phone and a chip on the front end, other parts of the business have taken the mobile banking approach — that is, use the phone as a way to communicate with customers — and run with it. Many financial institutions have seen the positive benefits of an ongoing dialogue with customers and are using the mobile as a way to deliver alerts and notifications to consumers about their payments accounts. Using simple SMS messaging channels (which, oddly enough, is the conversation channel in mobile that actually works consistently and reliably), financial institutions are having an ongoing conversation with consumers, such as:


  • your balance is low

  • that recurring bill was just paid

  • although you typically just use this card for groceries and gas, it looks like you’re at an electronics retailer spending several hundred dollars — if that’s not you, please call me

  • there’s a special offer available to you at your favorite clothing store — show this barcode, or use the card you registered with me, to receive you discount


In this service model, financial institutions have begun playing to the strengths of mobile devices. That is, their capacity for remote communication with consumers. And as a result, they have begun to wrap services around the core card payment –reinforcing a banking relationship, playing to consumers’ current behaviors-while creating more value for the consumer in a connection, not yet a combination, between the wallet in one pocket and the phone in the other.

What Does a Mobile Actually Do? As we wrap up our initial landscape overview and review of the recent evolution of mobile payments, we’ve taken a look at how the mobile landscape may change in the context of the challenges facing NFC adoption and how a mobile player (or players collectively) might enter the market for face to face transactions from a mobile phone. But, is a mobile really meant to be a physical payment vehicle? Yes, we’re still sitting around the conference table from our first section imagining the potential power in the combination of a mobile device and a consumer’s wallet. But what form should that really take? If we have to change consumer behavior and technology, not to mention the core business model for payments, to make NFC a success, can it be? Perhaps. Or maybe there’s a different way to think about a mobile device in the context of payment. There are a few companies that have created a potentially powerful model for consumers to pay with their mobiles, but perhaps not in the way we originally discussed.

Apple introduced the iPhone just a few short years ago. It was closely followed by Google’s Android platform and the first Android phones. While much has been made of the revolution in the mobile industry that these devices created, the business model change — and its implications for payment — are far more subtle. You may read elsewhere on about the impact of invisible engines and open development platforms like the iPhone and Android by clicking here. But the development that is perhaps most interesting in the context of how mobile payments may evolve is in the way these companies have deployed their application marketplaces.

Of course, the benefit to Apple of making the iPhone platform available to developers is that it now supports over 10,0000 applications, a smorgasbord of consumer choice that is hard to imagine if Apple were building all those programs itself. Android has seen a similar dynamic at play. However, the subtle change in the way mobile commerce may evolve is in the way consumers register to purchase applications, particularly with Apple. Using an installed base of consumers who were already iTunes users, Apple extended the utility of those iTunes user names and passwords, and the payment cards associated with them, by driving mobile application downloads from non-Apple providers through this massive digital marketplace. So far, Apple has kept this large population of registered users, and the alias database that drives transactions, to itself for its own purposes. However, is it a large leap to imagine Apple beginning to sell digital goods to iTunes users from outside the Apple storefront? Or is there any reason why you can’t use your iTunes ID to buy things in a physical Apple store? Would the company someday make this alias capability, distributed on an ever-growing number of consumer mobiles, available to other physical retailers to make mobile purchases quickly and seamlessly, with never a card in sight?

It’s Called a “Mobile” Device. So why would we try to introduce payments with a mobile phone by taking an anytime, anywhere highly-portable connected computing device out of a consumer’s pocket and then ask her to take it to a retailer to recreate the face-to-face purchases she makes today with a new technology? Maybe we won’t. As we will discuss later on in the semester in Mobile 401, it may be that remote mobile payments, combined with the evolution of consumers’ adoption of eCommerce checkout solutions, creates the opportunity for an evolution of payments with mobile devices that creates a new business model for using a mobile to make purchases — creating a value exchange that ties payments, retailing, advertising, and mobile telephony together in a way that drives unique value to the consumer.

Regardless of  the scenarios or outcomes, it is fairly impossible to imagine commerce in an increasingly connected world without mobile devices taking a more active role in payments. That role may well be primarily as a remote communication device to initiate and complement payments. That would, at least, fit with what mobiles do today.

Lesson 3 Discussion Board: Which mobile ecosystem participant (type of company or company name) is best positioned to drive the growth of mobile payments? Click here to respond..

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Mobile 205 Lesson 2: GPC Mobile Evolution

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