Mobile payments: great for coffee, but not much else(blog.thomvest.com)
blog.thomvest.com
Mobile payments: great for coffee, but not much else
http://blog.thomvest.com/muchsizzlelittlesteak/
22 comments
I find your comment interesting and perhaps there's an implicit nod to Aloha/Radiant Systems somewhere in there? As someone directly involved in the market, I'm curious about your thoughts on where the opportunity (creating more card accepting merchants vs. winning market share of current participants) is right now wtf to the POS space. NCR just acquired Radiant Systems, so that seemed like an indicator of disruption in the space.
I firmly believe the POS space is ripe for some really intense disruption. Tablets (namely, iPads given that's what 90% of the market actually owns) cost $500 apiece, are easily accessible, and let business owners demo point of sale systems software right on their device, instead of just placing a call to Micros/Aloha and making a call based on specs and feature checklists, when those feature checklists include a lot of convoluted features they won't end up using.
The problem is, even with the revolution of availability in the space, given the poor purchasing experience with previous point of sale systems, most business owners are A) not very excited to have to purchase a point of sale and B) cannot possibly comprehend a point of sale that can run on commodity hardware. All sorts of silly questions regarding reliability crop up.
But, I digress. Regarding payments, I think that point of sale developers regard it as just a necessary evil that we have to roll our eyes and hold our nose that we need to integrate these payment solutions. We end up writing integration for each payment processor themselves, and each of their unique XML/SOAP/what have you APIs instead of spending time on what we care about. I would love for a user-centric company like Square to come in and just offer a usable API, but that's not really their gig and it's a complex situation.
Payments are in need of disruption, sure, but the first person to 'win' will be the one who decides they're not going to go completely vertical anymore, and has a nice, full, API with a good accounting/reporting web service to back it up. At that point, I can trust they're going to get my customers the best rates and widest acceptance possible, and I can easily write integration for them and push my customers their way. I could care less about this and that detail about slightly lower rates, or gift card programs, or cutting me .005 percent of each transaction. I just want to give my customers the tools to run their business correctly and accurately at the lowest possible development cost to myself.
The problem is, even with the revolution of availability in the space, given the poor purchasing experience with previous point of sale systems, most business owners are A) not very excited to have to purchase a point of sale and B) cannot possibly comprehend a point of sale that can run on commodity hardware. All sorts of silly questions regarding reliability crop up.
But, I digress. Regarding payments, I think that point of sale developers regard it as just a necessary evil that we have to roll our eyes and hold our nose that we need to integrate these payment solutions. We end up writing integration for each payment processor themselves, and each of their unique XML/SOAP/what have you APIs instead of spending time on what we care about. I would love for a user-centric company like Square to come in and just offer a usable API, but that's not really their gig and it's a complex situation.
Payments are in need of disruption, sure, but the first person to 'win' will be the one who decides they're not going to go completely vertical anymore, and has a nice, full, API with a good accounting/reporting web service to back it up. At that point, I can trust they're going to get my customers the best rates and widest acceptance possible, and I can easily write integration for them and push my customers their way. I could care less about this and that detail about slightly lower rates, or gift card programs, or cutting me .005 percent of each transaction. I just want to give my customers the tools to run their business correctly and accurately at the lowest possible development cost to myself.
Yup. And the only thing that twitter and social networks are good for is inconsequntial chatter and trading funny cat pictures. For that matter, the same applies to blogs too. And smart phones, and tablets. Hell, maybe even personal computers too. What can you do with them anyway, keep track of recipes? This whole internet thing is probably just a fad since I can set up a straw man caricature of it and knock it down easily without digging in to the fundamentals with any degree of depth whatsoever.
Let me be serious a moment. Most new technologies start out limited. Look at the automobile or the airplane or the personal computer. In the PC's case it wasn't anything more than a toy, a hobby device for years. But it's the fundamentals that matter. Whether or not extensive air travel is feasible is not dependent on the quirks of the Wright flyer but rather on the fundamentals, and on the characteristics of later generation vehicles like the DC-3 or 747. The same goes for mobile payments. In 50 years, maybe sooner, keys and wallets will be obsolete because mobile computing devices will be used for payment, identity, and access.
Let me be serious a moment. Most new technologies start out limited. Look at the automobile or the airplane or the personal computer. In the PC's case it wasn't anything more than a toy, a hobby device for years. But it's the fundamentals that matter. Whether or not extensive air travel is feasible is not dependent on the quirks of the Wright flyer but rather on the fundamentals, and on the characteristics of later generation vehicles like the DC-3 or 747. The same goes for mobile payments. In 50 years, maybe sooner, keys and wallets will be obsolete because mobile computing devices will be used for payment, identity, and access.
Mobile payments have been very successful in some countries like Kenya, where the M-pesa system offered by a leading telecom provider is a leading mobile money service, with over 8 million subscribers. http://en.wikipedia.org/wiki/M-Pesa
In my country, I made a replacement for cab payments with mobile payments. We had the cab payment people, and all the telcos on board. However, because of the telcos selling virtual goods, they were used to 30%-50%-70% or more of the transaction. Where as the cab people were getting 10% on the credit card payments. The telcos gave up massive real world markets in order to keep their tiny ring tone, and wall paper markets.
idiots
idiots
Bluetooth, the Internet, Smartphones, Twitter, Facebook.
All were technologies that had to incubate quite some time, some for a decade or more, before they were widely usable.
It concerns me when a tech writer looks at something and says "it will never be useful within 6 months" when there is a ton of infrastructure involved.
It's not about the immediate payoff, it's about the future.
All were technologies that had to incubate quite some time, some for a decade or more, before they were widely usable.
It concerns me when a tech writer looks at something and says "it will never be useful within 6 months" when there is a ton of infrastructure involved.
It's not about the immediate payoff, it's about the future.
Even though they didn't test FaceCash, here's our general response to the "mobile payments are useless" argument:
http://www.quora.com/Aaron-Greenspan/Paying-With-Your-Phone-...
http://www.quora.com/Aaron-Greenspan/Paying-With-Your-Phone-...
Mobile payments using contactless technologies such as NFC goes beyond the transaction at the Point-Of-Sale, in terms of providing a context to my payment.
Even though it maybe that it would be easier to take your credit card and swipe faster than taking out your phone, launching the app and then initiating a mobile payment, the advantages are as follows:
- The app can tell me if for a particular retail category, I have crossed any predefined limits I have chosen: Say 300 dollars for Gas this month, or 200 dollars eating out.
- The app can tell me, if I make this payment, whether that impacts any bills or checks that are set to clear right away. This lets me avoid any late payments, bounced checks etc.
- If I had a debit card and a credit card with the bank, the app can choose the right card for me to use. If I am near my credit limit, then the app can default to my debit card. Or If my account is drawn out, then it could use my credit card for the purchase thereby saving me Overdraft fees. Or if there were specific coupons that would warrant the use of one over the other, then the app could show benefits of using both and let me choose.
- If the purchase amount is significant, and requires my credit limit to be raised, then the card could do an STP and ask me to whether to increase my credit limit.
- If the purchase amount is significant, instead of using a credit card, the bank could ask me whether i would like to open a small loan and approve me rightaway by showing me the salient details (rate and term).
- The app could show me how many rewards points I stand to gain from making this purchase.
- Even better, The app could possibly allow me to use my rewards points towards the payment instead of paying cash or credit, provided that the bank and the merchant has an agreement in place.
A lot of this might just be wishful dream for a while, but shedding the plastic for a powerful payment alternative will finally deliver on many fronts including the ones outlined above. If Banks continue to think and operate as they did in the past, they stand to lose out against upstarts like Square, Dwolla who are disrupting the payment industry. But I do agree that the players in this space, including the NFC enabled terminals, Banks, Payment Processors all need to work together in facilitating this and ensuring its a seamless process. Yes, it will be a radical shift from how we pay for things today, but there are tangible benefits to customers who are willing to change their payment modalities.
This space is still being shaken out in terms of players and alliances. NFC is still in its early stages, but I believe this is the way to go.
I am interested in hearing others opinions on my views as well.
Even though it maybe that it would be easier to take your credit card and swipe faster than taking out your phone, launching the app and then initiating a mobile payment, the advantages are as follows:
- The app can tell me if for a particular retail category, I have crossed any predefined limits I have chosen: Say 300 dollars for Gas this month, or 200 dollars eating out.
- The app can tell me, if I make this payment, whether that impacts any bills or checks that are set to clear right away. This lets me avoid any late payments, bounced checks etc.
- If I had a debit card and a credit card with the bank, the app can choose the right card for me to use. If I am near my credit limit, then the app can default to my debit card. Or If my account is drawn out, then it could use my credit card for the purchase thereby saving me Overdraft fees. Or if there were specific coupons that would warrant the use of one over the other, then the app could show benefits of using both and let me choose.
- If the purchase amount is significant, and requires my credit limit to be raised, then the card could do an STP and ask me to whether to increase my credit limit.
- If the purchase amount is significant, instead of using a credit card, the bank could ask me whether i would like to open a small loan and approve me rightaway by showing me the salient details (rate and term).
- The app could show me how many rewards points I stand to gain from making this purchase.
- Even better, The app could possibly allow me to use my rewards points towards the payment instead of paying cash or credit, provided that the bank and the merchant has an agreement in place.
A lot of this might just be wishful dream for a while, but shedding the plastic for a powerful payment alternative will finally deliver on many fronts including the ones outlined above. If Banks continue to think and operate as they did in the past, they stand to lose out against upstarts like Square, Dwolla who are disrupting the payment industry. But I do agree that the players in this space, including the NFC enabled terminals, Banks, Payment Processors all need to work together in facilitating this and ensuring its a seamless process. Yes, it will be a radical shift from how we pay for things today, but there are tangible benefits to customers who are willing to change their payment modalities.
This space is still being shaken out in terms of players and alliances. NFC is still in its early stages, but I believe this is the way to go.
I am interested in hearing others opinions on my views as well.
Exactly. The OP is basically "and these are the problems I have because this technology is early-adoption" rather than "and these are the problems I had because of fundamental issues with technology".
As to the whole speed of whipping out the credit card issue - c'mon, you probably had to queue to buy your groceries, you could anticipate the need for payment a whole 10 seconds ahead of time and have your phone out already.
As to the whole speed of whipping out the credit card issue - c'mon, you probably had to queue to buy your groceries, you could anticipate the need for payment a whole 10 seconds ahead of time and have your phone out already.
Most of the advantages you state there don't really require NFC, though. Certainly, very few of them are of immediate concern to me, so if a provider like Mint could check for transactions at regular intervals, I'd happily receive every one of those notifications by e-mail at a later point.
In fact, they pretty much already do that. I only get a weekly notification from Mint, but it might be possible to change that.
In fact, they pretty much already do that. I only get a weekly notification from Mint, but it might be possible to change that.
All those things you list are a detriment to the merchant since they all hold up the payment process (longer checkout lines, disgruntled customers, etc.) as well as potentially giving the customer incentive to back out at the last minute.
If I were a merchant, trying to sell me on the above "features" would pretty much convince me not to take part.
If I were a merchant, trying to sell me on the above "features" would pretty much convince me not to take part.
i dont think any of that matters. nobody cares.
the app can ask me to confirm the transaction after the retailer initiates. that's a game changer.
there is of course lots of lobbying to be done, but you need to already have a business interest to get the laws fixed.
the app can ask me to confirm the transaction after the retailer initiates. that's a game changer.
there is of course lots of lobbying to be done, but you need to already have a business interest to get the laws fixed.
i disagree. Lobbying and all can come later. Any bank who decides to take advantage of this new mobile channel both to engage their customers and are able to get a customer to change his payment modalities, they can recapture the mindshare they are losing today to the likes of Google and Square. Doubtful if these financial institutions are as prescient to realize the disruptive forces currently in play in the financial sector, but if they do then they can stay relevant.
How is that a game changer? That functionality already exist in modern card terminals.
> This space is still being shaken out in terms of players and alliances.
The big players are never going to open up their NFC tag format so 1) the only app that will let you use your phone to act as your bank or credit account will be their official, locked down app and 2) the only app that will verify that the tag read constitutes a valid credit card is the official app (sorry, Square - unless they manage to partner with the big banks).
I do not think there will be open standards for letting indie developers into the purchase chain for NFC.
The big players are never going to open up their NFC tag format so 1) the only app that will let you use your phone to act as your bank or credit account will be their official, locked down app and 2) the only app that will verify that the tag read constitutes a valid credit card is the official app (sorry, Square - unless they manage to partner with the big banks).
I do not think there will be open standards for letting indie developers into the purchase chain for NFC.
It's really disappointing that none of the developers of these systems thought to add anonymity as a feature.
It’s also sad that early adopters--who tend to be hackers/geeks--aren’t demanding anonymous transactions. It could even be limited anonymity, like being untraceable except by sender or recipient.
Yeah, we don’t need anonymity to buy coffee (not usually, but see note), but we certainly won’t get it later on for transactions where it is needed if it doesn’t get built in from the beginning.
(note) Who were you meeting when you got that coffee? Oh never mind, I can see in the centralized records who bought a coffee immediately before and immediately after you, and also who you reimbursed when you bought two coffees.
It’s also sad that early adopters--who tend to be hackers/geeks--aren’t demanding anonymous transactions. It could even be limited anonymity, like being untraceable except by sender or recipient.
Yeah, we don’t need anonymity to buy coffee (not usually, but see note), but we certainly won’t get it later on for transactions where it is needed if it doesn’t get built in from the beginning.
(note) Who were you meeting when you got that coffee? Oh never mind, I can see in the centralized records who bought a coffee immediately before and immediately after you, and also who you reimbursed when you bought two coffees.
I share your concern, and I believe there are people thinking like that working on solutions. If I had the talent, it would have been built 3 years ago.
I'm still not sure what the value proposition is supposed to be for me, as a consumer. In one pocket I have my credit and debit cards. In the other pocket I have my mobile phone. Unlike my phone, my credit and debit cards never run out of batteries. Why do I want to replace one with the other?
I'd say PayPal is "Better than checks" for the payer, but not for the payee. Transaction costs are a multiple higher.
I notice Interac E-mail Transfer is not listed. I've used that before. A bit of a pain to set up, but fees are lower than PayPal.
I notice Interac E-mail Transfer is not listed. I've used that before. A bit of a pain to set up, but fees are lower than PayPal.
I think a lot of the use cases will come after we have this implemented everywhere. It's often not obvious what a new technology can be used for, but it becomes clear later.
I would be interested to see responses from the companies tested.
The current division between point of sale and payment is that way for a reason, namely it allows for each to focus on its core competency and run with it. Square is a terrible point of sale for a business (it's great for personal use!), because they're not willing or able to built out a whole point of sale system just to satisfy the needs of businesses. We've had an incredible number of people since we launched extremely excited to switch from Square over to our product for some very basic features, such as receipt printing, much less things like managing what your employees can do in the system, maintaining payroll and separate user accounts, and a thousand other fundamental features that point of sale systems need to do to be anything besides a trendy, cheap, alternative.
The other payment services have little to no traction, and I'd like to think that's because of just how well Square is designed. Unfortunately, until Square either decides to build a full point of sale system and work on selling it (unlikely), or open up to 3rd parties via some API (which I doubt will happen, I've tried to get in touch multiple times to request this and haven't received any meaningful response), I don't see it getting much traction beyond personal use.