The Future of Mobile Payments Is So Yesterday

Much of the energy at Money2020 in Las Vegas this week is focused on mobile commerce — in other words, paying with a smartphone. It’s not because cards are broken or that consumers or merchants are itching for something new, but because mobile transactions are much richer in terms of data delivered to the merchant, and in service delivered to the customer.

Now, if there was just some way to let the merchants and customers know how great this stuff is!

Many of the big players in mobile payments are displaying their latest ideas here in Las Vegas. Google and Isis showed off their latest wallets yesterday and PayPal and Capital One are launching new products today. Here’s a roundup of the efforts to get consumer buy in on mobile payments.

PayPal Payment Code: Attacking on Multiple Fronts
PayPal has added functionality into its recently updated app to allow users to make purchases using QR codes or short codes, 4-digit numbers. The user checks in at a store and signals his intent to buy. The order is placed, and when the customer appears at the point of sale, possibly bypassing lines, though this would seem likely to annoy the rest of humanity, he presents his phone and either has the QR code scanned or enters his short code onto the POS terminal.

PayPal’s strategy is to attack mobile payments on multiple fronts, according to Brad Brodigan, vice president of small business retail. “Single bets have not proven successful so far,” he said. Further, PayPal will focus on partnerships — “co-opetition,” unfortunately, has been a major buzzword at Money2020 — rather than trying to do everything itself. Partners such as ShopKeep POS will help PayPal reach segments of the markets more efficiently than it could do on its own. Payment codes are expected to roll out in Q1 2014.

Capital One to Launch Location-Based Marketing for Small Businesses
Capital One Financial Corp. is enhancing its offering to its Spark Pay small business clients, offering to allow merchants to reach loyal customers in-store and potential customers near-store using location-based technology from San Francisco-based startup PushPoint.

Using the technology, merchants can purchase ad impressions within a defined geo-fence in ¼-mile increments. Offers can be run on social media or any channel the merchant wants, and when users accept the offer and enter the geo-fence, the offer is pushed to their phone. No apps need to be open or installed.

Another, related offering employs Bluetooth beacon rather than GPS and requires a store-affiliated app. This technology can tell when a user is within 50 to 100 feet of the transmitting beacon, which can then communicate with the user’s app to push offers. (Yes, like in the movie “Minority Report.”) The Spark Pay backend includes analytics to look at the effectiveness of these offers at a granular level.

The idea is that Capital One will help merchants not just keep already loyal customers happy, but acquire new customers. For the merchant, the loyalty portion is free — customer acquisition comes with a fee, according to Brian Hamilton, SVP of national digital platforms, small business banking. Again, it’s a play that hedges bets and attacks multiple fronts, which is a theme common to many new mobile commerce approaches. Capital One also redesigned its Spark Pay dongle, so it no longer resembles the old Verifone Sail devices, on which it was built.

Isis and Google Wallet Demonstrations Soldier On Through Failing Wifi, Crowd Indifference

Mike Abbott, CEO of Isis, took to the stage yesterday to show off the new look of the mobile wallet put together by a consortium of three of the four largest telecom companies. Despite a complete wifi breakdown, Abbott soldiered on. The app is “organized and simplified,” Abbott said, and brings the partners’ brands forward. Indeed, the smartphone screen is now nearly filled by whatever card is at the front of the wallet. The back of the card, instead of being a billboard for legalese, as Abbott put it, now displays the card balance and payment due date, and allows payment of partner cards from within the app. Abbott demonstrated making a purchase with a tap at a dummy point of sale and sent money using the app. Called Isis Connect, this feature will roll out “in a few weeks,” Abbott said.

Ariel Bardin, Google’s VP of Payments, came to the stage later to show off the new Google Wallet and reaffirm Google’s commitment to payments. Staff at Google is moving from AdWords — Google has made $140 billion in advertising over the last 12 years, parenthetically — to payments, Bardin said. (Facebook sees a similar disparity: massive ad revenue, paltry payments numbers.) Google Wallet has added 200,000 cards, primarily loyalty cards, Bardin said, and has adapted to the real world and the lack of NFC on certain phones by creating new solutions for contactless payments. (Isis is still betting on NFC, as its demo proved.) “We see this as a long-term bet,” Bardin said near the end of his presentation, adding that mobile payments is not a zero-sum game. It was a warning to competitor (or “coopetitors”) that Google doesn’t scare easily and will be a payments player for the long haul. Launching its iPhone app earlier this years should have shown that.

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The technology available to mobile payments providers keeps getting better, but until something exciting happens that pushes past customer apathy and merchant hostility, and offers benefits to both above and beyond plastic, widespread adoption will be slow. Have you seen this Pepsi Next ad? The baby is mobile wallet providers, Pepsi Next is plastic.