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January 06 2012

Commerce Weekly: Yahoo's new CEO has data focus

As the payments world roused itself from its holiday hiatus, here are some of the items that caught my eye.

Former PayPal chief brings data focus to Yahoo CEO position

YahooScott Thompson's move from leading eBay's PayPal division to becoming CEO of Yahoo received ample coverage in this light news week. The most interesting aspect to me was this former chief technology officer's focus on the importance of data to Yahoo's success. While past CEOs have focused on advertising, the company's role in the media landscape and alliances with U.S. and Chinese companies, Thompson showed his tech-centered origins in an interview with Ad Age:

At PayPal, we were able to create an unbelievably compelling business because we used data to understand risk and fraud better than anyone on earth. And that was the secret sauce. We had more data than anyone else, better tools and models, and super smart people who were challenged by the problem. It doesn't seem glamorous, but that was the reason.

Fast Company emphasized Thompson's background as PayPal's CTO and made clear to its lay-business audience that when he's talking about data, he's not just talking about a better dashboard to understand advertising opportunities. He's talking about the "big data" opportunity, tapping into large datasets produced by the transactions and interactions of Yahoo's 700 million members around the world.

From E.B. Boyd's Fast Company post:

Every day, those 700 million souls log in to the Yahoo universe and start making their way around its sites, moving from story to story to story to story — effectively giving Yahoo a media mogul's dream: the largest petri dish in the world to understand what sorts of content appeal to which sorts of people and what sorts of things will make them likely to consume more and more.

Of course, this is hardly news to Yahoo's data engineers or the big data community, but it will be interesting to see what effect a data-savvy CEO will have on Yahoo's prospects.

X.commerce harnesses the technologies of eBay, PayPal and Magento to create the first end-to-end multi-channel commerce technology platform. Our vision is to enable merchants of every size, service providers and developers to thrive in a marketplace where in-store, online, mobile and social selling are all mission critical to business success. Learn more at x.com.

Flurry: More than one billion apps downloaded in 2011's final week

While most retailers focus on the crucial weeks leading up to the holidays, the week between Christmas and New Year's Day — when customers are off work playing with their newly received devices — is more important for app developers. In fact, Flurry reports that this particular week was the largest ever for iOS and Android device activations and app downloads.

Flurry estimates that more than 20 million iOS and Android devices were activated, and 1.2 billion applications were downloaded on the two platforms. Christmas day itself was the biggest day ever for downloads: Flurry estimates that 242 million apps were downloaded while happy recipients explored their new toys.

Flurry also predicted that Apple's App Store will have delivered more than 10 billion apps in 2011 — more than twice the number downloaded in 2008, 2009 and 2010 combined.

EBay's mobile VP goes shopping with Robert Scoble

Just before the holiday, we reported on the "Watch with eBay" feature in eBay's iPad app, which offers viewers a sort of real-time catalog, proffering goods related to the program they're viewing on TV. Robert Scoble has an interesting follow-up interview with Steve Yankovich, eBay's vice president of mobile. Yankovich dropped by Scoble's home office with the app to show him how it works, and he revealed a new feature that identifies fabric patterns in clothing and taps related clothing items in eBay's inventories.

Posters on Scoble's related Google+ thread were more fascinated (or irritated) by Yankovich's comments that even though Android devices are dominating the market, the iOS platform is still more important from a commerce perspective.

Got news?

News tips and suggestions are always welcome, so please send them along.


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December 01 2011

Commerce Weekly: Cyber Monday lives up to hype

Here's what caught my attention in the commerce space this week.

US online shoppers spent $1.25 billion on Cyber Monday

Screenshot from Amazon's iOS appWe knew we were going to spend a lot of money over the four days from Black Friday through Cyber Monday; all the TV commercials, digital ads, and forecasters told us so. But no one knew just how much until it was over — and no one saw how much of the spending was going to happen online. After it was over, when the purchase buttons had been clicked and the UPS trucks were rolling, Cyber Monday (Nov. 28) turned out to be the heaviest U.S. online spending day in history, according to ComScore. Shoppers spent $1.25 billion online, 22% more than on Cyber Monday 2010, the only other billion-dollar-plus day in online spending history. This year's Cyber Monday splurge capped a month of intensifying sales: more than $15 billion spent online since the beginning of the month.

If online sales growth was healthy, the growth in mobile sales was practically supernatural. PayPal Mobile reported a 552% increase in global mobile payment volume on Cyber Monday 2011 compared to the same day a year earlier. Of course, percentages are bound to look big when the baseline starts out low, and mobile payments have come a long way in the past 12 months. Claudia Lombana, PayPal shopping specialist, wrote on the company's blog that mobile sales volumes were 17% above those on Black Friday and volume was heaviest between 2pm and 3pm PST — suggesting that, on the East Coast at least, shoppers waited until the workday was (mostly) done.

So, does all this activity mean that consumer confidence has returned and we're about to buy our way out of the economic doldrums? Not exactly, writes Sheyna Steiner on Bankrate.com. Bankrate's November Financial Security Index reports that 42% of Americans say they plan to spend less this holiday season while only 10% expect to spend more. Black Friday and Cyber Monday mania may be less about kicking off an orgy of spending than they are about seeking the best bargains to stretch limited funds.

X.commerce harnesses the technologies of eBay, PayPal and Magento to create the first end-to-end multi-channel commerce technology platform. Our vision is to enable merchants of every size, service providers and developers to thrive in a marketplace where in-store, online, mobile and social selling are all mission critical to business success. Learn more at x.com.

A chat with a Groupon Now merchant

GrouponGroupon saw a big boost over the Black Friday-Cyber Monday weekend, too, reporting a 500% increase over last year for those four days. It's a little hard to keep track of whether Groupon is hot or not. Its Nov. 4 IPO blew past critics, raking in $700 million to become the biggest initial public offer since Google's in 2004. But within a few weeks, it saw its share price drop from its $26.10 opening-day closing price to $15.24 earlier this week. A boost in holiday sales could improve its standing, but many analysts are still saying the shares should be priced lower.

Whether Groupon's share price rises or falls, investors would do well to focus not on on its over-hyped daily deals, but on Groupon Now, the company's real-time discount service that lets merchants control when and how to offer deals. To find out more about it, I spoke with Dennis Cavanaugh the owner of 5 & Diner in Mesa, Ariz. Cavanaugh, who started out with a daily deal earlier this year, says he likes the flexibility of Groupon Now better. For example, he was able to increase one coupon offer of $10 for $20 worth of food up to $12 for the same offer and noted that there was no drop-off in uptake — so, he kept it there. "I can pause it, unpause it, change the hours of redemption, all the do-it-yourself things," he says, "and I don't have to call someone in Chicago. It's all in real time. There's no lead-time required on the decisions."

Cavanaugh says that Groupon Now customers are also more likely to spend over the coupon amount than customers who bring in coupons clipped from a newspaper — $6 to $8 more on average. He suspects it has something to do with the fact that they're affluent enough to afford a smartphone. And he notices that the Groupon Now offers bring in customers from further afield than the 3- to 5-mile radius that most of his customers come from.

Cavanaugh says he probably wouldn't make another daily deal offer: "I like Groupon Now better. Groupon gave us a huge surge in its booking period, but you can't control any aspect of it once it's out there. It was my first try, and I didn't know if the coupon was priced right. I know a lot more now. I think [Groupon Now] is a better tool for me to draw people in."

RIM pursues a mobile wallet

BlackBerry Curve 9380Research in Motion announced two more Blackberry devices that support near field communication (NFC) and RIM's small mobile-wallet trial with Telefónica, the Spanish telecom.

The Blackberry Bold 9790 and Curve 9380 join a few existing models that support NFC wireless communication, the leading contender for tap-and-pay wireless technology in mobiles. The RIM trial isn't at the scale of what Isis is planning in the coming year, let alone the real-world capabilities of Google Wallet on Sprint's Nexus S phones. At Telefónica's headquarters in Madrid, 350 employees will get Blackberries that let them make purchases and gain access to the company's buildings.

It's not exactly tap-and-pay on the Metro, but it's a start — one that RIM is hoping will slow its sliding market share to Android and Apple.

Got news?

News tips and suggestions are always welcome, so please send them along.


If you're interested in learning more about the commerce space, check out DevZone on x.com, a collaboration between O'Reilly and X.commerce.


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November 17 2011

Commerce Weekly: Bring your mobile to Black Friday

Here's what caught my attention in the commerce space this week.

Retailers embrace mobiles for Black Friday

Using a mobile phone in a retail storeDo you still try to be sneaky when comparison shopping on your smartphone in retail stores? Are you afraid the manager will take offense and ask you to leave? I think this shyness is rooted in a past wherein retailers controlled the information that flowed to customers in their stores so that they weren't competing with any other retail outlets, let alone Amazon and every other online retailer. Like casino owners who banned clocks and hid exit signs, the retailers used to keep us in their bubbles with their marked-up prices.

That time is long past. As Peter Lurie, American Express' senior vice president of enterprise growth said at a mobile payments conference in New York in September, " 'Are you online?' is no longer a meaningful question." According to Deloitte's 2011 Annual Holiday Survey of 5,000 U.S. consumers, of the 42% that owned a smartphone, 27% said they will use it for holiday shopping. Some other interesting findings by Deloitte:



  • Consumers expect 1/3 of their shopping to be online this year.

  • 51% said they will go online to find the best price — up 10% from just a year ago.

  • Convenience is the top draw for online shopping (73%), followed by better prices (68%).

  • 47% said they have purchased in a store after researching online.

  • 39% said they purchased online after researching at a store.

With so many users doing their product research and comparison shopping online, some brick-and-mortar retailers have stopped fighting it and are instead embracing it. Nordstrom boasts free Wi-Fi access at its stores, and other large retailers, including Target, Best Buy, and Macy's, are promoting their affiliations with Shopkick, which combines check-ins with coupons. And even if retailers have modest expectations for this year's Black Friday, there are a handful of apps aimed at helping shoppers find the best deals in their areas.

While the term "Black Friday" has been gaining traction for decades, it was joined a few years ago by "Cyber Monday," the day when shoppers who had spent their weekends trudging through stores settled in at the high-speed connections at work to find better prices on the items they skipped in the stores. Now, add to the lexicon "Sofa Sunday," the tablet-enabled phenomenon of crashing on the couch after a day or two of heavy shopping to peruse store catalogs. So suggests Joaquín Ruiz, co-founder and CEO of shopping app maker Padopolis in an interview with AllThingsD's Tricia Duryee: "After you are exhausted with your Black Friday experience, you'll relax and regroup on Sofa Sunday."

And on the seventh day, the shoppers rested (a little).

X.commerce harnesses the technologies of eBay, PayPal and Magento to create the first end-to-end multi-channel commerce technology platform. Our vision is to enable merchants of every size, service providers and developers to thrive in a marketplace where in-store, online, mobile and social selling are all mission critical to business success. Learn more at x.com.

Developers chasing Fire

As Android's market share continues to climb — topping 50% of the global smartphone market according to Gartner — so too does developer interest in the platform. This week's release of Amazon's Kindle Fire has sharpened that interest. Appcelerator's Q4 survey of mobile developers found that Kindle Fire is tops in interest among Android developers in the U.S. and second (behind Samsung's Galaxy Tab) worldwide.

Square adds loyalty program to Card Case

The latest update to Square includes a few features designed to make it behave even more like a real cash register, along with something else: the promising of ditching those paper punch cards. In addition to adding integration with hardware peripherals (a merchant can tap an iPad screen to open a cash drawer or print a receipt), this new upgrade adds the ability to design and run loyalty programs. Merchants decide what constitutes loyalty — number of visits, frequency, amount purchased — and what rewards or discounts are given. Once earned, the awards are automatically delivered when the customer pays with Card Case, the app for the consumer side of Square's transactions.

The video embedded below shows some of the features. The hardware integration and loyalty-program interface are nice, but perhaps even cooler is the wooden stand that the iPad slips into to make it a register. It's beautiful when disruption comes with a graceful design.

Got news?

News tips and suggestions are always welcome, so please send them along.


If you're interested in learning more about the commerce space, check out DevZone on x.com, a collaboration between O'Reilly and X.commerce.



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November 10 2011

Commerce Weekly: Chasing down abandoned shopping carts

Here's what caught my attention in the commerce space this week.

Inviting customers back to their carts

Shopping cartOnly three out of every 10 online shopping carts actually make it to checkout, according to email marketing vendor Listrak. That's 70% of carts lying abandoned in the virtual corridors of ecommerce. Listrak wants to improve those numbers. It's one of several vendors offering "shopping cart abandonment solutions" — essentially, programs to follow up with shoppers who've left the store and ask them, "Haven't you forgotten something?"

Retailers would love to close more of those sales: Listrak estimates $18 billion lost in sales to U.S. retailers every year. A Forrester study last May found that 89% of consumers had abandoned a shopping cart at least once. Forrester's authors attributed that high rate to growing user sophistication: as shoppers become more experienced online, they are more likely to comparison shop even as they move toward checkout. Other industry observers offer a simpler explanation: shoppers are shocked at high shipping costs. A 2006 study by Goecart blamed comparison shopping, high shipping costs, and plain old running out of time as the leading causes of abandonment.

Listrak sampled Internet Retailer's Top 1000 online retailers, loading up carts and then abandoning them ("Hey you kids! Knock it off!") to see who would follow up. Only 14.6% sent a follow-up email, and fewer still sent a second or third email which, Listrak's CEO Ross Kramer told Internet Retailer, is where about half of the revenue comes from. Among Listrak's suggestions to retailers: get the shopper's email address first.

X.commerce harnesses the technologies of eBay, PayPal and Magento to create the first end-to-end multi-channel commerce technology platform. Our vision is to enable merchants of every size, service providers and developers to thrive in a marketplace where in-store, online, mobile and social selling are all mission critical to business success. Learn more at x.com.

Intuit cuts payment rate for AT&T subscribers

Intuit announced a partnership with AT&T for its GoPayment mobile payment solution, which competes with Square. Like Square, Intuit offers a free card-swiping attachment that plugs into the audio jack of an iPhone, iPad, Android or Blackberry device, allowing anyone to collect credit card payments. Intuit's basic rate of 2.7% slightly undercuts Square's 2.75%, but AT&T customers will pay even less (1.7%).

Intuit originally charged customers $175 for the swiper dongle, but last January, in a bid to compete with Square, it began offering the dongle for free. Still, Intuit has struggled to gain the visibility that Square founder Jack Dorsey and COO Keith Rabois and high-profile investors like Richard Branson have brought to Square. This week's deal with AT&T is a reminder that Intuit is serious about GoPayment, which may actually offer more to merchants since it integrates with QuickBooks, its bookkeeping package that also targets small businesses.

PayPal embraces NFC (just a little)

PayPal has made something of a point of not jumping on the NFC bandwagon, emphasizing the technology-agnostic nature of its mobile payments platform. Demonstrations at PayPal's recent Innovate conference emphasized payment options like PayPal's Empty Hand system, which lets you buy things with only your mobile number and a PIN.

Still, NFC seems an inevitable part of the payments picture in the years ahead, and this week, PayPal delivered the peer-to-peer NFC payment technology that it promised last July. Shimone Samuel, Product Experience Manager for PayPal Mobile Applications, wrote on the PayPal blog that the technology for NFC P2P is included in version 3.0 of PayPal's Android app. No need for it in the iOS app yet, obviously, since the most recent iPhone upgrade disappointingly didn't include support for NFC.

As we noted back in July, in practice, the transfer of funds through PayPal's NFC system isn't substantially different from what was already possible using Bump, which sends the transfer through servers in the cloud rather than wirelessly between the mobiles. But the NFC system will let PayPal developers acquire experience with NFC wireless transfers, which should serve them well as NFC-enabled point-of-sale terminals begin to show up next year and beyond.

Got news?

News tips and suggestions are always welcome, so please send them along.


If you're interested in learning more about the commerce space, check out PayPal DevZone on X.commerce, a collaboration between O'Reilly and PayPal.


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November 03 2011

Commerce Weekly: Square upgrades Card Case with geofences

Here's what caught my eye in the commerce space this week.

Card Case can reach out and touch someone

Square Card CaseIf you're among those who downloaded Square's Card Case digital wallet app back in May and haven't opened it since, there's something new in the latest upgrade that may inspire a return visit to the app: geofencing. Card Case's latest version takes advantage of new capabilities in iOS 5 to trigger alerts when a user enters a geofenced area. Users have to opt into the feature. Once they do, when they pass within 100 meters of a retailer who uses Square, the app will automatically load a card in Card Case. If you visit the shop and opt to buy something, you can complete the transaction by giving your name at the register and confirming the purchase through a text message that arrives on your mobile.

The process still sounds a little less convenient than paying for coffee with a five-dollar bill — and I must confess I wasn't able to demo this today, though I will follow up here once I do. But in theory, this makes Card Case a far more interesting app to parties on both sides of the transaction. Here's why:

  • First, for those of us who buy stuff — Card Case is an early form of the mobile wallet, one that isn't waiting for phones or merchants to adopt NFC wireless. Unfortunately, few merchants use it. It's no doubt more interesting downtown (isn't everything?). But I live in a medium-sized suburb where most of the nearby Square-enabled merchants offer services I don't use much: film editing, spa services, wine-country tours. It's not going to be much help in keeping track of my expenses unless Square makes some deal with a larger network of merchants.
  • Second, for those who sell things, the value is clearer — You can reach out and tap customers who may be close and ready to buy. As I noted this summer, Placecast is another player developing this service. Its ShopAlerts send out texts (for other merchants, not under its brand) when opted-in customers wander into a retailer's geofenced area. Groupon Now has also entered this game, giving merchants the ability to manage offers in real time. Undoubtedly, Square will want to offer similar capabilities to its merchants so they can clear the shelves or fill the tables in real time.

The back-end data and analysis that retailers get from these services is valuable, but the real-time customer management seems like the key feature of these apps. Placecast CEO Alistar Goodman offered a prediction about location and real-time at the recent Street Fight Summit:

Location and time are far more predictive of intent than any other past behavior ... We're fast approaching a time where you're going to be able to bid on a user on a street corner at a particular point in time in real time.

The age of virtual barkers is upon us.

X.commerce harnesses the technologies of eBay, PayPal and Magento to create the first end-to-end multi-channel commerce technology platform. Our vision is to enable merchants of every size, service providers and developers to thrive in a marketplace where in-store, online, mobile and social selling are all mission critical to business success. Learn more at x.com.

Survey: Mobile users say take my location but not my money

Oracle released results of a global survey of 3,000 mobile phone users, which highlights a few key trends:

  • Customers are becoming more comfortable sharing location data about themselves, but most still don't trust mobile security enough to buy stuff on them.
  • While tablet ownership remains fairly low, lots of people are planning to buy them and they want apps that work well on them.

It's no surprise that the survey found subscribers downloading more data and apps this year than last. But I was surprised at the timidity around mobile apps: still only 55% of users had downloaded a mobile app, and only one in four had paid for an app. (I'm guessing their iOS 5 upgrade went quicker than mine.)


Where consumers want to use popular types of apps (Source: Oracle Communications survey, "Opportunity Calling: The Future of Mobile Communications — Take Two.")

Shopping is obviously becoming more important, but for most the mobile shopping experience is still limited to pre-purchase research. Depending on the region, the survey found between a third and a quarter of survey respondents used their mobile phones for comparison shopping and reading customer reviews. But only one third believed their phone was secure enough to make a purchase on. In a related note, 84% bought their phone in a retail store, though most said they did their research online.

Smartphone ownership is rising quickly, but I wonder if the survey overstates it at 70% globally. According to Oracle's research, the U.S. and Europe have 56% and 57% smartphone ownership, respectively. That sounds in line with other reports. But the survey attributed 95% smartphone ownership in the Middle East. (The survey appears to have taken its entire Middle East sample in the United Arab Emirates, which may not be representative of the region as a whole.)

The survey also found that smartphones are outpacing owners' expectations of them.

  • In 2010, 52% thought their mobile phone would replace their digital camera; this year, 43% said it already has.
  • In 2010, 54% thought their mobile phone would replace their digital music player; this year, 34% said it already has.
  • In 2010, 54% thought their mobile phone would replace their GPS; this year, 24% said it already has.

Finally, the survey revealed rising enthusiasm for tablet usage. While only 16% said they have a tablet today, 41% plan to buy one over the next 12 months. Reading, watching television and movies, and banking ranked high on the list of things users wanted to use their tablets for, and in most cases they want these sorts of applications to work equally well on both tablets and their mobile phones.

You can download the report's executive summary here.

Got news?

News tips and suggestions are always welcome, so please send them along.


If you're interested in learning more about the commerce space, check out PayPal DevZone on X.commerce, a collaboration between O'Reilly and PayPal.


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October 27 2011

Commerce Weekly: Groupon's long and winding road to an IPO

Here's what caught my eye in the commerce space this week.

At last, Groupon's investor show hits the road

GrouponIt hasn't been an easy road to the NASDAQ for Groupon. Since it announced plans to go public last June, the leader in daily deals has lost its second COO in a year, endured an inquiry by the Securities and Exchange Commission, and had to make the embarrassing revelation that it was reporting revenues before paying merchants their cut. After delaying its investor roadshow in early September, Groupon launched it this week with an eye toward going public and raising $540 million on November 4. It's seeking a valuation of $11.4 billion, which is pricey compared to other tech leaders (5 times projected 2012 sales) but less than half the $25 billion it was said to be considering earlier this year. Investor enthusiasm, it seems, has waned.

No sooner did Groupon pack up its PowerPoint and hit the road than Yipit, which aggregates daily deals, reported that Groupon's most promising new service, Groupon Now, is off to a disappointing start. Groupon is promoting Now as "Groupon 2.0." The hope is that strong growth in Now will offset its original product, the daily deal, as that method plateaus in popularity. On the Yipit blog, David Sinsky writes that since its May launch, Groupon Now has drawn in less than $1 million per month, less than 1% of the company's revenue. Sales are strongest in Chicago, Groupon's home market, but even in that locale, Now is only on pace to generate $1.5 million annually.

Slow start aside, I can't help thinking there's tremendous potential for Groupon Now because it puts the control in the retailers' hands. As Groupon's Now video shows (below), local merchants can offer deals whenever they have available inventory they want to move, whether that's empty tables or merchandise on the shelves. They can define the deals, start them when they want, and end them when they've hit their limit. Whenever online companies have offered this level of control to sellers, the response has proved tremendous — think of eBay or ads on Google and Facebook. Groupon Now's value proposition to merchants is far greater than the daily deals, where merchants must get in a queue and wait for their special day, on which they're likely to be overwhelmed. What's more, Groupon Now will allow for much lighter-weight, coupon-like deals. Frequent readers of this blog could have guessed that I'm pleased the narrator of the video passes up offers of discounts for a yoga class, Segway tour, and glamour makeover, choosing instead the more mundane but useful discount on a hamburger for lunch.

X.commerce harnesses the technologies of eBay, PayPal and Magento to create the first end-to-end multi-channel commerce technology platform. Our vision is to enable merchants of every size, service providers and developers to thrive in a marketplace where in-store, online, mobile and social selling are all mission critical to business success. Learn more at x.com.

Square and Walmart

SquareMobile payments company Square moved a step closer to mainstream ubiquity this week when Walmart agreed to sell its iconic card-swiping device at more than 9,000 stores. You can already buy the Square at Target, BestBuy, RadioShack or Apple stores — or you can get it for free online. The device remains targeted squarely at small- and medium-sized business, companies that don't process enough volume to justify their own merchant accounts and use Square's service to process credit card payments. Square's marketing aims mostly at these small merchants, but in May it also launched its own mobile wallet, Card Case, which aims to let users run something like a tab at their favorite stores and pay by confirming the purchase on their mobiles — it's similar to direct billing.

Square's COO Keith Rabois has recently been positioning Square as a mobile payment alternative that doesn't rely on an NFC-powered future. "I've never met a single merchant in the U.S. who says I want this NFC thing," Rabois said in an interview with GigaOM founder Om Malik at last month's GigaOM Mobilize Conference. Indeed, consumers don't need any sort of mobile phone — NFC-enabled or otherwise — to complete Square transactions. It's the merchant who provides the "mobile" in this mobile payment: the Square, plugged into a merchant's phone (or tablet) takes the card swipe and processes the payment. With Square going on sale at Walmart, expect more merchants to be doing just that — though we don't expect Walmart to be one of them.

Tap and pay at 35,000 feet

Flight passengers have gotten used to flight attendants swiping their credit cards to collect payment for chicken wraps and mini bottles of Merlot. Now, WestJet, a Calgary-based airline, will try MasterCard's tap-and-pay PayPass system on some flights. NFC News reports that this system, once in place, will also allow NFC payments on mobile phones. But do passengers want to pass their phones to the aisle? American Banker quotes Brian Riley, senior research director with TowerGroup, as saying it might be a stretch. "While you might not mind handing your credit card momentarily to a stranger, the whole point of mobile payment is that you get to hold on to your phone; you don't want everyone touching it."

Got news?

News tips and suggestions are always welcome, so please send them along.


If you're interested in learning more about the commerce space, check out PayPal DevZone on X.commerce, a collaboration between O'Reilly and PayPal.


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October 20 2011

Commerce Weekly: Google juices its Wallet

Here's what caught my eye in the commerce space this week.

Google pairs payment with coupons in one tap

Google WalletGoogle expanded its Wallet this week. At some retailers — American Eagle Outfitters, The Container Store, Foot Locker, Guess, Jamba Juice, Macy's, OfficeMax and Toys“R”Us — the lucky few Sprint customers who have Google Wallet can pay for purchases, redeem coupons and earn rewards points with just one tap.

Google showed off a video (below) of its employees at these stores, demonstrating Google Wallet to lots of very excited people. Of course, as is clear on the video, Google is paying for their purchases as part of the demo, so that may have something to do with the enthusiasm.

Google also announced a deal with the New Jersey Transit Agency to enable Google Wallet purchases through some busses, vending machines and ticket booths. Stephanie Tilenius, Google's vice president of commerce, said "Transit has been a common element of every major successful NFC effort globally and is a critical component of Google Wallet's success." Isis, which is likely to become one of Google Wallet's main competitors when it begins showing up on phones sometime next year, feels the same way. Last spring Isis announced that one of its first trials will be with Salt Lake City's Utah Transit Authority.

Announcements like this may come and go like streetcars, but the real shift will come when more NFC-capable phones are available on more carriers. Currently, only Sprint subscribers holding Nexus S 4G phones can tap and pay with Google Wallet. HTC, LG, Motorola Mobility, RIM, Samsung Mobile and Sony Ericsson announced en masse last month that they would introduce NFC-enabled mobile devices that implement Isis's NFC and technology standards, presumably sometime in 2012. But it will still take time before secure NFC phones are mainstream. Even so, Juniper Research is bullish on the uptake curve, predicting that NFC mobile contactless payments will reach nearly $50 billion globally by 2014.

X.commerce harnesses the technologies of eBay, PayPal and Magento to create the first end-to-end multi-channel commerce technology platform. Our vision is to enable merchants of every size, service providers and developers to thrive in a marketplace where in-store, online, mobile and social selling are all mission critical to business success. Learn more at x.com.

PayPal powers eBay's results

EBay reported strong growth this week through its commerce channels. Fueled by PayPal and mobile payments, Q3 revenue was 32% greater than last year ($2.97 billion compared to $2.25 billion in 2010). In a conference call with analysts, CEO John Donahoe said the company expects PayPal's payment volume to exceed $3.5 billion in 2011, five times greater than it was in 2010. At last week's Innovate conference in San Francisco, the company showed off plans to bring PayPal to the physical point of sale. Donahoe said the company will begin rolling those payment systems, which don't rely on NFC but rather pay through the cloud or with direct-billing technology, as soon as the fourth quarter.

Also this week, Donahoe discussed eBay, PayPal and the future of payment at Web 2.0 Summit. Video from his Q&A session is below:

Got news?

News tips and suggestions are always welcome, so please send them along.


If you're interested in learning more about the commerce space, check out PayPal DevZone on X.commerce, a collaboration between O'Reilly and PayPal.


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October 14 2011

Commerce Weekly: PayPal wants to "one click" across the web

Here's what caught my eye in the commerce space this week.

PayPal enters the single sign-on space

PayPal AccessAt its Innovate developer conference in San Francisco this week, eBay announced PayPal Access, a single sign-on technology that functions like OpenID, Facebook Connect, and other proxy identity mechanisms. But it comes with a twist: PayPal Access enables transactions.

As with other single sign-ons, PayPal holds the master record of the user's identity information, sharing only enough with the third-party sites to guarantee identity. If Facebook Connect makes it easier to share your web activity on your Facebook feed, the main benefits of PayPal Access appear to be simplicity (you don't have to re-enter credit card or even PayPal information at each site) and security (as with PayPal, you're not sharing any payment information with the merchant).

The ambition behind PayPal Access is sweeping: eBay wants to deliver a web-wide experience comparable to Amazon's one-click shopping. PayPal Access attempts to do this by integrating with browser functionality so that customers can see they're already signed on. A PayPal purchase can be made without leaving the site.

There are obviously huge challenges here for eBay. First among those is bringing a critical mass of merchants into the tent so that PayPal's 97 million active users can rely on Access as an acceptable payment choice. Second will be the inevitable spoofing that goes on under PayPal's name. How many emails from a "PayPal" source do you get in an average month? How many are really from PayPal? I would expect that never-ending struggle to continue at the browser level.

At the Innovate Conference, PayPal showed off some other neat stuff, too, including a Shopping Showcase that revealed how the company will use some of the technologies it's been acquiring this year. For example, using Where's technology, PayPal wants people to check into stores before they arrive, not after. This lets merchants show discounts or special offers. If it's a frequent destination — your regular coffee shop or grocery store, for example — the wallet will show the merchant your previous purchases or shopping list so they can offer discounts on those or related items.

Zong's direct-billing technology, which eBay bought this summer, will enable a service called Empty Hand. Don't have your wallet or your phone? Key in your mobile number and a pin on the retailer's point-of-sale console and you can access your PayPal account to complete the purchase.

PayPal is also planning to offer new financing options. Currently, you can link multiple payment sources to your PayPal account (for example, checking account, Visa card, and AmEx) or you can use PayPal's BillMeLater service. Soon, you'll be able to change your mind after the fact. Wish you'd put that dinner on your miles card? Log on the next morning and switch the source. You can even decide to change from a full purchase to a payment plan, freeing up more cash to ... buy more things with PayPal.

As noted above, one of the challenges PayPal/eBay faces is bringing more retailers into its system. Toward that end, PayPal is taking its Shopping Showcase on the road to show what's possible. Next stop: a pop-up store in TriBeCa that aims to stimulate interest among trendsetters and the retailers they buy from.

X.commerce harnesses the technologies of eBay, PayPal and Magento to create the first end-to-end multi-channel commerce technology platform. Our vision is to enable merchants of every size, service providers and developers to thrive in a marketplace where in-store, online, mobile and social selling are all mission critical to business success. Learn more at x.com.

Tracking down Bitcoin's developer

BitcoinThis week's New Yorker magazine features a report by Joshua Davis on Bitcoin, the virtual currency launched in January 2009 by the pseudonymous developer Satoshi Nakamoto.

Bitcoin's program has distributed more than 7 million bitcoins through a lottery process. Value rises and falls with perceived demand, reaching a high around $29 last June, though it's down below $5 now.

For the New Yorker piece, Davis visited a Bitcoin mining operation tucked into a warehouse in Kentucky and a Howard Johnson's motel near Disneyland that accepts Bitcoin for payment. The hotel manager was excited to meet Davis because he was "... the first customer who's ever paid with Bitcoin."

The article traces Davis' attempts to uncover Nakamoto's real identity. Internet security expert Dan Kaminsky outlined some of the skills Nakamoto must have: "He's a world-class programmer, with a deep understanding of the C++ programming language ... He understands economics, cryptography, and peer-to-peer networking." Davis also noted that Nakamoto has impeccable English skills and tends to write in UK style rather than American style when in a hurry.

Davis narrowed the field of likely suspects and eventually settled on Michael Clear, a post-graduate student at Trinity College Dublin, who — at least in the New Yorker report — offered a non-denial denial.

After the story broke, Clear issued a much more unequivocal denial: "Although I am flattered that [the New Yorker] had reason to think I could be Satoshi, I am certainly the wrong person," he said. Whether he is or isn't, he has good reason to dispel the notion. As Davis noted, the U.S. government has a record of prosecuting people who create alternative currencies.

Got news?

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If you're interested in learning more about the commerce space, check out PayPal DevZone on X.commerce, a collaboration between O'Reilly and PayPal.


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October 06 2011

Commerce Weekly: How Steve Jobs changed the way we buy

We're changing the name of this blog from ePayments Week to Commerce Weekly to better reflect the wider scope of our coverage — not just payment, but communication and transaction technologies along the entire commercial value chain.

With that in mind, here's what caught my eye this week.

Steve Jobs' commercial legacy

First generation iPodIt's difficult to write about anything else today, with the entire tech and creative universe mourning the loss of an uncompromising genius. Much has already been published about the ways that Steve Jobs changed how we work and interact with computers. Less has been written about how he changed the way we shop and buy. Here are three thoughts on that.

The iPod and the iTunes store. As Jobs said before introducing the iPhone in 2007, the iPod "didn't just change the way we listen to music. It changed the entire music industry." Its pairing with the iTunes store actually went further, creating the first simple, sustainable platform for purchasing and downloading all kinds of digital media, including TV shows, movies, books, college lectures, and more. As of June 2011, iTunes had 225 million accounts, and through them more than 15 billion songs have been sold, making it the world's number one music store. Apple extended the model to software with the App Store, which has distributed more than 14 billion apps in three years.

The iPhone and in-app purchases. Although there were smart phones before the introduction of the iPhone in January 2007, finding and installing new applications for them wasn't easy. The iPhone changed that, making it simple to download and install new apps and opening the landscape for mobile app developers. By doing so, it broadened the opportunity for consumers to make purchases inside mobile apps. In-app purchases have helped make the freemium model (free to install, paid for with subsequent purchases inside the application) the dominant one for mobile apps, on iOS and other mobile platforms.

Apple Store in New York City
The Apple Store at 59th Street and Fifth Avenue, New York City. Via Fletcher6, Wikimedia Commons.

The Apple Store. Apple opened its first physical retail stores in 2001, just as other computer makers were closing theirs. But Apple's innovations — cutting-edge architectural design, the Genius Bar, iPhone and iPad checkout — made their stores a destination for Apple fans and the curious alike. Ten years on, Apple has 357 stores across the world.

Even all this was a small part of Jobs' legacy. I'd like to think the best part of what he gave us — even better than all the cool toys — was a shining, successful example of what's possible when you don't compromise your vision. He demonstrated to two generations of creative geeks what's possible when you commit yourself to making a thing work the way it really should. That's a rare feat in a world where too many things don't.

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eBay CEO: We won't compete with our customers

Ahead of eBay's Innovate conference, Robert Scoble talked with eBay's chief executive John Donahoe about the changes underway in retail, mobile, and social commerce. Donahoe predicted that rapidly evolving technology will drive "more changes in the way consumers pay and shop in the next three years than we've seen in the last 15 to 20."

Scoble has posted the interview on YouTube (it's also embedded below). Among the highlights:

  • Donahoe positioned eBay's commerce ecosystem as a merchant-friendly alternative to Amazon: "We provide all the tools to help third-party developers create businesses for merchants, and we will never compete with [merchants]."
  • There are 500,000 developers working with Magento (the open-source ecommerce platform that eBay purchased earlier this year) and, according to Forrester, that work has generated more than $1 billion in revenue for them.
  • Mobile is a big opportunity because "people don't want to enter a credit card number into a mobile device. It's cumbersome," and they don't believe it's secure.
  • Katie Mitic, who leads Facebook's platform and marketing efforts, is joining eBay's board. Donahoe positioned this as a significant gesture as eBay tries to work with Facebook to figure out the social shopping connection.
  • eBay is increasingly global: of the $60 billion in volume last year on eBay, 55% came from the U.S. and 45% happened outside the U.S. What's more, 20% of eBay's transactions cross borders. "So, $5 billion worth of goods was exported out of the U.S. on eBay."
  • eBay will remain platform- and operating-system agnostic. "We've lost the hubris of thinking we're going to decide for them. Our consumers will tell us where we need to go."

There were a few notable gaps where Donahoe was honest about not having the answers.

  • On China: Although some Chinese sellers use eBay and PayPal for transactions with customers outside of the country, foreign companies can't tap the enormous market in transactions within the country. He expects PayPal to partner with a Chinese bank or other financial service in the next few years.
  • On social commerce: While eBay is beginning to see elements of social entering the shopping experience, there's still no clarity on what the social shopping experience means. Is it Facebook coming to eBay, or eBay merchandise selling through Facebook (or both)?

Got news?

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If you're interested in learning more about the commerce space, check out PayPal X DevZone, a collaboration between O'Reilly and PayPal.


iPod Photo via Wikimedia Commons.

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September 29 2011

ePayments Week: Will NFC add value?

Here's what caught my eye in the payments space this week.

Square's COO questions NFC

SquareSquare's chief operating officer Keith Rabois went against the grain this week and questioned whether there was any value to be had by implementing near-field communications (NFC) for mobile payments. To be fair, he was at the GigaOM Mobile Conference responding to Om Malik's question of whether the short-range wireless function on mobiles would make Square's card reader redundant. Rabois called NFC "a technology in search of a value proposition," saying it's not clear who it helps. The process of swiping a credit card, he continued, is "very etched in the American consciousness ... and the Square card reader allows us to take advantage of that, to allow people to sell things more successfully without changing people's behavior."

He may have a point that the particular technology matters less than the mobile wallet itself. We could do pretty much the same thing by using through-the-cloud technologies (as Bump does) or direct billing (like Boku or Zong). But I think he's overlooked the clear value that seems likely to come to merchants as consumers ditch plastic for mobile wallets.

To name just three:

  • Merchants can administer reward and loyalty programs more efficiently if they're managed through phones rather than on rubber-stamped cards.
  • Merchants can deliver location- and time-specific coupons if they are acquainted with a customer's phone. Placecast is showing how you can deliver offers within a geofenced area. Merchants will also have the opportunity to move discounts quickly if they need to clear inventory. All of that is theoretically possible today with Twitter, but first you have to get them to follow you. Once someone has paid with their phone, presumably it's a lower barrier to get them to agree to receive offers via that phone.
  • Merchants can dynamically steer customers to their best payment option. If PayPal offers a lower percentage for a period than the merchant's credit card service, the merchant can offer products or services at a discount and let the customers choose on their devices.

The benefits for consumers may be a bit less clear and are likely to be a tradeoff: it's our data that we'll be giving up in exchange for being on the receiving end of those benefits listed above. In other words, your digital trail in exchange for daily coupons and every 10th cup of coffee free.

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Amazon's Kindle Fire doesn't have to be as good as iPad to steal market share

Amazon FireShould Apple worry about competition from Amazon's Kindle Fire? The quick consensus seems to be "no" since these are different devices for different functions. Still, I couldn't help myself from making the comparison between this contest and the dramatic rise of Android handsets against the near leveling of the iPhone market. Most reports on the Android versus iOS competition seem to pit the two evenly, as if it were in bad taste to mention that many Android phones cost hundreds of dollars less. Geeks might choose their smartphones based on their affection for Google or Apple. But you only need to visit the AT&T kiosk in your local mall and watch the purchasing decisions to get a truer picture of what's driving this race: cost. Apple's iPhone may be an object of beauty, inside and out, but when you're on a tight budget, you'll put up with the carrier's user interface.

The same thing could happen with Fire and iPad. Fire may not offer anywhere near the same capabilities as the iPad — though with its ability to access web services via its Silk browser, it may not lag far behind. But there are many millions of customers who won't have to think long and hard to save $300 if they can still have movies, TV, books, games, and the web, all on a color touchscreen.

Steven Levy in Wired noted that even if Fire isn't a threat to Apple's iPad, it will certainly be one to Barnes & Noble's Nook and to Netflix. At a time when half of Netflix's membership seems to be furious with the company, many are sure to notice they can get a whole new world of streaming for $79 a year from Amazon Prime.

Mobile broadband is less popular as an add-on

Customers use more mobile broadband services, and they use mobile broadband more frequently, when the capability is built into their devices and not used as an add-on (for example, a USB dongle or stick). This not-too-surprising finding comes from YouGov UK's recent survey of 2,552 British mobile broadband users. It reinforces the suspicion that the easier you make it to get to online services, the more likely they are to get used. Certainly, there's some allowance built into those results for the dongle or stick getting lost or just stuck at the bottom of the backpack. But it also seems likely that those who buy a device that's capable of reaching the web are more likely to use it than those for whom it was an afterthought.

Got news?

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If you're interested in learning more about the payment development space, check out PayPal X DevZone, a collaboration between O'Reilly and PayPal.

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September 22 2011

ePayments Week: Google Wallet debuts

Here's what caught my attention in the payments space this week.

The mobile wallet is here

Google WalletGoogle Wallet officially launched this week with payment partners Citi and MasterCard on board and three other credit card networks (Visa, Discover and American Express) waiting in the wings. Version 1.0 is pretty much what Google said it would be when it announced the service last May. Google is launching it first on Sprint's network, and for now you need to have Samsung's Nexus 4G — though there are several other NFC-compatible devices in use today and more coming soon. You also have to find a MasterCard PayPass terminal — typically found in taxis, fast-food restaurants and convenience stores — to tap and pay. (If you're looking for the technical specs on how that works, MasterCard's site has a handy interactive that shows how tapping the phone emits a beep from the terminal.)

Payment with the phone is only part of the value proposition; Google knows that won't be enough to convince consumers to use it. The integration of payment with rewards, loyalty programs, and coupons is just as important — as this spoof video of the "first Google Wallet customer," lifted from the "Seinfeld" archives, makes clear. It's a small start, with only a narrow slice of the smartphone user base able to tap into it. But who can doubt the promise of one of the Google engineers starring in the intro video when he says, "We're constantly working to improve the wallet."

It's worth noting that PayPal president Scott Thompson demoed their point-of-sale solution last week, emphasizing that PayPal isn't waiting for NFC and is instead considering multiple payment options, including bar codes (like Starbucks) and PIN confirmations (as with direct billing). Earlier this summer, Ogilvy & Mather's Mobile Shopper survey found that far more consumers trusted PayPal to handle their mobile payments than Google (34.3% versus 19.5%). If Google's challenge will be to earn consumer trust, PayPal's will be to remain visible as Google and its high-profile partners push their solution.

Mobile payments deemed "very unimportant" by some consumers

If Sprint fails to report a wave of new customers who suddenly must have the Nexus 4G, it will come as no surprise to the folks at Lightspeed Research who reported this week that mobile payments are "very unimportant" to more than half of all smartphone users. Only 15% said that mobile payments were somewhat or very important. An article in American Banker quotes Jim Smith, president of Blue Dun consultancy, saying that consumers are basically satisfied with their current mobile payment solution, the credit card: "The killer application in mobile payments hasn't happened yet," Smith said. (Presumably, he hasn't seen Google's "Seinfeld" parody.)

Lightspeed also reported that mobile app usage differs widely among customers of different credit cards and banks. Among the interesting differences:

  • Smartphone penetration is highest among American Express and HSBC customers — both at 37%.
  • Discover is the only issuer with more than 50% of its customers still using "basic mobile phones." In line with this, they have the lowest penetration of smartphone users at 28%.
  • 37% of Wells Fargo credit card customers said they have downloaded the Wells Fargo mobile app — the highest penetration among the card issuers analyzed.

Android Open, being held October 9-11 in San Francisco, is a big-tent meeting ground for app and game developers, carriers, chip manufacturers, content creators, OEMs, researchers, entrepreneurs, VCs, and business leaders.

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Who's that Android user?

Tech blog Mobile17 published a nice infographic on Android users, drawing on data from Nielsen, AdMob, Hunch.com, and others. One of their sources was a similar graphic from Mostly Blog published back in August, contrasting Android and iOS users. Among the more interesting findings in Mobile17's graphic:

  • Android owners talk on their phones about 15% of the time. They're on apps more than 56% of the time, not including email and messaging (19%) and web browsing (9%).
  • Android users are more likely than iOS users to be guys, more likely to be conservative, and more likely to be pessimists. They also are 80% more likely to have only a high school diploma (that is, no college degree) than iOS users.
  • That Samsung Nexus 4G you need to use Google's Wallet? It's not in the top ten most popular Android phones.

Of course, we can't infer simple conclusions about demographics and preferences for Google's operating system versus Apple's without also taking into consideration that Android mobiles are offered (by multiple handset vendors) at lower price points than the iPhone — so, income may be driving that preference more than other factors.

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September 15 2011

ePayments Week: Three startups bet on commerce

Here's what popped onto my radar in the commerce space this week.

Commerce startups at TechCrunch Disrupt

Openbucks, Rewardli, LemonThree startups in the commerce space caught my eye at TechCrunch Disrupt:

Openbucks lets users pay for credits in online games with gift cards purchased from some major retailers (Subway, Circle K, Sports Authority, etc.). CEO and cofounder Marc Rochman told me that the service was designed primarily for the "unbanked" — teenagers or others who don't have credit cards or bank accounts. But feedback from customers during the service's beta period this year showed him it also has legs with people who want a little privacy in their gaming. Rochman said they intend to branch out to other digital goods, including music and other media, as long as it's appropriate for the brands. That rules out one fairly large online industry where users would want to pay for online content while remaining anonymous — and Rochman confirmed, they intend to stay far away from adult content in order to protect their own brand.

Rewardli creates buying groups for small businesses to get volume discounts from retailers, tech vendors, and travel companies — the places that small businesses already buy from. George Favvas, cofounder and CEO, said this isn't another daily deal program. First, it's aimed at helping businesses save on the things they're already buying, like plane tickets, PCs, and paper. Second, it's not focused on limited-time offers or daily deals. Once you've signed as part of a group, you can buy from any of the 60 retail partners, including Staples, Lenovo, Virgin Atlantic, Expedia and GoDaddy. The size of your group and its activity with that retailer determines the size of your discount. You don't see your discount immediately, but you do get a bulk refund deposited in your PayPal account after a few weeks. It's a good idea and easy to join, but it will be interesting to see if businesses save enough to make it worth the wait.

Lemon is a service for organizing your receipts online. Retailers are beginning to follow the Apple Store's lead in offering to email receipts, and you can have yours sent to an @lemon.com address to keep them all organized. Co-founder Meyer Malik said they are developing smartphone apps (Android is ready; iOS, Rim and Windows are on the way) to digitize snapshots of your physical receipts and add them to the records. While I can't think of anyone (with the possible exception of myself) who would spend time photographing grocery and gas receipts, I think there's potential here in managing receipts for returns and warranties. Maybe that's where Lemon got its name: one of its best uses could be to help recover the value of products that don't outlast their warranties.

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Daily deals still rising

A couple of weeks ago I wondered whether daily-deal fatigue was setting in, given Facebook's abandoning of its program and an anecdotal sense that the offers were too niche and too expensive to fit into consumers' monthly budgets. But perhaps the wave hasn't crested yet: research and consulting firm BIA/Kelsey projects strong growth for daily deals. Back in March, the firm had predicted that deals would grow from $873 million in 2010 to $3.9 billion in 2015. This week, they goosed up the 2015 figure to $4.2 billion, based on a few new developments: more people signing up than expected, more active users, more targeted deals, and (to my surprise) a rise in the average price per transaction. Even so, BIA/Kelsey's chief economist Mark Fratirik sees "a ceiling on how many deals consumers will buy." At some point, presumably, people will decide it's cheaper to buy their own kayaks.

Feature phones

A few weeks ago, telecom research firm Ovum reminded us that there is still life in the feature-phone (or, non-smartphone) app market, predicting that the market would double to $1 billion by 2016. The report noted that the combination of large numbers of feature-phone owners and an uncrowded playing field offer lucrative potential for developers. Widgets from Nokia and Opera, along with the advent of HTML5, could also make feature phones more capable competitors to smartphones.

A report this week from comScore MobiLens, paired with analysis by Asymco, however, suggests the feature-phone market is quickly yielding ground to smartphones. ComScore's report focused on the growth in smartphone usage in Europe's five largest markets, particularly among Android users. Asymco looked at the flip side of that gain and found that Android hadn't taken its share from other smartphone operating systems as much as it had taken it from feature phones. Still, Asymco notes, there are billions of people on the planet without phones, and the first one they're likely to afford will probably be a feature phone.

Got news?

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If you're interested in learning more about the payment development space, check out PayPal X DevZone, a collaboration between O'Reilly and PayPal.

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September 09 2011

ePayments Week: Who will own your mobile wallet?

Here's what caught my attention in the payment space this week.

What's in your mobile wallet?

MobileMarketingandTechnology.com (MMT) hosted a mobile payments conference in New York this week that brought together a diverse group of people from a few points along the value chain, including payment providers, credit card issuers, and consumer marketing services. With the mobile wallet at the center of the conversation, three questions recurred throughout the event:

  1. Who will control the mobile wallet?
  2. How do you get people to adopt it?
  3. What new features will a more intelligent wallet enable?

First, whose name will be on it? Google Wallet owns a tremendous amount of mind share given that virtually no one actually has it on their phone yet, and few people, even those in the conference's crowd, have any idea when it will reach wider distribution. David Schropfer of the Luciano Group, author of "The Smartphone Wallet — Understanding the Disruption Ahead," suggested that familiar brands will be key in helping consumers switch from a physical wallet to a digital one. "People don't like to make two significant changes at once — how they pay and what they pay with." If they're switching from plastic cards to their mobile phones to make payments, consumers will almost certainly want a brand they trust with their money involved, someone like Visa or MasterCard. But while credit cards are trusted, those companies so far have had little success in promoting their own digital wallet solutions. They're more likely to be an option on some other branded mobile wallet from Google, PayPal, Amazon, or even Isis.

How Google Wallet works

The second key question on everyone's mind was how to get people to use the services, whether that's how to get them to notice and download an app, how to get them to favor the app, or how to get them to respond to things the app wants them to do. Google again appears highly favored, given the number of times every day the average person interacts with the brand's services. PayPal or Amazon would seem to have a higher hurdle, given they have fewer touch points with consumers, but both have more than 100 million user accounts through which they could extend offers.

In terms of getting users to make transactions, it's clear that the mobile wallet of the future will have a lot more "pull" to it, as opposed to the "push" nature of our physical wallets. I wrote recently about Placecast, which uses geofenced locations to trigger alerts when opted-in subscribers enter a particular zone. I was interested to hear from Placecast's Blair Swedeen at the MMT conference that of the consumers who took action on offers, only 27% did so that day, with another 35% responding up to three days later — a longer shelf life than one might have expected for location-triggered offers.

Opinions differed as to whether or not mobile payments would replace cash. Tom Meredith of P2PCash suggested it wouldn't replace simple cash transactions, and Schropfer showed data indicating that while debit card usage had replace plenty of credit card usage, cash purchases remained fairly steady in the US. The story may be different in other countries. Schropfer also presented a slide showing a dramatic rise in the volume of Safaricom's M-PESA text-message payments in Kenya from 2007-2010, while cash usage in the country dwindled significantly. This suggests that the M-PESA payments have indeed replaced cash payments when available for small, simple transactions like taxis and bus rides.

There is no shortage of answers to the third question — what features will a more intelligent wallet enable? Certainly, those features will include the ability to set limits on payments (where and how much), better ways to prevent fraud (since phones offer a variety of ways to confirm identity), and obvious marketing tools like location-smart marketing and automated rewards and loyalty programs. Schropfer suggested another feature: retailers steering customers to their preferred method of accepting payment. In the physical world, retailers are pretty much at the mercy of consumers' payment options. But in a smart-wallet purchase, merchants will have a greater ability to dynamically offer discounts based on a consumer's choice of payment. A company might offer a bigger discount if you pay with, for example, PayPal, if the merchant can redistribute that value within the PayPal system without paying any fees. The retailer might offer a smaller discount with Visa and none at all with American Express since those options cost the merchant more. And, of course, those conditions might vary from day to day as different payment providers offer different incentives.

In short, there will be far more options and capabilities with a mobile wallet. But it also seems clear that, as often happens, a technology that enters the scene promising to make life simpler winds up making it more complicated.

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Pew survey: One quarter of US adults use location services

About a quarter of Americans use the location-smart capabilities of their mobile phones to get directions or recommendations; far fewer use them to share where they are with friends and contacts. That's one conclusion from a Pew Research Center survey based on phone interviews with 2,277 U.S. adults last spring. The percentages are higher for smart phone owners. Only 4% owned up to checking in on services like Foursquare or Gowalla, while a slightly higher number had set up their social media services (Facebook, LinkedIn, Twitter) to show their locations when posting. (I have to wonder if that number has jumped higher since Facebook changed its posting settings to make location-aware posts easier.) The Knight Digital Media Center for digital journalism picked up on the Pew results to urge news media publishers to geotag their content.

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September 01 2011

ePayments Week: Financial Times bets on its web app

Here's what caught my attention in the payment space this week.

Financial Times drops iOS app

Financial Times web appThere are at least two big issues involved in The Financial Times' decision to pull its iPad and iPhone apps from the iOS App Store this week: one is about data; the other is about money. The FT, along with other publishers, has complained that the key sticking point in Apple's new requirement that all purchases, including subscriptions, go through the App store, has been the question of who controls the relationship with the subscriber. The publishers see these as their readers, and they want to know everything about them. And when readers upgrade or renew their subscriptions, the publishers want to deal directly with them. The view from Cupertino is different: these readers appear to be iTunes subscribers making an in-app purchase. For delivering this consumer to the app maker (the FT in this case) Apple would like its 30% cut of revenue. That may have been a factor in the FT's decision, though it seems the amount of money it would have had to give up — Robert Andrews at PaidContent.com figured it at $1.63 million at the high end — would have been fairly insignificant to FT's parent company Pearson (and even more so to Apple with its billions in cash).

The FT's withdrawal comes as no surprise. Its online and print versions have been encouraging readers all summer to dump their iOS apps and switch to FT.com's "web app" — its HTML5 site that displays nicely on the iPhone and iPad. The Wall Street Journal reported that more than 550,000 users have the web app. PaidContent's Andrews speculated that the web app's adoption may have been spurred by a promotional offer earlier this summer granting full access to the site. (FT.com is primarily a paid-subscription site, allowing only 10 free articles to registered users every 30 days.)

Lest we wonder if "the pink 'un" knows what it's doing in walking out on Apple and its 200 million store members, we should note that FT.com has run successfully on its paid subscription model for more than 10 years, even during the days when most mainstream news publications believed they could never charge for online content. Some publishers have come around to the FT's model, most notably The New York Times, which resumed charging for full access to online content earlier this year.

What's more, the FT says it hasn't completely abandoned Apple and, according to a Reuters report, still plans to distribute future apps in its store, including one for its luxury weekend magazine, "How to Spend It." Apparently, those are subscribers that the FT doesn't mind sharing with Apple.

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Flickr's geofencing: setting access based on location

Last week, I wrote about geofencing in the context of Placecast's service to announce deals and other offers when subscribers enter a virtually delineated space. This week, Flickr rolled out another interesting use of geofencing: automatically setting privacy restrictions on photos based on where they were taken. Flickr's blog explains the new feature, and creating a geofence and linking it to access preferences is a quick and easy process.

Flickr geofence example

Flickr's geofencing is a mashup of two services that its members are already familiar with: geotagging photos and setting limits on who can see them. But in combining these two simple features, Flickr (and parent Yahoo) will offer many consumers the first glimpse of a new degree of control they will gain over the intersection of their digital and physical worlds: setting controls over what happens when they move from one location to another.

As a bonus, there's a nice post on code.flickr describing the details of the feature and the fun process the coders went through to pull it together: "We met at Nolan's house, ate a farmer's breakfast, and brainstormed."

Is daily deal fatigue getting you down?

Robert Hof has a compelling column on Forbes: "5 Reasons Daily Deals are Tanking — and 3 Reasons They're Not Dead Yet." Movements this week among the category's top players would seem to confirm the ambiguity of that headline. Facebook has said it will stop its four-month old Deals program and Yelp said it would scale its program back (CEO Jeremy Stoppelman said "it hasn't been all rainbows and unicorns"). Meanwhile, Google appeared to be ratcheting up its Offers program, even promoting an offer on its legendarily sparse home page ($5 tickets to New York's American Museum of Natural History). And Groupon continued to storm toward its anticipated IPO.

I tend to agree with one of Hof's main points: too many offers are for expensive, bucket-list or birthday-party events, like flying in a hot air balloon or learning to scuba dive. Google Offers appears to take a more budget-friendly approach, offering things that people really buy every day. Google launched its Offers in Portland in June with a $3 deal at Floyd's coffee, and it continues to promote cheap recession-friendly luxuries, like $7 worth of frozen yogurt. But even Google Offers suffers from an excess of kayak rental offers.

I have to wonder if all the wine-tasting and helicopter ride offers are part of the reason why Groupon has seen its web-based traffic drop by half since June, as reported by Experian Hitwise. It may be that while there is a continuous appetite for bargains on things we consume every day (like coffee and bread), it's more difficult to sustain interest in endless offers for boot camps and laser-based body slimming.

Got news?

News tips and suggestions are always welcome, so please send them along.


If you're interested in learning more about the payment development space, check out PayPal X DevZone, a collaboration between O'Reilly and PayPal.

Fence photo: Fence Friday by DayTripper (Tom), on Flickr



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August 25 2011

ePayments Week: The rise of location-triggered offers

Here's what caught my attention in the payment space this week.

Geofencing: As long as you're here ...

Fence Friday by DayTripper Tom, on FlickrOne of the promises of mobile advertising — at least from the merchant's perspective — has been the potential to advertise to customers when they're near your store and can act immediately (and impulsively) on your offer. To make these location-triggered offers, merchants need to delineate a "geofence" around their retail outlets — a radius or polygonal area in which customers who have opted into a deal program can be notified on their mobiles that an offer is available nearby. Indeed, Groupon is working on adding such location-based deals to its daily offers, according to a letter sent from its general counsel David Schellhase to two U.S. Representatives who were asking about Groupon's privacy policies.

Placecast is one company that has been working on this issue. Its service allows merchants or event planners to delineate a virtual perimeter around their locations that marks their space. When customers who have opted in to receive alerts about their retail brand or event enter one of these locations, they get a text message (a "ShopAlert"), describing the offer or event. In an interview, Placecast CEO Alistair Goodman said the company has focused on text messages thus far because they're very effective. By some measures, 90% of all texts are opened within three minutes of receiving them.

This week the company expanded its service so that ShopAlerts can also work as notifications that are linked to apps. Just as with other notifications on iOS and Android, the relevant app doesn't need to be open to receive the notification, but clicking on the notification can trigger the app to open. The new notification capabilities would seem to go well with expected improvements in the way that iOS handles notifications.

Goodman said the key to success in mobile coupons is making the message relevant. "We're only sending a text if it's the right place and time." That's key since most of us are not very good coupon clippers; we're unlikely to retain, remember, and use an offer if we don't do so almost immediately. Goodman said that location-triggered delivery is highly effective with "exceedingly high" response rates: between 11% and 60% of users are likely to visit a store when pinged with an offer if they're nearby, and up to 46% are likely to make a purchase.

More than three million subscribers, mostly in the US and UK, are currently receiving offers from Placecast — though they don't see them as coming from Placecast, which operates as a "white brand" service to other businesses. Goodman emphasizes that subscribers have all opted in via their telecom carriers or a retail brand like North Face. With that much data, there's a back-end business for the company in aggregating and anonymizing the information so it can analyze it and feed data back to merchants on which offers are most effective and when. Indeed, the company's self-service tool with which clients can manage their offers online also includes some data tools for this type of analysis.

It remains to be seen how many customers will be comfortable with this level of interaction with stores — even if they are their favorite brands. On the up side, services like Placecast are merely sending out information based on location awareness; consumers aren't being asked to divulge any financial information. On the down side, some percentage of customers are always going to remain fairly uncomfortable broadcasting their locations in this way to businesses, even if doing so offers tangible rewards. The key to success will depend on how large that percentage is.

Android Open, being held October 9-11 in San Francisco, is a big-tent meeting ground for app and game developers, carriers, chip manufacturers, content creators, OEMs, researchers, entrepreneurs, VCs, and business leaders.

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Survey: iPhone users keen on mobile payments

Results of a UK survey about customers' willingness to use mobile payments and banking apps suggest that iPhone users are somewhat more likely to embrace mobile payments than their Android- and Blackberry-carrying peers. According to a summary report on GigaOm, the survey found 46% of iPhone users said they would pay bills with their mobiles compared to only 21% of the total group surveyed. Not surprisingly, younger folks (18-24 years old) were also more comfortable with the idea than their older brothers and sisters.

YouGov's ongoing research has provided some other insights on platform differences among UK users. Loosely generalized, they paint a picture of Blackberry owners as more driven and responsible compared to iPhone users who are more likely to overdraw their bank accounts and spend the day on social networks. According to YouGov:

  • BlackBerry users are likely to earn more, with 10% earning over £50,000 a year compared to 7% of iPhone users and 5% of Android users.
  • iPhone users spend more time on their phones than users of any of the other top models, with 18% spending more than four hours a day on it compared to 4% apiece of Android and BlackBerry users.
  • 63% of iPhone users say social networking apps are among the three they spend the most time on compared to other types.

These results, combined with other research that has found iPhone users may be a more lucrative market for developers than Android users, suggests iPhone users are quicker to spend money on their phones. We can speculate on the reasons. Certainly the higher price point (in many cases) of an iPhone attracts a user who is willing to spend more on technology and its accoutrements. Another possible factor could be their familiarity with the Apple retail model: iPhone users are accustomed to a tightly controlled shop where they deal with a single company that they trust — the same company that made their phone and its software. The Android platform, by comparison, may require users to navigate a telecom interface, Android's operating system, a hardware maker's device, and perhaps a fourth-party app store. That could create a less-structured environment where users may be less comfortable spending money. McAfee's recent report on Android's greater susceptibility to malware may only compound this feeling.

Android phones are the new destination for crapware

And speaking of trust, are telecoms burning up the goodwill of their customers who choose Android handsets by loading them with crapware? Mike Jennings on PCPro.co.uk compares this trend to the same syndrome experienced on Windows-based desktops and laptops in recent years, where the excitement of discovering your new gadget is often dampened by splash screens with offers to sign up for security or media services.

Jennings notes that it's worse this time around since the mobile software, which can degrade performance, is more difficult if not impossible for average users to uninstall. He blames the network carriers, who load up the handsets to fulfill lucrative deals they've signed with software vendors. But there may be a limit to what customers will accept. Earlier this month, the same publication reported that Vodafone was backpedalling on an over-the-air upgrade that loaded up HTC Desire handsets because customers had complained of being tricked into installing the software. "We've listened to feedback from customers on a number of points around the recent 360 Android 2.1 update and made some changes to the rollout plan," Vodafone posted sheepishly on its own forums.

Got news?

News tips and suggestions are always welcome, so please send them along.


If you're interested in learning more about the payment development space, check out PayPal X DevZone, a collaboration between O'Reilly and PayPal.

Fence photo: Fence Friday by DayTripper (Tom), on Flickr



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August 18 2011

ePayments Week: The economics of in-app purchases

Here's what caught my attention in the payment space this week.

Flurry: Gamers buying more consumables

Mighty Eagle from Angry BirdsA few weeks ago we reported on research from Flurry Analytics that found the freemium model for games was quickly becoming the dominant source of income from mobile apps on the iOS and Android platforms. This week, Flurry has followed up that report with some details on the types of goods gamers buy. Economists in the physical world divide goods into durables (washing machines) and consumables (detergent). So does Flurry, which found that only 30% of purchases were for things users could keep (like a new suit of armor or a building), while 68% was spent on things we use up getting to the next level (like Smurfberries or fertilizer). Personalization items, like decorations, accounted for 2%.

Flurry's Jeferson Valadares speculated that the relative value of a purchase depends on the game's goals. For example, purchasing a structure in a city-building game may help you reach a higher level, whereas in a farming game consumables like fertilizer may be more valuable. And it just may be that in more games out there, consumables help players reach their goals more often than durables do.

Over on The Unofficial Apple Weblog, Mike Schramm reported on the finding and added another perspective: that in some cases, gamers will balk at too much help. "[S]ome consumers will backlash against a consumable item that affects gameplay too much, like a double-damage token in a multiplayer game, or anything else that could be seen as cheating." Gamers, like anyone else, don't mind a little help, but not so much help that they feel they're not winning on their own.


Android Open, being held October 9-11 in San Francisco, is a big-tent meeting ground for app and game developers, carriers, chip manufacturers, content creators, OEMs, researchers, entrepreneurs, VCs, and business leaders.

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Cheap Androids invade Kenya

While One Laptop Per Child continues its mission of distributing inexpensive, network-enabled laptops to school children around the world, it seems that smartphones may make an end run around that effort. Chinese technology firm Huawei is manufacturing an $80 Android-based phone called IDEOS, and it has sold 350,000 through Safaricom in Kenya.

Writing on Singularity Hub, Jeremy Ford dissects some of the technology used in the IDEOs to show that by delivering a slightly less powerful phone, Huawei is able to deliver a significantly less expensive product that still offers users access to hundreds of thousands of Android apps. Ford describes some of the apps available, including one that uses crowdsourcing to track crop diseases.

Safaricom has already made an international name for itself through its M-PESA program, which has brought mobile banking services to millions of Kenyans in urban and rural environments. Having innovated in the financial arena on phones that were only capable of sending text messages, it will be interesting to see what sorts of payment applications take shape once millions of Kenyans are carrying smartphones — and it sounds like that won't be far off.


What makes a successful mobile app?

What should mobile developers be thinking about as they approach development on their next project? Which platform offers the most potential for growth? How about revenue? Over at Fierce Developer, Sandhya Raman has a round-up of six questions that developers should ask themselves before starting that next project. Raman links to a similar article that ran last month on GigaOM, Rachel Youens' "7 Habits of Highly Effective Apps." Both make good, quick reading for anyone involved in mobile development.

Got news?

News tips and suggestions are always welcome, so please send them along.


If you're interested in learning more about the payment development space, check out PayPal X DevZone, a collaboration between O'Reilly and PayPal.



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August 04 2011

ePayments Week: Customers still wary of mobile payments

Here's what caught my attention in the payment space this week.

Consumer Reports: Only 5% use mobile payments

In something of a reality check to mobile payment enthusiasts, Consumer Reports says U.S. consumers are still wary of using their cell phones to pay for day-to-day purchases, and only 5% have done so in the past month. Interestingly, that percentage doubles (to 10%) if you include purchases made by charging things to home or mobile phone accounts — a category that could include direct-billing payments like those offered by Zong, Boku, or Bill2Mobile, which are largely used to buy virtual and other digital goods, mostly in gaming environments.

Consumer Reports warned its readers about the hidden costs of mobile transactions, as well as the difficulty in recovering funds if a billing error or erroneous charge appears — something that, the publication says, 1 in 4 Americans have experienced in the past year. Mobile payments linked to credit cards generally offer the most protection in these cases, the report said; the protections offered by those linked to debit cards or phone bills can vary.

Covering the report on GigaOm, Ryan Kim writes that mobile payment providers have their work cut out for them convincing mainstream users that tapping their phone is better than swiping plastic. If they can't sell the pitch, he notes, an opportunity is open for someone who can. That could be any of several hundred third-party app providers that link location to payment in some beneficial way. For example, the partnership between Foursquare and American Express, which offers an easier way to cash in a location-based coupon by making the discount automatically apply when swiping a phone linked to an AmEx card.

Android Open, being held October 9-11 in San Francisco, is a big-tent meeting ground for app and game developers, carriers, chip manufacturers, content creators, OEMs, researchers, entrepreneurs, VCs, and business leaders.

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Snapshot of mobile banking

An infographic produced by Lookout Mobile Security, a firm that offers security services for smartphones, offers an interesting snapshot of the state of mobile banking. (The data is compiled from a range of sources, including Juniper Research, NPR.org, ABIResearch.com, and eBay.) The most striking aspect to me is how low some of these numbers are:

  • Only 10% of banking households use mobile banking.
  • Only 9% of consumers opening new bank accounts said a mobile app was important to them.
  • Only 22% of consumers who use mobile banking use it to pay bills.

State of mobile banking infographic
Segment from Lookout Mobile Security's "Mobile Banking on the Go" infographic. Click to see the full graphic.

The graphic also reports that 51% of U.S. banking customers don't trust the security of mobile banking apps — a number that seems lower than I might have expected, given the hesitation reported by consumers in surveys like the Consumer Reports one noted above.

iPhone 5 Rumors: Apple + PayPal

There's more speculation this week as to whether the iPhone 5, which is predicted to roll out in September, will include a payment capability. While the news cycle around "the next iPhone" is a perpetual stream of rumors, they don't always turn out to be false. I'm seeing a consensus emerging that the iPhone 5 may have NFC (near-field communication) chips, but no solid explanation of what Apple may do with them.

This week's rumors suggest that Apple may partner with PayPal to create a payment channel for goods in the wider world beyond the iTunes store. (Apple, of course, doesn't need NFC or a partner to enable payment for digital goods.) NFC would turn the iPhone into a device that could be used to pay for goods in the physical retail world — provided that the merchant has a point-of-sale device capable of communicating via NFC.

PayPal and its parent eBay have made a string of acquisitions this year to strengthen their payment capabilities online, in the mobile space, and in the physical retail space. Ebay's announcement in June that it would buy the rest of open-source economic platform developer Magento complemented its acquisition of GSI Commerce, which provides ecommerce services for physical retail chains. In the web and mobile native worlds, eBay has picked up Milo, which helps consumers find local deals, Where, which offers location-based ad services, and Fig Card, which offers payment channels to merchants. Put them together and it creates a soup-to-nuts commerce channel that could inspire a partner like Apple to wonder, "Why bother re-creating this?"

Got news?

News tips and suggestions are always welcome, so please send them along.


If you're interested in learning more about the payment development space, check out PayPal X DevZone, a collaboration between O'Reilly and PayPal.



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July 28 2011

ePayments Week: Freemium is fruitful for mobile games


Here's a few payment stories that caught my attention this week.

Freemium revenue rises

In-App purchaseA report this week from Flurry Analytics, which tracks mobile games and other apps, says the freemium (also called free-to-play) model is rapidly becoming the dominant track for generating revenues from mobile games. Earlier this month Flurry had reported that the percentage of revenue from freemium games (free download, then in-app purchases for new capabilities or levels) in Apple's U.S. App Store had jumped from 39% in January to 65% in June. This week, Flurry's general manager of games Jeferson Valadares, followed up on that report with a post noting that the average in-app purchase in a freemium game is $14. Averages can be tricky, and a small share of high-end purchases pulls this amount higher than we might otherwise expect. Looking closer at the stats, 71% of transactions are for less than $10, 16% are between $10 and $20, and 13% are for more than $20. Up at the high end, 5% of the transactions are for $50 or more.

All of this revenue comes from the 0.5% to 6% of players who make even a single in-app purchase on these free-to-pay apps; the rest never get engaged enough to pay for it. But Valadares and Fierce Developer's Jason Ankeny both note that the revenue from this small percentage is now greater than it might have been had developers charged $0.99 for their games. In other words, a free download followed by in-app purchase makes it possible to create the widest possible opening of the funnel to find a large group of hardcore gamers willing to engage at a deeper level with a game — $14 deep, on average.

Flurry estimates that game revenue on iOS and Android platforms will top $1 billion in 2011 — a symbolic number that should help mobile developers gain a little respect from the old-guard gaming platforms, whose executives have, from time to time, dissed mobile games for lacking the excitement of console games. To help make sense of the various platforms, Gamasutra published this week a rundown of pros and cons for the two leading smartphone platforms and Windows Mobile, with insights from leading game developers about the relative pain points of each.

Android Open, being held October 9-11 in San Francisco, is a big-tent meeting ground for app and game developers, carriers, chip manufacturers, content creators, OEMs, researchers, entrepreneurs, VCs, and business leaders.

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Report: iOS 5 to offer facial-recognition APIs

Last week I reported on common iPhone passcodes and lamented there was no easy way to put more sophisticated technology to work in securing the data in increasingly important smartphones. One reader commented that biometrics would be a welcome addition. This week there's news that Apple is moving quickly in that direction. Apple-watching site 9to5Mac reports that iOS 5 will include facial recognition as a public developer API for iOS 5 applications. So don't expect to see it soon as a security preference in the iPhone's settings, but we might see third-party apps with a biometric lock available at some point, perhaps this fall. 9to5mac also reports that the technology is most likely from Swedish facial-recognition developer Polar Rose, which Apple acquired in 2010.

Here's a video showing the Polar Rose tech in action:


Credit cards on webcam: Payment through video capture

This isn't exactly what we meant by swipe-and-pay, but mobile payments start-up Jumio introduced this week another new way to pay online with old credit card technology. Jumio's Netswipe would let a consumer pay for goods and services purchased online by holding their physical credit card up to the webcam on their computer. The idea isn't just to capture the 16-digit credit card number. Netswipe uses video streaming to guard against fraud detection, noting characteristics of the card, including how the letters are raised, its size and depth, and even what material it appears to be made of. Tapping in your 3-digit CVV code from the back of the card adds yet another layer of security. Netswipe forces users to mouse-and-click on a graphical keyboard rather than keying in the numbers, for further security against automated hacks. A mobile version supporting smartphone cameras is planned for later this summer.

Here's a demo of Netswipe:

Got news?

News tips and suggestions are always welcome, so please send them along.


If you're interested in learning more about the payment development space, check out PayPal X DevZone, a collaboration between O'Reilly and PayPal.



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July 21 2011

ePayments Week: Is "0000" your passcode?

Here's what caught my attention in the payment space this week.

Most common iPhone passcodes

Really bad passcodeOne of the obstacles to mobile commerce is the sense that it's not secure, but there's a dead-simple action that can make things a little tougher for the bad guys: consumers can choose original passcodes. App developer Daniel Amitay took a look 204,508 iPhone passcodes and found that the 10 most common ("1234," "0000," etc.) accounted for 15% of all passcodes. Amitay also found a whole lot of codes based on year dates from 1980 to the present. Number 3 on Amitay's list — the code "2580" — stumped me until I looked at a keypad and saw it's a vertical line down the middle. Likewise, I needed to look again to see what "5683" spelled out: LOVE (or LOUD, but I'm guessing love).

MFoundry CEO Drew Sievers cited Amitay's results in his blog this week, and he also added a few things banks should do to educate their customers — like telling users to never respond to a request for a password via SMS text.

Android Open, being held October 9-11 in San Francisco, is a big-tent meeting ground for app and game developers, carriers, chip manufacturers, content creators, OEMs, researchers, entrepreneurs, VCs, and business leaders.

Save 20% on registration with the code AN11RAD

Google In-App Payments

This week, Google made its In-App Payments system available for developers to deploy on any web app. In-app payments rolled out at the Google I/O developer conference in May, but it was initially limited to apps distributed through the Chrome store. Now it works anywhere on the web. It's similar to PayPay for Digital Goods in that it aspires to offer a seamless purchasing experience for users engaged in games or content. And it's similar to Apple's in-app payments for games and subscriptions, except that Google takes a 5% cut compared to Apple's 30%. (PayPal's cut is a close second at 5% plus a nickel.)

Mobile payments mainstream in 4 years? How about 2

It finally happened to me this week: the moment where mobile payments crossed the line from an intriguing novelty (at Starbucks, usually) to a serious questioning of why we're still waiting for this. I found myself out running errands with my phone, but no wallet. Without thinking too hard about it, I had left the house carrying the item that was more essential to me (the phone). Back home, a folded piece of leather stuffed with plastic and paper sat on my dresser. As I groped for a credit card that wasn't there, it seemed odd that with all of the things I can do with my smartphone — conduct business, keep up with friends, research topics, read news or books, watch any movie I could think of, play games, edit videos — I still can't pay for a gallon of gas.

That's changing, of course, and rapidly. Auditing firm KPMG released survey results this week reporting that 83% of 1,000 executives surveyed expect mobile payments to be mainstream within four years, and about half of them think it could be as soon as two years. I'll be surprised if it takes that long.

Isis takes credit cards

ISISIsis, the telecom-backed consortium to put NFC payment technology and standards into mobile phones, said Tuesday it has signed agreements with Visa, MasterCard, and American Express to let buyers and sellers use those credit cards in Isis' future system. (Isis launched last November with the No. 4 credit card company Discover as a partner.) Original consortium members AT&T Mobility, T-Mobile, and Verizon Wireless guaranteed near ubiquitous backing among U.S. carriers, but the credit card provider angle seemed a little thin with only Discover enlisted in the effort before this week. These new agreements with virtually the entire credit card industry would seem to be a major vote of confidence in the consortium's ability to drive a standard for NFC payment that handset makers can get behind.

That leaves the major mobile OS operators out own their own — where they presumably want to be. Back in May, Isis invited Apple and Google to join their consortium, but so far both appear to be content with their solo efforts.

Got news?

News tips and suggestions are always welcome, so please send them along.


If you're interested in learning more about the payment development space, check out PayPal X DevZone, a collaboration between O'Reilly and PayPal.



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July 14 2011

ePayments Week: Contactless payment (and zombie survival tactics)

Here's what caught my attention in the payment space this week.

PayPal demos tap-to-pay

PayPal demonstrated peer-to-peer payments using near-field communications (NFC) at this week's MobileBeat conference. They showed how two mobile users could send payment to each other by tapping phones and confirming the transactions in the PayPal app. Laura Chambers, PayPal's senior director of PayPal Mobile, wrote in a blog post that they expect to make the service available publicly later this summer. Right now, however, there's only one NFC-capable mobile phone in the U.S. market — the Nexus S — so both the payer and the receiver would need to have that device.

A PayPal video (below) shows the recipient initiating the transaction, requesting $10 and then holding her Nexus S up to someone else's. Both phones buzz and vibrate, and the recipient gets a request, which they can confirm. Both get an email confirming the transaction.

In practice, PayPal's system doesn't seem too different from what's already possible with Bump, an app that lets mobile users share images or music, or send money from one phone to another — although Bump sends the transaction over the network rather than via NFC. Bump says its app has been downloaded more than 40 million times on Android and iOS platforms, but it still lacks the reach of PayPal with is 94 million users. What's more, by launching its NFC capabilities now, PayPal will already have experience under its belt as more NFC-capable phones (and point-of-sale terminals) begin to appear later this year and next.


NFC tap-and-pay wasn't the only gesture PayPal made this week to show it's getting ready for the future. CEO Scott Thompson put out the challenge for five Bay Area employees of PayPal to try to live their lives for a week with only PayPal purchases, and apparently they've found five willing to give it a try. It'll be interesting to see how they secure necessities like food and gasoline (not to mention rent or utilities, if those are due that week). But that experience may serve them well if PayPal's other publicity stunt of the week transpires: the company produced a funny video that suggests PayPal's one-tap payment system could prove useful during a zombie attack. (The short video is worth watching not just for laughs but also to see PayPal's vision of how one-touch user clicks will be enabled on everything from soda machines to rental car windows.)



eBay buys Zong

In other eBay/PayPal news, eBay continued its acquisition trend, announcing it would pay $240 million for Zong, one of the leaders in direct billing via mobile phone accounts. Zong, Boku, and Bill2Mobile all offer services that let subscribers buy digital goods — often something in an online game — by entering their mobile number online and replying to an SMS text; the charge shows up on their cell phone bill. At times, these services have touted their capabilities as a form of banking for the "unbanked," though in practice many of the unbanked are social game players who are too young to have bank accounts.

Zong brings along its direct billing relationships with 250 telecom carriers around the world, and it's easy to imagine that users will be able to put PayPal payments on their cell phone bills. A spokeswoman for eBay, Sarah Lasky, told me the converse is already true in some countries such as Malaysia where, through a deal with telco Maxis, customers can use PayPal to pay their mobile phone bills.

Back in April, Zong competitor Boku announced a trial with Germany's Telefonica 02 to pay for online purchases of real-world (that is, non-digital) goods. Lasky said there are no plans so far to use Zong this way over at PayPal.

Android Open, being held October 9-11 in San Francisco, is a big-tent meeting ground for app and game developers, carriers, chip manufacturers, content creators, OEMs, researchers, entrepreneurs, VCs, and business leaders.

Save 20% on registration with the code AN11RAD

The three types of social commerce

Oodle CEO Craig Donato has posted an interesting short essay on social commerce on ReadWriteWeb. Donato breaks social commerce into three elements: social shopping, social marketing, social trading. Social shopping is nothing new, of course. Shoppers have always traveled in pairs or groups and shared opinions about purchases. But as commerce has shifted online over the past 15 years, the social aspect is now racing to catch up. Social marketing can be seen as merchants wanting to join this conversation. Donato points out that, here too, this is a restoration of a traditional two-way conversation that has only become a one-way marketing monologue in the era of mass communications. Social media offers a return to the days when buyers had a direct voice to the merchants, one that helps them decide what and how to sell.

Trading, Donato points out, is the weakest area right now — a hyperlocal activity that's often managed through donations or trading goods with neighbors (sometimes with an assist from online services like Neighbor Goods or Freecycle). While there may still be opportunity here, it's clearly the most difficult to monetize, given the very nature of these money-less transactions.

Oodle, the world's largest aggregator of online classifieds, also powers Facebook Marketplace, which figures prominently in a new report from JWT on "The Rise of Social Commerce." Perhaps not surprisingly, the report finds the Millennial generation driving social commerce, especially on Facebook where "they spend so much time ... they might as well shop there, too." The report says Millennials are more interested in conducting commerce through Facebook than Boomers or Gen Xers but, paradoxically, Millennials are also more concerned about privacy issues, particularly when Facebook shares information with third parties. Even so, 59% of Millennials in the survey say they appreciate personalized recommendations that help them cut through the volumes of marketing information. Now, if merchants could only find a way to offer personalized recommendations without knowing much about you, they'd really be on to something.

Got news?

News tips and suggestions are always welcome, so please send them along.


If you're interested in learning more about the payment development space, check out PayPal X DevZone, a collaboration between O'Reilly and PayPal.



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