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June 07 2012

Commerce Weekly: Identifying real-time consumer intent

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

Responding to real-time consumer intent

LocalResponse LogoA new survey by behavioral commerce company SteelHouse shows that mobile commerce is getting more social. Mediabistro shared an infographic produced by SteelHouse that highlights a few important points for mobile commerce:

"... one-third of customers state browsing for items as the number one reason why they use a retailer's apps, ahead of looking for discounts and deals (26 percent) and making purchases (22 percent). Overall, however, 66 percent of consumers prefer purchasing from a retailer's website than via their app."

Though the national survey was small — just 309 consumers across the U.S. were surveyed — the numbers confirm that social media is changing the way we shop.

Mashable took a look this week at four startups that are revolutionizing social ecommerce. Of the four, LocalResponse's platform seemed to make the most of mobile. The post describes the product as "a social advertising platform that aggregates public posts and 'check-ins' across multiple platforms to help brands and businesses identify intent and respond to it." The important note about this company is the way it's making use of real-time data. Mashable reports:

"Targeting data, such as behavioral, demographic or contextual, is usually approximated. LocalResponse's platform is able to identify where someone is, when they are there, and what they are saying about it. Marketers act on the consumer's real-time intent by converting people with exclusive offers or coupons via mobile at point-of-sale."

According to a post at Mobile Commerce Daily, making use of consumer data to discern consumer shopping behavior on an individual and geolocational level not only will ensure a future for mobile check-in platforms, but also will be the key for brands to better connect with consumers.

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.

Another centuries-old business goes all-in on digital

Move over Encyclopaedia Britannica. A 350-year-old post office would like to join the club of centuries-old businesses stepping up to embrace the digital age. A post at Fast Company reports that the British Post Office, established in 1660, is launching an NFC-based payment system in each of its 11,500 locations, making it the "biggest adopter of contactless payments in Europe," according to the post. Consumers will be able to ship packages and buy stamps using NFC-enabled debit and credit cards — and they won't even need to sign or enter a PIN for purchases less than £20.

The Fast Company post also takes a look at other mobile payment activity in the U.K., including the launch of the PayPal in-Store App, new NFC-enabled phones, and NFC ticketing.

A new problem for banks: Staying "top of wallet"

The digital disruption unsettling the retail and publishing industries' brick-and-mortar stores may have found an additional target: brick-and-mortar banks. A study (PDF) released this week by Carlisle and Gallagher shows that mobile wallets pose a threat to traditional banking. Carlisle and Gallagher's Peter Olynick discussed the results in a press release:

"People have already slowed their use of cash and checks in favor of credit and debit cards. Within five years, half of today's smart phone users will be using their phones and mobile wallets as their preferred method for payments. These customers will be using better tools to help them optimize transaction choices. Banks need to proactively consider how their products will stay 'top of wallet' in the new mobile wallet world."

In light of the study, financial analyst Peter Wannemacher told PCWorld that "[f]inancial institutions risk ending up as back-end funding sources for mobile wallets and payment products owned by other brands, who operate the front-end, consumer-facing aspects of the interaction and transactions." He says that traditional banks will need to offset the convenience of mobile wallets and mobile banking by offering compelling services.

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April 12 2012

Commerce Weekly: Bump taps mobile payments

Here are some of the commerce items that caught my eye this week.

Bump taps into payments

A Bump in progressBump relaunched its service this week as a PayPal-powered person-to-person payment service. Bump has been around for a few years, offering a clever way to share data that looks, to the casual user, as if it's transferring data locally from one device to another by bumping the two devices together. Is it using NFC? Infrared? Bluetooth? None of these, of course: Bump sends data through the cloud, locating the two sharing devices by their proximity and the reaction each device had to their bump. It seems pretty clever, as it enables virtual phone-to-phone transfers without having to wait on any assurance that the two phones share technology for syncing locally. As long as both phones can talk to the network — and would they be mobile phones if they couldn't? — Bump can process the transfer.

The capability for payments has always been part of the plan, but until now Bump has promoted itself primarily as a way to share contact and other information. Payments is a far more compelling use, though what Bump is actually doing is just sharing emails and looping PayPal into the process — just as you would if you were paying someone by going to PayPal's site from a laptop.

Still, how big can the market be for splitting the tab at dinner or sharing a tank of gas? The real upside for Bump must be in licensing its technology to other, more established payment processors, like PayPal. If you could Bump to pay at Home Depot or anywhere else where PayPal is accepted in the physical world, that would be simpler than having to key your mobile number into a keypad and faster than having to wait for a manufacturer to build NFC capabilities into your next phone.

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.

When will Apple enter the mobile payment race?

There's an interesting guest column by Ramzi Yakob, a strategist at digital agency TH_NK, on Wired's UK site about what mobile payments could do for Apple and (more importantly) what Apple could do for mobile payments. Yakob suggests that Apple is uniquely positioned to enter the increasingly crowded field of mobile payments — not exactly late, but not a first mover either — and reinvent it in its own image. What's interesting is that, even though Apple is now, on some days at least, the world's biggest company by market capitalization, Yakob notes that it isn't Apple's market might that gives it the power to enter and change industries:

"The position that Apple has now, not just financially but also within the hearts and minds of the modern consumer, gives it the perhaps unique ability to enter new sectors and make them 'Apple' in a way that feels completely natural to us — and by making them 'Apple', I mean, of course, beautiful, desirable, easy-to-use and hugely profitable."

The post is worth a quick read. (As an interesting aside, to point out how lax credit card security and scrutiny are, Yakob points to his brother's Tumblr where he shares pics of the ridiculous signatures he gets away with on restaurant tabs.)


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April 05 2012

Commerce Weekly: The do's and don'ts of geo marketing

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

Placecast's CEO on the secret to successful targeted offers

PlacecastLast August, I wrote about Placecast, which has been working to deliver coupons and offers on behalf of its retail clients to opted-in customers when they hit geofenced areas. Placecast's platform allows merchants to set up a ring around their locations (or other locations, as described below) and then trigger an SMS to customers who have opted in to receive them. Placecast works with mobile carriers to deliver large tranches of opted-in customers to its merchant clients. This week at O'Reilly's Where Conference, Placecast CEO Alistair Goodman talked about the right and wrong way to deliver ads to a geofenced audience, based on the learning curve they have climbed over the past few years.

Some of these are obvious, like the need to link data about the customers' preferences with the location — the richer the data, the more relevant the message, and the more likely it is to hit home. Goodman explained this as a sort of stack, with positioning data (mostly from GPS, but supplemented with Wi-Fi and other data) at the lowest level. Just above that, a layer on context: What type of place is the user at (mall? stadium? park?) and what's the weather like? Atop that level, demographics and psychographics — who are the users and what do users in their consumer categories tend to go for? Atop that layer, the users' preferences: What do they want to be notified about, when, and how often? And finally, at the top of the stack, the offer itself: What is it the retailer is promoting?

A second key point is the need to find relevant locations — not just the retailer's store, which is obvious, but other places where the customer is likely to be receptive to the offers. For example, you might promote dog food or pet stores at a dog park, or a promo for a sports drink around a gym, or the sponsor of a concert around an arena. Interestingly, Goodman said that while merchants often ask Placecast to geofence around a competitor's store, he advises them that isn't a particularly effective marketing strategy: "If a customer is already headed into a certain store, a message urging them to visit a different location isn't likely to be very effective. A more effective way is to promote the message from a relevant public space." (I noticed the audience received this wisdom in total silence; you could almost hear the wheels of doubt spinning.)

Finally, Goodman said customers react better to offers when they believe it comes to them through this channel with some level of exclusivity. "Customers like it when they feel they're getting an offer that others aren't getting." So the coupons or other offers can't be the same as what's posted on the window of the store.

Goodman said the platform can deliver offers through a variety of channels, but most are delivered as SMS text messages, which remain tremendously effective. And they seem to be working: Goodman said that their research finds that 49% of store visits that occurred after receiving a Placecast ShopAlert were unplanned before the alert, while another 19% served as reminders to visit the store. In these cases, you might say those texts delivered twice.

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.

Jumping ship at Google Wallet?

Google WalletThe departure of Google Wallet co-founding engineer Rob von Behren to join payments startup Square aroused suspicion that Square might be looking to incorporate NFC in its system. Dan Balaban's article in NFC Times puts von Behren's departure in the context of a swath of high profile talent exits from a project that appears to be struggling to find partners and users. Balaban quotes a mobile commerce analyst who believes von Behren's joining Square almost certainly means a move by Square to support NFC. "Else, it would be like hiring Michael Jordan to get advice on golf," the analyst said.

In the past, Square's COO Keith Rabois has questioned the value of NFC, calling it, at last September's GigaOM Mobile Conference, "a technology in search of a value proposition." But as more mobile phones ship this year with the short-range wireless technology, it seems natural that Square would want to tap into it to facilitate its "Pay with Square" (formerly Card Case) system that allows customers to pay at merchants with their Square accounts.

Meanwhile, Balaban's article raises questions about the viability of the Google Wallet project. In addition to von Behren, fellow founding engineer Jonathan Wall and product lead Marc Freed-Finnegan left to start their own mobile-commerce startup, Tappmo, in March. Andrew Zaeske, former director of engineering for Wallet, is also said to have left the project. Speculation centers around disagreements between Wallet chief Osama Bedier (who joined Google from PayPal in February 2011) and other leaders of the team over the project's direction. It can't help that the refusal last autumn of Verizon to allow Google Wallet into its phones, and Verizon, AT&T, and T-Mobile's plans to launch their own mobile wallet under the Isis brand, cast into doubt whether Wallet will ever be able to expand beyond the Sprint network.

Will carriers like Facebook's post-IPO status?

Mobile carriers run the risk of losing text revenue from Facebook, as more of the service's users access it from mobile devices and use it as their primary communication channel. That's the view of Victor Basta, managing director of London-based Magister Advisors, which advises companies on acquisitions and public offerings. Basta told Bloomberg BusinessWeek that "Facebook's IPO is about the worst thing that could happen to network operators" since the pressure to demonstrate strong earnings to investors will make it harder for Facebook to share revenue with the carriers. Facebook's "over-the-top" service rides on the mobile networks, failing to share any of the revenue from advertising delivered over it and increasingly taking away from the carriers' SMS text earnings, as users send free Facebook messages instead.

"The fundamental challenge for network operators will be finding a way of becoming part of the Facebook ecosystem rather than simply external enablers," Basta said.

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March 29 2012

Commerce Weekly: Google Wallet vs Isis is coming soon

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

Who's got the winning wallet?

Several recent articles have speculated about the coming competition between Google Wallet and the forthcoming mobile wallet from Isis, which is set to debut in tests in Austin and Salt Lake City this summer. Tech bloggers love a contest, and even though there's only one major player in this race so far, observers are handicapping the players before they even take the field.

MobilePaymentsToday.com ran a column comparing the merits of the two platforms in several categories. (Where was the massive infographic that we've all grown used to for this sort of thing?) Google took the prize in time-to-market (already out there, a little) and branding, while the nod went to Isis for building a solid ecosystem, with its support from three major U.S. wireless carriers and the top credit card networks and handset builders. Isis should also get the award for most imaginative and compelling demo video, based on the clip of Cyber Illusionist Marco Tempest at SXSW a few weeks ago (demo begins 15 seconds in, after the ad):



Of course, both of these plays depend on NFC wireless capability in phones, and while that's destined to ramp up soon, GigaOm reported that in 2011, NFC in the U.S. lagged far behind other regions. Of the 30 million NFC-capable handsets sold worldwide last year, about five million went to North America, 10 million went to Europe, and more than that went to Asia. Some mobile wallets, of course, don't rely on NFC: PayPal, for example, is getting ready to launch an updated version of its wallet that operates closer to the direct billing model, where you enter your mobile number on the retailer's keypad and then confirm when a text is sent to your mobile. PayPal's system is a bit less elegant than wireless tap and pay, but as we wrote a few weeks ago, it's ready now and available on any phone that supports texting.



We couldn't help notice that all this handicapping of the two most visible mobile wallets overlooked the potential of a third player that has yet to enter the arena. Only a few weeks ago, mobile payment geeks were abuzz about newly published patents from Apple that described a method for payment with credit cards that sends the receipt to the user's iTunes account. And since there are more than 200 million of those iTunes accounts (and 350 million iOS devices out there), that represents a significant installed user base that may be receptive to Apple's familiar interface applied to a mobile wallet. Those who think Apple is coming late to the party should be reminded that Apple has never had to be the first to a market to end up dominating it.

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.

In-app purchases continue to dominate

In-app purchase screenshotHere's more evidence that in-app purchases are driving most of the revenues in mobile apps. According to Inside Mobile Apps, Distimo, which specializes in tracking app store activity, reports that a majority of the top-grossing apps on iPad, iPhone and Android monetize with in-app purchases. The researcher found that, of the top 200 grossing apps in the iPad App Store, the iPhone App store, and the Google Play store in February, 74% of the iPad apps and 80% of the iPhone apps featured in-app purchases. The numbers are even more remarkable when taken with the additional insight that only 10% of all iPad apps and 6% of iPhone apps even offer in-app purchases. So, there appears to be an awful lot of iOS apps that aren't yet interested in playing in the winning game.

The number was lower on Android apps (56%). Inside Mobile Apps' Kathleen De Vere suggested that may be because Android has a shorter history with in-app purchases (only since last May) and, related, fewer Android apps offer in-app purchases.

The findings support other reports that have also suggested the superiority of the foot-in-the-door model, including one by Flurry Analytics last summer that found freemium emerging as the dominant model for generating revenue from mobile apps.

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March 08 2012

Commerce Weekly: An app to end tab walkouts

Here are the commerce stories that caught my attention this week.

Tabbed Out connects check-ins with payment

For every one of us who's ever had a hard time catching the server's eye so we can make a hasty exit from the bar, here's the app you've been waiting for. Tabbed Out (available on Android and iOS) lets you check in and open a tab at restaurants and bars. When you set up the app, you link your credit card to it, so checking in delivers that info to the merchant's point-of-sale system. When you want to check out, you can do it on the app, even leaving the tip there instead of on the wet table. That's good for the merchant: There's no chance of getting walked out on, even if the patron leaves in a hurry or deletes the app.

Tabbed Out screens

It's also good for the patron: Not only does it allow you to flee when the urge strikes, but it might save you a trip back the next day. Every bar has a drawer full of abandoned credit cards, tabs opened by good-spirited folks early in the evening who, by the time they left, were too tipsy to remember to collect them on the way out. Do the same with Tabbed Out and the merchant can close the tab — and you don't have to return to the bar the next day to pick up your plastic.

The app offers some of the usual benefits we've grown to expect from a mobile check-in app — allow it to know your location, and it will also tell you what's nearby. Well, eventually it will. As of this week, it's only available at 450 locations in 34 states. Starting this weekend, some of those locations (the ones in Austin, Texas) will begin accepting PayPal as a payment option, too. A spokesperson for Tabbed Out says the company plans to make the PayPal option part of its standard offerings as it continues to roll out nationwide. So, this is another foothold for PayPal in the real world: Now you can use it to charge supplies at Home Depot, then pay for that brew you buy to reward yourself at the end of the day.

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 coming to NYC taxis

An iPad using Square as a cash register Square's back in the news this week, with an upgraded cash register app (timed to coincide with the new iPad announcement) and more details on its rollout to New York City taxis. The iPad cash register isn't exactly new: Square has been pushing it for more than a year, and Cult Of Mac did a nice little round up of nifty iPad holders back in January 2011. But the company has relaunched the app and its integration with Card Case, the buyer's app that lets you run a tab using just your name at Square-accepting retailers (if you can find one).

Bigger news may be that, as The New York Times reports, Square will begin a pilot program in 30 NYC taxi cabs, with iPads mounted where those little TVs are now. (They better bolt them in pretty good!) The big innovation here, at least for the rider, is that you can swipe your card anytime during the ride. Then just sign the screen with your finger and you can hop right out at your destination; no more waiting to sign a credit-card receipt. Cabbies get something out of it too — faster payments and a silent iPad instead of a noisy TV with looped audio.

Despite these innovations, anyone who's been excited watching Square's development has probably also felt the disappointment that goes along with not seeing it used … well, just about anywhere. Dan Frommer, the tech journalist who blogs his own news at SplatF, certainly feels that disappointment. Still, he's enough of an enthusiast to review the company's releases over the past year of its daily processing volumes. While they're still a drop in the ocean compared to more visible options, like credit cards and even PayPal, Square seems to be headed in the right direction, and on a steepening curve that has reached $11 million a day. Considering the few businesses that show up on my Card Case app right now, that's an impressive number of lattes, massages, and farm-fresh produce.

iWallet is coming

While the rest of the Apple-lovin' world focused on the details of the new retina-display 4G iPad, payment geeks were poring over the details of a patent released Tuesday describing features of a mobile wallet to be used in some future version of the iPhone. Patently Apple reported that, while we've seen a number of patents published over the past year dealing with NFC communication and transactions, this patent details credit-card transaction rules, including a note that credit card companies will send statements (or at least receipts) directly to a buyer's iTunes account. "The iWallet project just became a little more real today," PatentlyApple noted.


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Reposted byRK RK

March 01 2012

Commerce Weekly: Small banks lagging in mobile

Here are some of the commerce stories that caught my attention this week.

Smaller banks lagging in mobile channel

Smaller financial institutions, which depend on a higher level of customer service to compete with the giants, are falling behind in the increasingly important mobile channel, according to a report by Javelin Strategy & Research. Javelin says about 37% of customers at big banks use mobile banking, compared with only 21% at regional and community banks and only 15% at credit unions. Javelin's report suggests two reasons for this. First, community bank customers tend to be older, less well off, and less tech-savvy than customers at big banks. Second, big banks can invest more in online and mobile development and marketing, resulting in a better banking experience through those channels. (That's certainly been my experience: my attempts to switch to a smaller bank were thwarted by a virtually unusable online banking system, which drove me back into the warm and fuzzy interface of a cold financial giant.)

Some smaller financial institutions say they benefitted from the anti-big-bank sentiment of the past year, epitomized by Bank Transfer Day on Nov. 5, 2011. Redwood Credit Union in Santa Rosa, for example, says its new membership was three times the normal rate last fall. But to keep that momentum going, Javelin suggests, financial institutions like Redwood will need to funnel some of their new income into development of these channels.

The report also found that mobile usage is beginning to surpass non-mobile online usage, even if those customers tap their accounts through a mobile browser. Most customers reach banks' mobile sites through a browser on their phone. However, at the largest banks, which tend to offer a "triple play," more customers use apps and SMS text instead of the browser.

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.

How Netflix improves its recommendations

One of the interesting presentations at O'Reilly's Strata conference this week was about how Netflix looks at its data to present recommendations of other shows members might like. Netflix streams 30 million shows a day. It has 5 billion ratings on those shows and collects another 4 million every day. Data scientist Xavier Amatriain discussed how Netflix uses the data from those ratings and other, more implicit data (including what people watch, which listings they mouse over to read, whether or not they finish programs) to offer recommendations that members will like enough to keep their accounts active, month after month.

Netflix gained a lot of attention a few years back with a broad open innovation initiative: it offered $1 million to anyone who could improve the Netflix recommendation engine by at least 10%. Amatriain said two teams tied for the prize with plans that improved the probability that Netflix could recommend shows that members would like based on their previous activities (though, he added, the cost of integrating those new recommendation engines into Netflix' system may have exceeded their value). Even so, since 75% of shows watched on Netflix's streaming service are based on recommendations, it's more important than ever to offer something that will draw viewers' interest.

Netflix queue example

The clues from all this data allow Netflix to present an array of recommendations to its members. First, there's a row of "top ten" most likely shows. Of course, as Amatriain pointed out, these recommendations are based on viewing history and clues of the entire membership household, not just one viewer. For example, when I log on, along with the thrillers and comedies that Netflix recommends to me, there's a fair amount of "Pretty Little Liars" and other teen dramas that my daughters might like. I used to wonder if this bizarre mix confused Netflix, but Amatriain's talk has reassured me that the company understands what's going on. Then, at a finer-grained level, there are "hyper genres" that Netflix can offer based on your track record: not just Kids Shows, but Goofy Kids Shows; not just Family Movies but Feel-good Father-Daughter Movies. Slicing the offerings narrowly improves the chances of a hit, and it's no accident that the single most likely recommendation is the first one in each row.

Of course, the main complaint Netflix receives (other than its new price structure, I would imagine) is, "why don't you have the show I want to watch?" Amatriain said the company also looks at implicit data to decide what new content to license. So when you search for a show that Netflix doesn't offer for streaming, it gets noted. I guess if you really want it to show up, keep searching for it.

Opera enters the payment fray, PayPal and Home Depot go nationwide

Mobile World Congress, the humongous European conference on all things mobile, is happening this week and everyone loosely connected to mobile payments seemed to time an announcement around it. Here are some of the more interesting announcements that have come down the PR wire from Barcelona:

  • Opera, whose Opera Mini browser has more than 160 million downloads, launched the Opera Payment Exchange (OPX). Opera says it wants to "democratize" the payment space by building a payment platform that works on more platforms and devices than Android and iOS smartphones. It says the OPX platform provides APIs that developers can use to integrate payment systems with the Opera Mini mobile browser.
  • PayPal and Home Depot said they would roll out nationwide the payment program they have been piloting in a handful of Bay Area stores over the past six weeks. The program is a significant step for PayPal, bringing its payment system offline and into the physical retail world. Customers can buy hardware and other stuff on their PayPal account, with a PayPal card or with a mobile number and PIN — no NFC required.
  • Isis, the mobile payments joint venture between AT&T, T-Mobile, and Verizon Wireless, announced more partners in its effort to build a payments ecosystem. Customers of Chase, CapitalOne, and BarclayCard will be able to load their payment information into Isis-compatible phones when they're ready. Isis secured deals with the top four credit card companies (or "payment networks" to use the parlance) last July; now it's making agreements with the banks ("issuers"). Isis is planning two pilots in 2012, in Austin and Salt Lake City, though it's not clear what phones the technology will be in by then.

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Bank photo: Old Bank in Sunbury Village by Maxwell Hamilton, on Flickr

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February 23 2012

Commerce Weekly: The mobile payment system that's ready now

Here are a few stories that caught my eye this week.

Three reasons why direct billing is ready for its close-up

In a sign that direct billing is gaining credibility beyond the realm of online games and media, WorldPay, a payment network for sellers, said it would add Boku as a method of payment to its system. Direct billing companies like Boku, BilltoMobile, and Bango let people buy things by entering a mobile number online and replying to a confirmation SMS text; the charges show up on their cell phone bills. Execs with these firms often describe them as "banking for the unbanked," but the reality has been that in practice, many of the "unbanked" are online game players who are too young to have bank accounts.

But that seems bound to change. Direct billing has at least three things going for it that make it an attractive option right now for mobile payments.

Boku graphic

The first is the potential user base. The graphic above, from Boku's site, shows the numbers that these services pin their ambitions on. There are two billion credit card accounts in the world, but more than five billion mobile phone accounts. Each of those mobile numbers is a unique identifier that the carrier can identify anytime, anyplace in the world. Compare that to the experience many of us have had where your credit card issuer puts a hold on your account because it is suspicious that you paid for a taxi in Chicago on Tuesday but are now buying lunch in Puerto Rico on Thursday.

Second, PayPal is about to train its millions of mobile customers to pay for things by keying in a mobile number. Its real-world retail pilot at 51 Bay Area Home Depot stores allows users to do just that (or use a PayPal card) to pay for hardware and other real-world goods. PayPal bought Zong, a direct-billing leader, for $240 million in July 2011. It has woven that technology into its suite of customer payment methods, though the process now taps your PayPal account rather than showing up on your mobile phone bill. And that's probably a good thing: One of the things that has held direct-billing back has been the reticence of mobile carriers to go along with a scheme that threatens to anger their subscribers when they open their monthly bills to see totals that are hundreds of dollars more than they spent on telecom services. The direct-billing companies have helped the carriers get over their hesitation by offering them a cut of the charge, much higher than the few percentage points that credit card companies charge for transactions.

The third great thing that direct billing has going for it is that it could allow people to pay for real-world goods now, no matter what kind of mobile phone they have. We've written a lot about NFC wireless as a tap-and-pay solution coming "soon." But so far in the U.S., only a handful of Nexus G users on the Sprint network are able to pay for goods using NFC and Google Wallet. Verizon's decision last December to lock Google Wallet out of its rollout of Samsung's Galaxy Nexus due to "security concerns" made the advent of universal NFC a little less certain. Direct billing, however, works on any mobile phone that supports text messaging. As Boky co-founder Ron Hirson pointed out in a column on Venture Beat last year, the more advanced benefits of a mobile wallet accompany direct billing, and no NFC is required. As Hirson wrote, the real advantage to mobile payments isn't the supposed convenience of tapping your phone compared to swiping a plastic credit card; it's the integration with other apps on the phone for record-keeping, bargain hunting, rewards tracking, financial planning, and the option to go social.

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.

Is social commerce not commercial enough?

A Bloomberg story published late last week said Gamestop plans to shutter its Facebook store after disappointing results. The article also noted that over the past year, three prominent retailers — Gap, JCPenney, and Nordstrom — have all opened and closed stores on Facebook, too. The report quoted Forrester Research analyst Sucharita Mulpuru explaining the disconnect that's leading to disappointment:

"There was a lot of anticipation that Facebook would turn into a new destination, a store, a place where people would shop. But it was like trying to sell stuff to people while they're hanging out with their friends at the bar."

The report was noticed, and widely reposted and linked to. A counter-point published by Forbes on the same day appeared to get less attention. In that piece, Wade Gerten, CEO of 8th Bridge, which makes social shopping software, suggested these companies failed because they didn't understand what social commerce (or Facebook commerce) really is. Gerten wrote that it's not about setting up your Facebook page as a checkout stand; that's what your website does. It's more about tapping Facebook's best qualities — sharing, bragging, and asking — to help people discover what you're offering. He cites Ticketmaster and Delta Airlines as two successful practitioners of the art. Neither company attempted to replicate its website's transactional activity within Facebook's walled garden, but each organization used that channel to promote their offerings. So maybe it's not exactly F-commerce but F-marketing?

Meanwhile, with Facebook's ability to push merchandise now slightly tarnished, we look for a new champion. Pinterest is barely on the radar screen, but Forbes' Jeff Bercovici writes that it's already a better place for social commerce. "Pinterest isn't a bar," Bercovici writes, referencing Mulpuru's quote in Bloomberg's story. "It's more like a craft fair where people go to exhibit their wares, check out other vendors' offerings, or do a bit of both."

How to dial a telephone (again)

Our smartphones are so capable, and we're so adept at using them to manage our lives, that it's funny to look back and see that people once needed instruction in the most basic of phone operations: how to dial a number and place a call. But an ancient 10-minute black and white film on AT&T's Tech Channel (embedded below) shows the lengths that "the Bell network" went to in preparing their customers for the switch from operator-assisted calls to dialing systems. Rows of nerdy guys in white shirts and pocket protectors line up to yank out the fuses at the stroke of 12, while other white-shirted guys in another room at the same moment yank out strings that activate the new systems. A model who might have been Lucy's Connecticut neighbor explains some of the basics, like what a dial-tone and busy signal sound like, how to look up a number in the directory, and even how to dial a rotary phone.

Actually, the instructions on how to use a rotary dial phone — "making sure your finger firmly touches the finger stop with each pull of the dial" — are as novel now as they were when this film was produced. My young kids found an old one in their grandparents' house (not in service) and had fun marveling at how this heavy, black analog beast was able to make calls.

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February 16 2012

Commerce Weekly: Google defends its Wallet

Here are some of the news stories that caught my eye this week.

Google says its Wallet is still safer than your leather one

Google WalletGoogle's mobile commerce team spent the week doing damage control after the revelation of security flaws. Last week, it was widely reported that engineers at Zvelo, which provides web-categorization services, had found vulnerabilities in Google Wallet that allowed an app they had written to expose the PIN and tap prepaid funds in the wallet. Google's initial response was to advise users not to run Google Wallet on rooted phones, and be sure to have the screenlock on. But further work, as reported by Zvelo engineer Joshua Rubin, suggests that the hack requires root access, but not necessarily a pre-rooted phone: "While it is true that this PIN vulnerability requires root privileges to succeed, it does not require that the device be rooted previously." Rubin's post and a nice summary by Neil J. Rubenking at PCMag give a good picture of the vulnerability.

Security flaws like this feel inevitable to those accustomed to the ups and downs of web start-ups and the public bugs that accompany any release-early, release-often philosophy. They are, however, more alarming to those who work with banks, merchants, and anyone else who has experience moving money around. Bank Technology News captured the split between the two attitudes and cited Aaron McPherson, a practice director with IDC Financial Insights saying the recent security problem demonstrates "an almost cavalier attitude by non-payments companies toward protecting consumer security."

Google wasn't cowed by the charges, responding with a calm coolness and an insistence that, despite any flaws in its payments system, it's still better than what everyone else is doing:

"Mobile payments are going to become more common in the coming years and we will learn much more as we continue to develop Google Wallet. In the meantime, you can be confident that the digital wallet you carry provides defenses that plastic and leather simply don't."

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.

Buck enters the one-click mobile payment fray

Buck (previously Billing Revolution) announced a one-click credit card checkout for goods this week. Entering your credit card information once in the app allows you to buy with a single click at participating online merchants — providing you want to buy from Glamour magazine, Papaya Mobile's social gaming network, or any of the other (relatively few) merchants now offering Buck.

If, on the other hand, you're at your local Starbucks, you'll want to pay with one click by unlocking your Starbucks mobile payment option, generating a 2D barcode, and holding it up for the cashier to scan. But suppose you were feeling too groovy for Starbucks this morning and you stopped at your local independent coffee house? Then you might want to pay with a single click with Square's Card Case, providing your indie coffee guy has signed up for that. At Home Depot, you'll want to use PayPal, at Macy's you can tap-and-pay with Google Wallet, and you might need to pay with American Express to get the Foursquare deal that your local eatery is offering.

Mobile payment is exhausting in its current, fragmented state, but it will be interesting to see which systems gain critical mass. Recent web history offers some clues. It was not too long ago that a half dozen search engines, including AltaVista, Yahoo and AskJeeves competed for your searches until one company offered a simpler way with more effective results. And five years ago there were a handful of social network sites competing for our profiles, including MySpace, Orkut, and Friendster, until Facebook rose on a platform of sharing photos, social games, and an easy interface. So which mobile-payments option will find the right combination of security, usability and adoption first?

Adele scorns freemium model

Freemium may be the up-and-coming dominant model in mobile apps — particularly in games — but not everyone is in love with the concept. Adele, who just took home six Grammy awards, declined Spotify's request to stream her award-winning album "21" on its service. According to Austin Carr on Fast Company, the reason is that Spotify offers two tiers of service: a free ad-supported service and a premium one without ads. Adele was willing to let "21" stream to Spotify's paying customers, but not to those riding for free. Spotify, which doesn't offer different libraries for its two tiers, couldn't accommodate the request. So while you could buy "21" on iTunes or hear it on Rhapsody (where everyone pays to stream), you can't hear it on Spotify. But, as Carr points out, with a 20% conversion rate of free subscribers to paying ones, who can second-guess Spotify?

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February 10 2012

Commerce Weekly: Facebook finds a mobile commerce partner

Here are a few items that caught my eye this week.

How will Facebook cash in on mobile?

Facebook logoWith Facebook's public filings ahead of its imminent IPO, we know now that advertising accounted for 83% of its revenue of $3.71 billion in 2011. But we also know that almost none of its revenue came from mobile users — which is a bit of a problem since mobile users are an increasingly large part of Facebook's user base. Facebook members have embraced mobile apps on smartphones and tablets, and Facebook has encouraged their use by developing and releasing apps that deliver a UI experience that is, in some ways, superior to the traditional browser-based interface.

Now, Facebook has to figure out how to make mobile pay. A deal signed this week with mobile payments firm Bango aims to help. Bango provides mobile payment services and direct billing to carriers (like Boku and BilltoMobile), so that the cost of buying things on your mobile shows up on your mobile bill. That seems like a convenient way to buy, and such services have sometimes touted themselves for nobly serving "the unbanked" — even if many of those unbanked are largely American teenagers who use the services to buy virtual goods in games. The drawback is that mobile carriers have been lukewarm to the systems because they worry about customers seeing huge mobile phone bills and complaining or switching, even if what they're seeing is made up of virtual poker chips and Smurfberries. Direct billing services have helped the carriers get over these anxiety by giving them a cut of the revenues much greater than most payment providers get, often as high as 33%.

There's no word yet on how Bango and Facebook will manage payment or what percentage of those payments will go to the telecoms. But we can imagine what goods will be sold: Facebook Credits, as Facebook last year began insisting that mobile game providers sell their virtual goods using only Facebook credits. But I would expect Facebook's position on Credits to evolve as mobile commerce grows on the site. It's one thing to force users to buy Credits so they can be dispensed within social games; it seems unnecessary when consumers are buying a wider range of digital (or physical goods) throughout their Facebook experiences, and a restriction that could limit the potential. As long as the mobile carrier is taking a cut, why couldn't Facebook take a cut as well, without having to force Facebook's virtual currency into the equation?

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.

Google Wallet's glitches

Google Wallet is stumbling through some embarrassing growing pains as it comes under the scrutiny of white-hat hackers who are finding and publicizing security flaws. Engineers at Zvelo developed a Google Wallet Cracker app that appears to be able to break Google Wallet's encryption in seconds. Google is working to find a solution for the glitch, which exposes users' Google Wallet PIN numbers on rooted Android phones. Kate Knibbs at Mobiledia writes that the breach "validates Verizon's decision to block Google Wallet on the Galaxy Nexus," due in part to its concerns about security on the Android platform.

Meanwhile, over at TheSmartPhoneChamp.com, there's a video that highlights another security flaw in the phone. Since the Google prepaid account option within Wallet is tied to the device, not a separate Google account, someone who finds the device can open the Wallet app, clear the data, and then re-launch the app. Although the "new owner" will need to enter a PIN, the old prepaid Google account is still tied to that smartphone. I'm not certain how big a hole this is because I have no idea how much people store on their prepaid accounts — though I would hazard a guess it's not more than $300. All right, so nobody wants to lose $300, but it's not like being upside down on your mortgage.

Add to these issues the growing awareness that malware and crapware are a problem on the mobile side. To fight the malware problem, Google developed Bouncer, a program that scans for malware and spyware on Android apps. To keep out known troublesome apps, the service performs a malware and spyware scan on all submitted material. It also uses behavioral analysis to determine if a given app is trying to do something suspicious. Google doesn't stop there; it also performs fraud and abuse detection to ban and remove malware writers posing as legitimate developers. Google says it's already deployed the service and has seen a 40% drop in "potentially malicious downloads" thanks to it.

What would you buy with a QR code?

PayPal has launched a pilot with "shopping walls" in subway stations in Singapore, where you can purchase stuff by snapping a pic of the QR code while using a PayPal app on a smartphone (see a shopping wall in action here). It looks like a swell way to get some of your Valentine's Day shopping done while you're waiting for the Circle Line. Another nifty experiment would be ordering dinner from a shopping wall while waiting for your train in one station, so that it would be ready for you when you exit another. Snap the QR codes of the meals you want and checkout with PayPal. The system could even be smart enough to know when you'll pick it up, based on the station you ordered from. And there's no question of the food going to waste: The restaurant has your money and your mobile number.

That's my idea — and I freely admit that it's just because I'm late for dinner. Let me know if you've seen anyone selling meals or other interesting items via QR codes.

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December 15 2011

Commerce Weekly: Daily Show skewers freemium CEO

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

Daily Show corners gaming CEO on freemium

Poor Rizwan Virk. The co-founder and CEO of GameView Studios thought he was going to be featured as a new media visionary whose product (social games) contribute to a thriving virtual economy while the real one staggers on through an endless, grinding downturn. Instead, he found himself being skewered by Daily Show correspondent Aasif Mandvi, who accused him of playing off children's emotional immaturity and propagating a business model that looked a lot like drug dealing. Fame, like the Daily Show's producers, plays by its own rules. Here's the segment:

The sneak attack on Virk centered around GameView's popular TapFish, which features a virtual aquarium where players feed virtual food to virtual fish. The game is free, but as with all freemium games, a small percentage of players choose to buy virtual goods (food, fish, accessories) to enhance it. Virk touted the model in the interview as a new approach that allows more people to play the game: "Traditionally, you had to go to a store and buy a $60 cartridge to play. In this new model, you can play games for free."

Mandvi then switched gears and reported on a family in Montpelier, Vermont, (though it's unclear whether this was a real family or actors) where the kids boasted about maxing out the dad's credit card buying virtual fish and fish food on an iTunes account. B-roll showed someone purchasing $99.99 of virtual fish — though Virk says most of the game's actual purchases are for less than $2.

Virk looked equal parts annoyed and confused as Mandvi accused him of pushing a model that lured people into the game and then exploited their addiction. "You provide a product, the first one is free," Mandvi said. "And then as they get accustomed to your product, the price rises. So you're a drug dealer." He then went on to accuse Virk of targeting kids as the dupes, exploiting their "undeveloped frontal cortex" and their desire to keep the fish alive at any cost.

Virk defended himself in a blog post the next day, saying he felt tricked because the Daily Show said it was producing a segment on the virtual goods, and Mandvi's "drug dealer" comments came near the end of four hours of recording. In the post, he pointed out that most purchases are for much less than the one shown during the interview and that all purchases require the buyer to enter their iTunes password. But of course, far fewer people will read his post than see the Daily Show bit.

The report was an unusual attack on the increasingly popular freemium model, which, as Flurry Analytics pointed out last summer, has become the dominant model for popular mobile games. Stories of kids overspending appear rare and anecdotal. I took a small survey on Facebook and Twitter for this post, asking parents how many of them shared their iTunes password with their kids. For the most part, that trust barrier seemed to break down along age lines, with parents of kids younger than about 8 or 9 not sharing the password, while parents of teens were more comfortable with sharing — especially if, as in one case, the child had set it up for them. That may be because at a certain age, kids are old enough to understand they're spending real money and that they're likely to lose the privilege if they abuse it. At least that's what happened to one of the kids in my mini poll: "[I shared the password] until he purchased a bunch of music with inappropriate content!"

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.

Isis taps NFC partner

ISISIsis, the mobile payment platform funded by Verizon, AT&T, and T-Mobile, said it has contracted with Dutch digital security company Gemalto to run the NFC platform on Isis-enabled phones. This means that Gemalto will manage the access to the secure NFC chip on Isis-enabled phones, saying in effect who can access the system for payment or other services.

The move is another step toward Isis' eventual rollout, which will be preceded by two tests planned for the first half of 2012 in Austin, Texas, and Salt Lake City, Utah. Isis is emerging as a major competitor to Google Wallet, particularly in light of Verizon's recent decision not to allow Google Wallet to function on the Android-powered Samsung Galaxy Nexus on Verizon's network. Verizon and Google say they're in discussions, but skeptics wondered if this might be the first of many blocks to come by the three carriers who support Isis.

Meanwhile, Bank Technology News (BTN) reported that Google Wallet may be planning to roll out a larger demo in London in the first months of 2012, ahead of the Summer Olympics. BTN said that Visa, the payments sponsor of the Olympics, is likely to be part of that trial. Thus far, Google Wallet has been limited only to Nexus owners on the Sprint network who have a MasterCard through Citibank. The London trial is likely to be widespread, reaching more handset owners and, presumably, far more merchants.

Consumers: Make it easier for us to spend

Survey results released this week offer the counter-intuitive finding that consumers might be more comfortable with mobile payments than they are with credit cards. Javelin Strategy & Research conducted the survey that found that (not surprisingly) consumers don't like having to key in 16-digit credit card numbers to buy stuff online. They would be more comfortable with direct carrier-billed mobile payment, which requires only a mobile number and a pin. Those charges then show up on a mobile carrier bill. The survey was commissioned by Payment One — a direct carrier-billed mobile payment provider.

More than half of the 2,000 consumers who took the survey said they've abandoned shopping carts before checking out because of security concerns, and four out of five said they would spend more money online if it were easier and more secure. In the report, Javelin said this could all add up to an additional $110 billion in new revenue for merchants in the U.S. each year. Payment One is just one of several vendors willing to step in to help merchants reach that number, recognizing that 14 numbers is a lot easier to key in than 16, particularly when 10 of those digits are your mobile phone number.

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December 08 2011

Commerce Weekly: Verizon drops Google Wallet

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

Verizon to Google: Leave your Wallet at home

VerizonVerizon's decision not to support Google Wallet in a new NFC-enabled phone renewed concerns that the mobile payments landscape is in for a long turf battle. Samsung's Galaxy Nexus, an Android-powered phone in all other respects, won't support Google Wallet on Verizon because, the carrier says, Google Wallet differs from other apps in that it interacts not only with the operating system but also with "a new and proprietary hardware element in our phones" — presumably, the NFC chip.

Few thought that was the whole story: the consensus among observers was that Verizon won't ship Google Wallet because it's one of the founding partners of Isis, a competing mobile-wallet solution. Isis isn't on any phones yet, but it's planning trials in Austin and Salt Lake City later this year. Verizon teamed up with fellow telecoms AT&T and T-Mobile, along with Barclaycard US and Discover Financial Services to launch the Isis effort last autumn. Since then, Isis has signed agreements with the other major credit card services to collaborate on development.

ZDNet's James Kendrick said it's not just about Isis, but about how much Google should pay to reach a new, large pool of customers: "Google will have to pay Verizon to play." And besides, Kendrick wrote, Google has a deal with Sprint right now — though it's going to be a long, cold winter for Google if that agreement keeps it off the other major carriers.

This fragmentation is likely to be the case for a while, noted Rebecca Greenfield at The Atlantic. Mobile wallets are probably fine for enthusiasts and early adopters, but mainstream shoppers won't take it too seriously until they know they can use their mobile wallets in most of the places they go. "[W]e won't leave our wallets at home until we get a cord-cutting equivalent," Greenfield wrote. "For now, users either have to load a smorgasbord of mobile payment apps, or settle for the current half-hearted solutions."


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.

Crooks take swipe-and-pay literally

In a reminder that unattended payment points — such as pay-at-the-pump terminals, ATMs, and self-serve check-out lanes — are weak links in the payments security chain, shoppers at Lucky supermarkets in Northern California appear to be the victims of criminals who tampered with card readers to skim debit card and PIN data. As of Tuesday, police in Petaluma, Calif., had 112 reports from customers of the local Lucky who reported unauthorized withdrawals from their accounts.

SaveMart, Lucky's parent corporation based in Modesto, Calif., said on its website that it discovered breaches back on November 23 and replaced compromised card readers at 20 stores. Unfortunately, they missed a few stores, including the one in Petaluma.

It's not clear yet what method was used to skim the data and the PINs. BankInfoSecurity.com reports that there are several ways to capture the PIN, including compromising the PIN pad hardware inside the box. In that case, it's also possible that Bluetooth technology could be used to transmit data to a laptop in a car parked close outside. Michael's craft stores were hit by a similar breach last May, causing that company to replace 7,200 PIN pads.

"Criminals realize that retailers are understaffed to the point that swapping out a [point-of-sale terminal] will go unnoticed," McAfee consultant Robert Siciliano told BankInfoSecurity. "Once they determine the make and model of an easily swappable device, they target a chain they can easily comprise."

Starbucks succeeds with payments, moves on to augmented reality

Starbucks said it has processed more than 26 million transactions on its mobile app since launching it last January. The novelty effect appears not to have worn off: in the first nine weeks of the program, there were three million transactions. For the nine-week period starting in October, there were twice that number. The Starbucks app is a nice example of what's possible with lightweight payments when you have complete control of a closed-loop system. Customers can load up a Starbucks card by credit card online or at a store (with cash or credit). They can draw off that card's credit by clicking a button on the mobile app, which displays a barcode that Starbucks' cashiers scan to debit the card.

But payment is just one part of Starbucks' mobile strategy. In November, it introduced Cup Magic, an augmented-reality application that lets users interact with characters on its red holiday cups and on displays in its stores. After launching the associated iOS or Android app, you find drawings of the characters and view them with your phone's camera. The app identifies shapes in the characters and launches simple interactive animations, like snowflakes falling and the characters playing.

When I first read the release, I thought it was yet another way for customers to engage with their phones rather than anyone else in the store. But when my daughter and I went to a nearby Starbucks to try it out, just the opposite happened: a crowd of curious customers gathered around to see what we were laughing at. Some downloaded the app right away and began doing the same. The two cashiers, who were unaware of the app or the secret behind the character drawings, demanded to know what we were all doing. When we explained, they agreed it was pretty cool and helped us locate the other characters in the store. As we drove home with her hot chocolate, my daughter explained to me how each of those people in the store would probably go home and tell a few other people about what they saw at Starbucks this evening. I smiled and thought to myself: a viral marketer's dream.

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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.

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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.

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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:

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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.

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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.

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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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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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 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.

Save 20% on registration with the code AN11RAD

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 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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