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October 25 2012

Commerce Weekly: Square’s big moves

Here are a few stories that caught my attention in the commerce space this week.

Square gets international, plans major growth; PayPal Here hits retail

Square made a couple of big move announcements this week. First, the company literally will move to a new office space in the Central Market area of San Francisco by mid-2013, according to a report by Leena Rao at TechCrunch. Rao notes that the company has grown to more than 400 employees and reports Square plans to expand its staff to almost 1,000 people before the end of 2013.

Square also announced this week that its service is now available in Canada, at the same 2.75% rate it charges in the U.S., according to a report by Ingrid Lunden at TechCrunch. Lunden reports one of the obstacles for Square in Canadian as well as European markets is that its dongle depends on the magnetic stripe on the backs of credit cards; many credit card processes in these markets use a chip-and-pin system instead.

The obstacle isn’t insurmountable, however, as Lunden notes, Square’s partnership with Starbucks to incorporate its Pay With Square app service as a mode of payment might pave the way forward with retailers in other markets, making the card processing format irrelevant.

Square competitor PayPal Here was on the move this week as well — into retail shopping. Rao reports in a separate post at TechCrunch that PayPal CEO John Donahoe announced a U.S. retail deal with AT&T during eBay’s earning call this week. PayPal Here previously had a retail presence only in Japan with Softbank. Rao reports that Here will retail for $15, with the purchaser receiving a $15 discount upon signing up; Square is sold in 20,000 outlets in the U.S. and sells for $10, with a $10 purchaser sign-up discount, Rao reports.

Let the mobile payment testing begin

The long-awaited Isis mobile wallet began testing this week in Austin and Salt Lake City markets. Stephanie Mlot reports at PC Magazine that compatible phones at launch include Samsung Galaxy S III, Galaxy S Relay 4G, and Galaxy S II on T-Mobile; the HTC Droid Incredible 4G LTE on Verizon, with Motorola Droid Razr HD and Droid Razr Maxx HD support coming yet this week; and the Samsung Galaxy S III, the HTC One X, the Samsung Exhilarate, the LG Escape, and the Samsung Galaxy Rugby Pro on AT&T.

Mlot also reports that T-Mobile customers can get $10 in Isis eCash if they visit a brick-and-mortar location and activate the application. At launch, Isis works with Chase, Capitol One, Barclaycard, American Express, Visa, Mastercard and Discover credit cards.

As to Isis’ success, a report at Consumer Reports says services like Isis are solving “a non-existent problem” and concludes: “Isis, like Google Wallet, still seems to require a lot of work and needless complexity for the questionable convenience of paying by cell phone.”

Apple also announced this week that it too soon would be testing a mobile payment solution in a limited market — its own retail stores. Mark Gurman reports at 9to5Mac that Apple is preparing to update its point of sale system to scan Apple Store payment card codes through Passbook. The payment system update could be ready as early as the end of this month. Jordan Golson writes at MacRumors that though it’s not confirmed, it’s possible in-store customers also will be able to pay for any merchandise using their iTunes account information; thus far, only select accessories have been available for purchase through Apple’s EasyPay self-checkout system.

Google Wallet on the iPhone?

Business Insider’s Owen Thomas was paying close attention this week, noting the “The next version of Google Wallet, coming soon” statement at the top of Google’s Wallet homepage, with an option for visitors to request an invite. Thomas reports that when he requested the invite, he was prompted to select the type of device he uses: iPhone, Android, or “other.”

Ryan Kim at GigaOm agrees with Thomas’ assertion that this likely suggests Google is looking to expand its purview beyond Android phones and into iPhones and “others,” but notes it really could mean anything. Kim writes:

“It could mean that Google may be pursuing a more cloud-based approach to payments that doesn’t require NFC for transactions. Or Google Wallet could integrate with Apple’s Passbook or evolve to support QR codes or 2D barcodes, which is how Starbucks and Dunkin Donuts handle mobile payments. Or it could just mean Google wants to know how many iPhone users are interested in Google Wallet.”

You can sign up for an invite here.

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October 04 2012

Commerce Weekly: More brands throw in with Merchant Customer Exchange

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

MCX’s mobile payment vision draws in more big names

The Merchant Customer Exchange (MCX) got a boost this week as several more big brands joined the mobile payments network. Nivedita Bhattacharjee reports at Reuters that the new members include Gap, Bed Bath & Beyond, Dillard’s and Dunkin’ Brands, bringing the total to 21 publicly traded members to date.

James Wester at Mobile Payments Today notes that a merchants mobile payment solution doesn’t yet exist and no launch date has been announced. Wester reports:

“MCX said its platform is under development and the company is trying to focus on integrating payments with offers and promotions delivered to a smartphone. But a source familiar with MCX’s effort said the consortium is still working through an RFP process to find technology vendors to help bring its solution to market.”

Wester says MCX officials described the vision for the payment solution as including discounts and promotions, and requiring little involvement from merchants in terms of equipment and technology investments. The platform also reportedly will “take a ‘hands-off’ approach to retailer’s transaction and customer data,” which is a major factor in some retailers choosing MCX over other payment options, such as Google Wallet. Mike Cook, vice president and assistant treasurer at Wal-Mart, one of the MCX partners, made it clear this week that Wal-Mart is not interested in sharing consumer and transaction data and that that played a role in the company choosing to back MCX over Google or Isis.

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.

Lemon opens its API, but is it aiming at Passbook?

Mobile wallet startup Lemon stepped up its game in the mobile payment arena this week, launching its developer platform “Lemonade,” or “Lemon Application Development Engine.” Sarah Perez reports at TechCrunch that third-party developers now will be able to create branded interactive “smart cards” to better connect with consumers. She writes:

“Using the SmartCard Wizard, developers can customize their cards in terms of design as well as functionality. … A gift card could display the current balance, which is updated as the money is spent. Cards can also be used as mechanisms to allow the card providers to communicate with users, letting users send messages, respond to surveys, receive offers, discounts, and more. Other card add-ons might include integrated loyalty programs, coupon tracking tools, or price comparison tools. Support for tickets is also possible, and these can now be made interactive as well, alerting users to venue or time changes for the event, among other things.”

Ryan Kim at GigaOm says that opening the API “will pit Lemon against Passbook and perhaps Google’s larger vision for Google Wallet,” though he also reports that Lemon founder and CEO Wences Casares told him there are plans to integrate with Passbook. Perez reports that Lemon sees itself more as a complement than a competitor to Passbook and that the planned integration is about two months out.

QR codes breathe new life

While NFC technology continues to take hits in the payment space, it looks like QR codes might be enjoying a comeback. Apple employs the codes in its new Passbook service, and this week Target announced a new holiday shopping campaign using the codes; the idea is to steer “showrooming” consumers to Target’s website in hopes of retaining the sale.

Leena Rao at TechCrunch reports that Target will add the codes to the top 20 selling toys this holiday season. Consumers can scan the codes to purchase the toys with their mobile phones — even if they’re out of stock in the physical store — and then ship them anywhere in the U.S. for free. Rao notes this may be a preemptive strike against any holiday campaign plans Amazon may have up its sleeve — last year, the Internet retailer gave consumers a discount for “showrooming” at physical stores and then buying the products from its own retail platform.

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September 27 2012

Commerce Weekly: An early look at who’s who in Passbook

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

Passbook’s early merchants

Apple’s iOS 6 launched last week, bringing the Passbook feature to iPhones, and merchants from all walks of industry have started jumping on board. Target was among the first to push its app update, and Sarah Perez at TechCrunch argues it will be one of the most influential merchants in making mobile wallets mainstream. Perez notes the practical nature of Target’s app, as it focuses on saving and storing mobile coupons. Mobile coupons are nothing new, of course, but Perez argues, “becoming part of a more comprehensive system — one that even pushes you reminder notifications as you walk into a store — it has the potential to actually change user behavior” (e.g. make consumers more comfortable and intimate with their phones as part of the shopping experience).

Perez also looks at startup gift card company Gyft’s new Passbook integration in a separate post. The company sells cards from more than 200 retailers, and for those with which it has a relationship, the app will allow users to check gift card balances, too. The integration also is on a per-card basis, so each card must be transferred into Gyft individually, but Perez says it’s worth the trouble: “instead of having a generic ‘Gyft’ card stored in the Passbook app, you’ll have what appears to be the individual store gift cards there, powered by Gyft.” Perez also looks at a few other startups that were agile enough to jump on board early, ahead of many major brands, including Belly and SnipSnap.

One of the more surprising of the major brands to be slow off the mark is Starbucks. Alex Heath at Cult of Mac reports that the Starbucks app will be updated by the end of the month and points out why it’s such a surprise the coffee mogul is late to the game. Not only is Starbucks mobile savvy with its Square payment integration, but “Apple originally routed Passbook in the iOS 6 developer betas to the Starbucks app in the App Store,” Heath writes.

A few of the other major brands already on board with Passbook include Walgreens, Ticketmaster, Fandango, Sephora and several Major League Baseball teams. To give Passbook a whirl in the real world, Josh Lowensohn at CNET took it to a Major League game. He writes that he was able to get into the game by having his ticket scanned off his phone but that the experience wasn’t completely paperless: “In order to give Passbook users some sort of proof of purchase, the stadium prints out a paper receipt that you need to hold on to. … The stadium also requires those with higher level tickets, to somewhere like the suite levels, to carry an extra paper ticket.”

A little rough, but it’s a start. If you want to peruse all Passbook-updated apps, AppShopper has a running list.

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.

The chaos in the payment space

Carol Coye Benson took a thorough look at the state of the payment industry over at Payments Views this week. She describes the landscape as being in chaos:

“When we look at the payments industry today, we see a rapidly fragmenting world, with multiple models, many using various decoupled or layered approaches, with many new solutions for both consumers and merchants. Choice and innovation, of course, may bring potential benefits, but will create equally obvious challenges — including a more confusing environment, for consumers and merchants alike. Regulators, too, will find this a more difficult environment to manage, as will investors, given that many of the new solutions do not have clear or established business models.”

Benson delves deep into each area, looking at the various fronts: wallets versus cards, merchants versus payments industry incumbents, secure element (SE) data storage versus cloud, etc. She also stresses that mobile commerce encompasses far more than mobile payments, including online ordering, self-checkout, mobile ticketing and mobile-enabled digital content purchases. You can read Benson’s complete analysis here.

For a hands-on look specifically at the state of mobile payments, CNN reporter Laurie Segall spent a day shopping in New York City sans physical wallet, using only her smartphone to pay. Throughout the day, she visits a variety of merchants and tests Google Wallet, LevelUp, Square and PayPal. You can see how each works out in the following video:

Studies show importance of the mobile shopping experience

A report released by NetSuite, Inc., this week spells out some good news for mobile payments on UK’s high streets. A press release at CNN Money highlights a few key findings from the report:

  • 67% of high street retailers already offer a mobile app, and that percentage jumps to 80% when you include retailers planning to launch a mobile app in the coming year.
  • Retailers expect mobile commerce to grow at a rate of 23%, an increase of £11bn in 2012.
  • 38% of retailers report their biggest challenge is integration with other ecommerce systems, 37% report budget as the problem, and 15% say they just don’t know how best to create a compelling experience.

A new study released by Google this month stresses the importance not only of having a mobile site or app, but of offering a mobile-friendly experience. A few highlights from the study include:

  • 61% of consumers say they’ll leave a site and move on to a competitor if they can’t easily and quickly find what they’re looking for.
  • 74% are more likely to become return customers if a site is mobile-friendly.
  • 67% say they’re more likely to buy a product or service from a mobile-friendly site.

You can download the NetSuite report here and the Google Study report here.

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September 20 2012

Commerce Weekly: Big data in retail

Here are a few stories from the commerce space that caught my attention this week:

Mom and pops sidelined by big data?

Gary Hawkins at the Harvard Business Review took a look this week at marketing and research in the commerce space and argued that the costs associated with big data advantages may be wiping out the little guy. Hawkins writes:

“In this war for customers, the ammunition is data — and lots of it. It began with transaction data and shopper data, which remain central. Now, however, they are being augmented by demographic data, in-store video monitoring, mobile-based location data from inside and outside the store, real-time social media feeds, third-party data appends, weather, and more. Retail has entered the era of Big Data.”

Hawkins points out that this level of consumer intelligence is highly advantageous and even more expensive, thus only retailers with adequate resources (read: deep, deep pockets) can compete. Citing a study (PDF) by the Grocery Manufacturers Association, he notes that “annual industry spending on shopper marketing at over $50 billion, and growing.”

In addition to sidelining smaller retailers, the shopper marketing trend is having a more pervasive effect on the industry as a whole by changing the distribution of budgeted marketing expenditures. “Trade promotion accounted for 44% of total marketing expenditures by manufacturers in 2011, lower than any other year in the past decade,” Hawkins notes. The reason for the shift is all about the ROI — quoting Matthew Boyle of CNN Money, Hawkins writes that “the partnership of Kroger and dunnhumby ‘is generating millions in revenue by selling Kroger’s shopper data to consumer goods giants’ … It is widely understood that Kroger is realizing over $100 million annually in incremental revenue from these efforts.”

This model not only caters to large retailers over smaller retailers because of the size of their wallets, but because it’s easier for brands to interact with the corporate headquarters of a major retailer with 1,000 stores than to interact with 1,000 owners of independent stores, Hawkins writes. He goes into detail about how this business model will affect the industry on several fronts — you can read his piece in its entirety here.

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.

NFC, a mess waiting to happen?

When Apple unveiled the iPhone 5 last week, the big news on the commerce front was the new device’s lack of NFC technology. After some time to mull it over, most are coming to the conclusion that it won’t be detrimental to Apple — or to mobile payments, for that matter. Brian Proffitt at ReadWriteWeb addressed the issue this week and argues that Apple will be just fine without NFC — you can’t really use it anyway, as NFC payments aren’t universally accepted. And with the expense and hassle on the part of the merchant in setting up for NFC payments, this form of payment is going to have to become far more ubiquitous to make it worth their while. Proffitt writes:

“NFC may afford some convenience to some customers, but if it doesn’t increase sales in a meaningful way it’s going to drop to a lower point on a business’ priority list. Getting more sales and customers is the big win, and NFC might not help with that when something like Passbook or other payment systems like Square could be implemented with less cost and hassle.”

Over at All Things Digital, Carey Kolaja, chief of operations for global product & experience at PayPal, took a look at this issue as well. She argues that NFC is a mess waiting to happen and asks why Apple would want any part of it anyway. Kolaja writes:

“No retailer will have multiple NFC boxes to take payments from different networks, and the NFC terminals shipping today do little more than just transmit the card number and transaction size. They’re not equipped to automatically accept the complex coupons and offers that make the digital wallet so exciting. On the technology side, carriers are trying one solution, phone manufacturers another, and technology companies yet another. Meanwhile, the consumer is standing at the register thinking ‘really, how hard is it to pull out my credit card?’”

Kolaja also defines “mobile wallet” and “digital wallet,” and explains why the terms are not interchangeable. She argues that, in the end, digital wallets will prevail over mobile wallets because “[r]elevance to the consumer will be king, and the ability to act in a seamless and secure environment across any device or platform will be what matters most to that consumer.” Her piece is well worth the read.

Mobile-empowered consumers are driving retail innovation

A new report released this week from MasterCard and the Economist Intelligence Unit showed that consumers are effecting change and innovation in the retail industry more than ever before. The report refers to this shift as “the era of the ‘I-Con’ — the smart, omnichannel, omnipotent consumer.” A couple highlights from the findings include:

  • “Data allows retailers to put the ‘I’ in I-factor”: data was voted the second most important factor in customer retention and in growing market share, as it allows retailers to better personalize services. “41% say they will use data to deliver an improved customer experience in the coming year.”
  • “Retailers are ramping up investment in new technology solutions to keep pace with customer demand”: 44% of retailers say they plan to offer contactless payment in the next year and 35% will invest to improve their e-commerce and m-commerce strategies and platforms.

Additionally, the study looked forward to 2020 and offered a few predictions. One notable highlight focused on mobile:

  • “Mobile commerce is predicted to become king”: 43% of retailers predict that mobile will become the most important channel for customer communication by 2020, ahead of brick-and-mortar stores and desktop PCs.

The findings echo study results from BigCommerce this summer that showed the exponential growth of e-commerce and m-commerce. The study results, visualized in an infographic, in part addressed the changing behavior of consumers and how mobile is driving those changes:


Click for the full infographic.

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Commerce Weekly is produced as part of a partnership between O’Reilly and PayPal.

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August 30 2012

Commerce Weekly: Google Wallet vs Apple Passbook

Here are a few stories from the commerce space that caught my attention this week.

Google prepares its Wallet to compete with iOS 6

Robin Dua, Google’s head of product management for Google Wallet, participated in a video interview (embedded below) this week to talk about Wallet features and plans. Technology reporter Cromwell Schubarth notes in a post at Silicon Valley Biz Blog that the future plans for Google Wallet look a lot like Apple’s newly announced Passbook that’s due to release in iOS 6 this fall. Schubarth quotes Dua:

“‘One of the types of things we’re trying to do is make it easy for airlines, transit providers, and other types of issuers of credentials to make it super simple for them to get their credentials stored in the wallet,’ Dua said. ‘That’s the goal. We want you to be able to leave your leather wallet at home and carry your phone and transact with that as your primary transaction device.”

Dua said they plan for the Wallet to hold credit cards, loyalty cards, IDs and things like boarding passes and transit passes. Very much like Apple’s description of Passbook.

You can view Dua’s interview in the following video:

As far as mobile payments are concerned, however, Google Wallet might retain its leg up on Apple. Earlier rumors of the next generation iPhone, anticipated to be announced at a rumored Apple event on September 12, indicated the phone would include an NFC chip, fueling further rumors that Apple would launch a digital wallet. This week, Brian Klug and Anand Lal Shimpi at AnandTech presented a compelling argument as to why it’s highly unlikely the phone will include NFC. Ryan Kim at GigaOm reports:

“AnandTech said given the reports that the next iPhone will have a metal backing, there will not be enough space in the non-metal window reserved for other antennas to support an NFC chip.”

Of course, an NFC chip isn’t necessarily required for Apple to launch a mobile payment product. Some analysts have argued that Bluetooth technology would make more sense.

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.

It’s not about the tap. It’s about the data behind that tap

Dan Rowinski at ReadWriteWeb took a look at the transformative effect technology is having on currency and the way people shop and pay for goods. He argues that major changes to our cash-based society will be “brought on by the two most fundamental innovations to hit the mainstream consumer since the advent of the Web: mobile and cloud computing.” He notes that, philosophically, the cash-to-digital road hasn’t been (and isn’t) easy:

“This notion of using a smartphone to pay has been criticized by many people (including us at ReadWriteWeb) as adding no value. There has been a lot of hype about NFC for the last couple years, but there is really no discernible argument that can validate that a tap is easier or more valuable than swiping a card. This is the crux of the argument against mobile payments: The transformation taking place is not necessary. For NFC in particular, it has been called a solution without a problem.”

Rowinski argues that the transformation to mobile payments does, in fact, add value — the value is in the layers beyond the transaction. “The value of the mobile wallet is the digital transformation of monetary and transaction data,” he writes. “When a consumer makes a purchase on a smartphone, the retailer knows who that person is, the mobile wallet provider gets information about what was bought when and where and by whom, and the consumer gets the value of electronic receipts and the ability to receive coupons, offers and loyalty rewards.” You can read more of Rowinski’s analysis here.

Wallet competition roundup

John Martellaro at The Mac Observer pulled together a roundup of the competition in the digital wallet wars this week, with breakdowns of all the major players: Google Wallet, Merchant Customer Exchange (MCX), Isis, Square, PayPal and V.me. Martellaro addresses a few of the hurdles facing mobile payment as well, including technology and security issues, but also points out what might be the biggest — and perhaps most overlooked — issue: consumer frustration. Martellaro writes:

“… there is also the issue of competition that will confuse and annoy customers. For example, it doesn’t appear that Google Wallet will come to iOS. As a result, banks, telecom companies, and merchants are in a much better position to work out the requisite details. On the other hand, a system from smartphone makers, because of the competing interests, would generate discord. This could explain why Apple hasn’t jumped in with ‘Apple Wallet,’ (other than its iOS 6 Passbook).”

On the other side of The Pond, Mastercard heated up the mobile payment competition in Europe this week, striking a deal with Everything Everywhere, the biggest telecom operator in the UK. The initial offerings will be a bit different from other services that charge purchases to registered credit cards or bank accounts. The BBC reports that, “one of the first products would be a service in which users pre-pay money into an account before being able to spend it via handsets equipped with near-field communication (NFC) technology.” Future plans, according to the report, include adding the ability to pay through a bank account with a mobile phone and a service to facilitate person-to-person money transfers.

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Commerce Weekly is produced as part of a partnership between O’Reilly and PayPal.

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