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February 28 2013

Commerce Weekly: Visa pursues NFC mobile payments

Visa looks to kick-start NFC

Visa is taking aim at the NFC mobile payment holy grail. On Friday, the company announced the Visa Ready Partner Program. Leena Rao reports at TechCrunch that the initiative “aims to help mobile device manufacturers, technology partners, mobile network operators, and others gain access to Visa IP, licenses and more,” and that Visa “will make APIs and SDKs available to allow mobile point of sale providers to connect to Visa via payments gateways CyberSource and Authorize.Net.”

Rao says the program will serve as a resource for developers and provide a way for financial institutions and retailers to adopt mobile payments solutions. One of the initial program partners announced is Samsung. Ina Fried reports at All Things Digital that per the agreement, future NFC-enabled Samsung phones “will come with Visa’s [PayWave mobile] applet and pre-certified to work with its payment system.” Fried also reports that Visa mobile chief Bill Gadja said that they’re aiming to “turn upstarts into potential allies rather than rivals” with the program.

Marguerite Reardon reports at CNET that while the program may well help kick-start NFC-enabled payments around the world, it may hit a snag in the U.S. She writes:

“Since wireless carriers in the U.S. still have a say in what features are available on devices and which aren’t, there’s a chance that the Visa PayWave technology may only be available on Samsung devices sold internationally and not on most Samsung smartphones sold in the U.S.”

Reardon uses Google Wallet’s uphill battle as an example of potential obstacles Visa may face, noting that “the three major U.S. operators that have already blocked Google Wallet are investors in a joint venture called ISIS, which is building its own NFC-based mobile wallet.” You can read her full report at CNET.

PayPal Here crosses The Pond

PayPal unveiled a version of its PayPal Here mobile payment device that will launch in the U.K. this summer, with other European countries to follow. Rebecca Grant notes at VentureBeat that “PayPal already has a large presence in the U.K. and seeks to capitalize on its existing network as well as name recognition.”

The biggest obstacle PayPal faced in designing the European version of PayPal Here was the complex Chip and PIN system used throughout Europe, technology that Marcus Wohlsen at Wired says “crushes anything available stateside.” Wohlsen explains that the chips in the Chip and PIN cards are more difficult for thieves to copy than the magnetic stripes we have here in the U.S.

Rick Oglesby, a payments industry expert at Aite Group, told Alistair Barr at Reuters that “[t]rying to figure out how to make Chip and PIN work in these devices has been hard” and that the devices thus far have been expensive and “clunky.” Barr also reports that PayPal will charge merchants a “nominal fee” for the European PayPal Here device and that it will charge a per-transaction fee similar to that in the U.S.

Study measures the showrooming effect

Location analytics company Placed released a new study this week, “Aisle to Amazon: How Amazon is impacting brick-and-mortar retailers,” that identifies the retailers that are most at risk from consumers showrooming and then buying from Amazon.

Devindra Hardawar reports at VentureBeat that the study coupled data from nearly one billion location data points measured in January with 14,925 surveyed respondents. The results showed the stores most at risk were Bed Bath & Beyond, PetSmart, Toys “R” Us, Best Buy, Sears, and Barnes & Noble. Hardawar notes that online price matching programs have been launched by Best Buy and Target and says “Placed’s study shows that plenty of other retailers will need to follow in their footsteps.”

In related news, DataPop CEO and co-founder Jason Lehmbeck looked at Google’s recent acquisition of Channel Intelligence and its integration of Google Shopping results into its core search engine in a guest post at GigaOm. Lehmbeck says that Google not only is aiming to “eat Amazon’s lunch” but is also “making a play for all retail” and that “every retailer should be worried about the implications” of Google’s recent actions. He notes that it’s not too late for retailers to position themselves to compete and offers a few strategies marketers can employ to fend off Google’s advances.

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November 15 2012

Commerce Weekly: As Square heats up, so too does its competition

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

Square aims high, BofA enters mobile payment arena

Square’s partnership with Starbucks launched this month, catapulting the payment startup into a new tier of competition. Gerry Shih at Reuters writes that Square now is looking at processing $10 billion in payments per year and “has attracted a furious response from established or deep-pocketed rivals who are determined to crush the San Francisco-based upstart.” Rivals include PayPal, Groupon and Intuit, among many others.

Shih says Square needs to prove it can compete on this new level, moving beyond food trucks and taxis and into large retailers and big-box chains.

Square’s COO Keith Rabois told Shih that Square eventually plans to process payments for every business in the U.S. and argues that though it won’t happen today, the company is in a good position to make that a reality. Shih reports:

“Because Square acts like an aggregator for its thousands of merchants, Rabois added, Square will be able to negotiate better rates with banks and credit card companies and improve its margins. Square’s daily transaction volume already makes it the equivalent of the 20th largest retailer in the United States, larger than, say, Trader Joe’s or the Gap.”

Square’s competition heated up yet again this week as well, as Bank of America launched Mobile Pay on Demand, which will allow merchants to process payments on iPhones, iPads or Android devices. Tricia Duryee reports at All Things Digital that BofA’s service fees will run 2.7% per transaction (compared to Square’s 2.75%) and that the service will launch at the beginning of December.

In what may be a sign that competition in this space is only going to increase, Trevor Rubel, EVP of strategy and emerging products for Bank of America Merchant Services, told Duryee, “I hate to come out with a commodity product, but every bank should have one.”

Visa’s V.me exits beta

Another mobile wallet/payment service entered the payment fray this week — Visa brought its V.me service out of beta and officially announced signed partners. Tricia Duryee at All Things Digital reports that at launch, 23 retailers and 50 financial institutions are on board, noting consumers can sign up for the service regardless of whether or not their bank is participating.

Sarah Perez at TechCrunch reports that the wallet platform is designed for online and mobile commerce, but it may extend beyond cyberspace:

“‘In early 2013 — not necessarily in the U.S. — you’ll see physical implementations of V.me,’ says [Jennifer Schulz, Visa's global head of ecommerce], explaining that mobile has enabled new ways to shop beyond online checkout, but may also include things like mobile shopping combined with in-store pickup, for example. V.me’s mobile payments mechanism can take advantage of NFC, more popular overseas than here, but it can also support QR codes, barcode scanning or other methods.”

Schultz also told Perez that though the initial rollout in the U.S. will focus on the service’s online application, the service will rollout internationally and on point-of-sale terminals starting in early 2013.

Plastic may facilitate transition to mobile payments

Ryan Kim over at GigaOm took a look this week at the mobile payment space and concluded that plastic cards — the very objects mobile payments are hoping to replace — aren’t going anywhere anytime soon. In fact, not only are the cards not being relegated to the sidelines, he writes, mobile payment companies are starting to incorporate traditional plastic into their payment platforms.

Kim looks at PayPal’s announced partnership with Discover and a rumored similar partnership with Google to create a Google Wallet card. He notes that the cards are offering more functions and services than credit and debit cards do now, but that the real benefit to incorporating the cards is that they can serve as a bridge while the fragmented mobile payment ecosystem matures. Kim writes:

“With so many systems available, but all with limited reach, there’s no tool available currently that promises ubiquitous acceptance. Increasingly, competitors are realizing that a payment system that works everywhere, not just for early adopters but for mainstream consumers, has the inside track on in-store payments.”

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July 26 2012

Commerce Weekly: Square disrupts, PayPal shrugs

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

The mobile payment war rages on

David Pogue took a look this week at Square’s latest maneuver in the mobile payment race, its Pay With Square app. Pogue says it’s far more disruptive than the simple ability for anyone to accept a mobile credit card payment:

“You walk into a shop or cafe. The cashier knows that you’re on the premises because your name and thumbnail photo appear on his iPad screen. He rings up your items by tapping them on the iPad.

“And now the magic moment: To pay, you just say your name. The cashier compares your actual face with the photo on the iPad’s screen, taps O.K., and the transaction is complete. No cash, no cards, no signatures — you don’t even have to take the phone out of your pocket.”

Writing about taking the app for a spin at a coffee shop in San Francisco, Pogue describes a few hang-ups: merchants have to use an iPad as a cash register and they must enter every item they sell. Another issue concerns Square’s security and actually stems from customers themselves — users are required to upload a photo of themselves to set up a new Pay With Square account, but as the coffee shop cashier told Pogue, “sometimes use pictures of cats or SpongeBob instead of their own photos,” which prevents a visual ID of the customer.

The mobile payment competition isn’t sitting still, however. Pogue also notes that PayPal is working to catch up with Square’s frictionless purchase technology with its own local payment system, PayPal Local. And at the recent VentureBeat MobileBeat conference, PayPal’s vice president of global product Hill Ferguson said he isn’t particularly concerned with Square. John Koetsier reports at VentureBeat: “Though [Square] can facilitate very personal commerce — put it on Bob’s bill — [Ferguson] says it is not going to work very well at Safeway.” Ferguson also acknowledged that PayPal is a “two-click” system, as it doesn’t own the ecosystem “like Google Play or Apple,” but says he sees both companies as “fantastic potential partners, doing highly complementary things.”

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 security hacked at Black Hat 2012

Andy Vuong at the Denver Post took a look at NFC technology this week, its potential uses — including but not limited to mobile payments — and the likelihood of it becoming mainstream in the U.S. Vuong writes that the biggest question concerning NFC’s future may be whether or not Apple will include the technology in its next generation iPhone.

Mohamed Awad, associate product line director for NFC products at Broadcom and a board member of the NFC Forum, told Vuong that he doesn’t think the future of the technology hinges on Apple’s adoption, and he also dismissed security concerns. Vuong reports:

“‘The credit card in your wallet is just magnetically encoded, so anybody with a magnetic reader can read all of your credit card information,’ [Awad] said. ‘On your smartphone, there is a secure element in there, the encryption is much more tight and it’s a much more secure platform.’”

The security concerns, however, may not be so easily discounted. Research consultant Charlie Miller demoed the security gaps at the Black Hat security conference in Las Vegas this week. Meghan Kelly at VentureBeat reports that Miller showed a video in which he closely followed a friend, keeping his hand “awkwardly close to his buddy’s back pocket” in order to hack his phone. Kelly says that though Miller noted the attack was difficult and that the NFC bugs he found are “not too extensive,” he was still able to exploit a bug in the Nokia N9 smartphone. She writes:

“The N9 has a feature in it called ‘pairing,’ which allows the phone to connect to other devices using Bluetooth and NFC. … If a hacker creates a tag that can pair the phone, she can have access to the Bluetooth network and eventually make it into the rest of the phone. Miller demoed the hack and pulled all the data from the phone, including the photos and address book. He also showed that you can send text messages to other phones using the hacked phone, as well as make calls.”

Kelly writes that Millers takeaway for the mobile security community is to “[m]ake phones prompt the user before accepting an NFC connection.”

Visa takes mobile payment to the Olympics

Bill Gajda, Visa’s head of mobile, brought some perspective to the state of mobile payments this week in an interview with Roger Cheng at CNET. Gajda says that though mobile payment experiments are underway, the mode of payment won’t become mainstream in the U.S. for two to three more years. Cheng reports that the issue isn’t only related to hardware and technology hang-ups, but that “Gajda’s more realistic view of the broader acceptance underscores the difficulties in changing long-drilled consumer habits and getting past the comfort level of paying with cash or swiping a credit card.”

Visa is planning to address the issue of consumer awareness at the 2012 Summer Olympic Games in London, England, which begin this week. Cheng reports:

“Visa is using the Olympics as an international showcase for mobile payments. The company has hooked up 140,000 payment terminals in London with near-field communication, or NFC, chips that enable the tap-and-pay process. The locations include 5,000 London taxis and 3,000 point-of-sale venues at the Olympics. The company is handing out several thousand Olympic-edition Galaxy S3s to VIPs such as athletes to test out the service.”

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January 12 2012

Commerce Weekly: Report criticizes "feeble" mobile strategies of posh retailers

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

Report says 44% of prestigious retailers have "feeble" mobile strategies

Few high-end retailers are moving as quickly as they should on mobile commerce, according to a new report from research firm L2. In its first survey of premium brands' mobile strategies, L2 looked at the mobile and tablet platforms of 100 prestigious retailers — names like Dolce & Gabbana, Clinique and Cartier. In spite of their high margins, L2 found that most were taking a wait-and-see approach to mobile commerce, even though U.S. m-commerce sales are expected to grow from $6 billion in 2011 to $31 billion by 2016, according to Forrester.

In its report (and accompanying video, below) L2 scolds the laggards, reporting that:

  • 30% of brands haven't developed a mobile app
  • 33% don't have a mobile-optimized site
  • 16% have no mobile strategy at all

L2 placed 44 of the 100 brands it surveyed in the "feeble" category. At the other end of the spectrum, only four companies seemed to be doing enough right to earn a place in L2's "genius" category. Sephora topped the list, thanks to solid mobile and tablet apps, and successful cross-promotion of its mobile offerings across the rest of its digital platform. Nordstrom, Macy's and Net-a-Porter rounded out the top four.

It may look like a dismal showing, but as Lauren Indvik pointed out at Mashable, it may be enough to lead the rest of the retail competition. Indvik cited figures from Jesse Haines, group marketing manager for Google Mobile Ads, who told Mashable that a survey of major advertisers in early 2011 found only 21% had launched a mobile site at the time.

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.

Sprint triples your chances to use Google Wallet

Samsung Galaxy Nexus with Google WalletIf you're like me, you've begun to see point-of-sale devices promoting the capability to pay with Google Wallet around town — for example at Whole Foods, Radio Shack, and CVS. Google has a nifty little map app that shows you where in your zip code you can wave your NFC-enabled Sprint Nexus S 4G phone to pay for — oh, you don't have a Nexus S 4G phone? Yeah, that's the problem: I've yet to see anyone actually making a purchase in the wild.

Sprint said this week it will do what it can to help by introducing two more phones that support Google Wallet: Samsung's Galaxy Nexus and LG's Viper. That brings the total number of phones that support Google Wallet to three. Both of the new phones store the payment applications on a secure embedded chip. Buyers will need to use either Google's Prepaid Card or a Citi Mastercard. The secure chips can also store coupons, points and offers.

Google will need all the help it can get from Sprint to spread the base of Wallet users, at least until the other carriers, all of whom are founding members of Isis, decide to let Wallet onto their phones. Verizon's decision in early December not to allow Google Wallet on its Android phones has cast a shadow of doubt on the whole business.

Meanwhile, all the players in the mobile payment system continue to run trials and tests to see where the soft points are. Visa said this week that it has certified six mobile devices to handle NFC payments using its PayWave system, a point-of-sale device that can process Visa payments wirelessly from a mobile device or a PayWave fob or card. On ZDNet, Zack Whittaker reported that in the U.K., Visa is hoping to roll the technology out as far as it can in time for this summer's Olympic games.

PayPal's mobile volume exceeds its own expectations

The volume of mobile payments is rising faster than expected, as shown by PayPal's announcement that it processed nearly $4 billion worth of mobile payments in 2011. That's up from $750 million in 2010 and $141 million in 2009. David Marcus, vice president of PayPal Mobile, made the announcement at the Consumer Electronics Show in Las Vegas. A year ago, Marcus told VentureBeat, the company predicted it would process $1.5 billion in 2011, a figure it later revised upward to $2 billion. Marcus credited, among other things, Starbucks customers using PayPal to top off their cards and the rise of iPad-based e-commerce.

Next stop: moving offline to point-of-sale devices. PayPal announced a trial using PayPal at the register in Home Depot stores, with no NFC required. For now, it's a limited test with a handful of PayPal employees who can use a PayPal card or just enter their mobile numbers in a point-of-sale terminal to pay for their DIY supplies. PayPal expects to roll it out to a wider audience later this year.

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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.

Got news?

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


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December 17 2010

ePayments Week: Google goes patent shopping

I'll be tracking payment-related news, products and ideas in the weeks to come. Below you'll find a number of recent developments that caught my attention.

Google's mobile payment purchase

We've been waiting to see how and when Google will move into the mobile payments space. It looks like we may not have to wait much longer. At the Web 2.0 Summit in November, Google CEO Eric Schmidt demoed a location-smart purchase on an anonymous black phone that appeared to be running an upcoming version of Android 2.3 (code named "Gingerbread"). But it wasn't Schmidt's purchase on stage, but a purchase by Google last summer that may shed more light on what was going on behind that demo. Tech M&A blog Inorganic Growth revealed this week that Google bought Toronto-based Zetawire, a low-profile mobile startup with patents involving "mobile banking, advertising, identity management, credit card and mobile coupon transaction processing."

The Nexus S, the first Android 2.3 phone, went on sale this week (check out Engadget's review). Since Gingerbread supports near-field communications (NFC), the promising wireless technology that improves on Bluetooth (faster) and RFID (more focused and secure), we should soon have a better idea whether the mobile payments revolution is well underway or just a step closer.

Video of Eric Schmidt at Web 2.0 Summit is below:

For me, Visa? You shouldn't have.

Visa launched its iPhone app this week. It appears to be a timid start for an organization whose chief executive recently boasted that they intend to compete head-on with PayPal.

At launch, the app is offering an ATM finder and location-smart coupons from a number of vendors. This app's potential lies in its promise to learn a customer's buying habits and serve targeted offers. I was a little surprised that Visa wasn't able to do more of that targeting on its first try. By entering my credit-card number and agreeing to terms, I no doubt gave access to years of transactional data. My enthusiasm for the app will likely never be higher than the day I installed it, so an opportunity was missed. I was also disappointed by a bevy of untargeted offers: chocolates, day spas, and jewelry stores. My Visa app seems to think I'm a trophy wife.

Does FarmVille need ads?

Most social games are only able to sell virtual goods to 1 to 3 percent of their players, raising questions about how Zynga (and other social-gaming companies) will continue to thrive if they don't pounce on revenue streams like advertising. An AdWeek report on the Social Gaming Summit held in New York earlier this month suggests that as the dominant player, Zynga doesn't have to worry about ads right now -- perhaps because it's making enough from sales of virtual goods in its games. Still, an exec cited in the AdWeek piece noted that "not monetizing 95 percent of your audience isn't a great model." Sounds a little like public radio -- with mafia and pirates, of course.

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