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November 17 2011

Commerce Weekly: Bring your mobile to Black Friday

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

Retailers embrace mobiles for Black Friday

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

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

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

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

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

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

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

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

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

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

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

Developers chasing Fire

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

Square adds loyalty program to Card Case

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

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

Got news?

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

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


September 15 2011

ePayments Week: Three startups bet on commerce

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

Commerce startups at TechCrunch Disrupt

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

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

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

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

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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Daily deals still rising

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

Feature phones

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

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

Got news?

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.


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,,, 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.


June 30 2011

ePayments Week: Growing demand for connected health services

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

Report: Connected health devices poised to take off

SparkPeople screenDo you monitor your health activity — your calories, your exercise, your sleep — on your smartphone? If so, you're an early adopter in a movement that appears poised to become much larger, according to a recent study and white paper from IBM, "The future of connected health devices." The report is based on an online survey of 1,300 users of home healthcare electronics, 80% of whom are chronically ill patients and 20% of whom are their caregivers. It starts with the observation that there are two pools of users already deeply involved with connected devices: those with health conditions that require monitoring (the "Chronically Monitored") and another group of relatively healthy geeks who are interested in using technology to keep themselves healthy longer (the "Motivated Healthy"). The latter group includes the Quantified Self movement, which Gary Wolf discussed recently on Radar. It's made up mostly of tech-savvy folks who are pushing the boundaries in monitoring and analyzing everything from their body chemistry to emotions and clothing options to improve their daily lives.

In between these groups lies a larger group of potential consumers that the report calls "Information Seekers": "... a willing — but currently underserved — market for health device makers." This is a broad group with widely varying needs, including weight loss, breaking destructive addictions and other habits, monitoring high blood pressure, migraines, mood swings, or ADHD. The market to serve them, the report continues, is poised to grow quickly given the convergence of a few important trends, including the improvement (and cost reduction) in sensors that can automatically monitor and transmit data from the body, the rise of smartphones and better connectivity, and better tools for analysis. Of course, the effects on any individual are just part of the story: as with any set of big data, the bigger story may arise out of the analyses that will be performed on the aggregate data from millions of these devices, connected and collecting data implicitly and explicitly.

The report's authors expect these systems to create a new revenue stream for service providers — not just the cost of devices, which may be paid for by insurers in some cases and out-of-pocket by consumers in others, but also for monthly fees paid for premium services. Only 5% of the people IBM surveyed pay monthly fees for these kinds of services today, but 35% said they expected to be doing so within two years. Seeing the data will be valuable, but an intelligent, synthesized, human response will probably be worth even more. Sure, it's great when my Spark People app delivers an automated message telling me enthusiastically that I've burned enough calories for the day. But I might pay real money for the added service of a human adviser who could coach me through the day and keep my diet on track.

Mobile research firm research2guidance conducted a survey on this topic last fall, and the results are summarized on Slideshare. Their report found that, among other things, app stores could lose their dominance as the main distribution channel for mHealth apps, with hospitals, physicians, and health websites taking over that responsibility. It's easy to imagine that health consumers may be more likely to trust a health-monitoring app that's been sanctioned by their care providers — though it's difficult to imagine a mechanism for delivery that would be easier than the app stores where consumers are used to getting their apps. Still, hospitals and insurers may determine it's worth investing in a different distribution channel, particularly if they feel that the app store owners are likely to take an unwarranted cut in their revenues.

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

Consumer Watchdog asks FTC to check out Facebook Credits

Facebook CreditsJust days before Facebook's new terms requiring game developers on the world's most popular social network to offer virtual goods only in Facebook credits, Consumer Watchdog has filed an anti-trust complaint with the Federal Trade Commission (FTC). The complaint notes that the new rules coming into force on July 1 require game developers to sell all their virtual goods on Facebook using only Facebook Credits (not credit cards, PayPal or any other method), refrain from offering those digital goods at lower prices elsewhere, and give Facebook a 30% cut on earnings. While one could argue that it's Facebook's sandbox and if game developers want to play in it they must play by the Zuckerberg rules, the more damning charge is that Facebook has made a joint venture agreement with Zynga, the biggest game developer on Facebook, which largely exempts it from these burdensome rules. "The agreement between Facebook and Zynga," the complaint reads, "if published reports are correct, would therefore constitute a conspiracy between competitors and further extend Facebook's already overwhelming monopoly power."

While a blog post on Consumer Watchdog's site appears to be exaggerating the significance of the new rules, saying they "could well put the Internet powerhouse on the road to dominance of all online commercial transactions," the complaint raises an interesting question about whether Facebook's dominance on the web will translate into dominance of online commerce. Certainly, the financial transactions among its members and developers must fall far behind those of web-native leaders like Amazon, PayPal, and the iTunes store, not to mention the much larger bundles processed by MasterCard and Visa. But as Venessa Miemis, the author of The Future of Facebook project pointed out in a recent column on Forbes, Facebook's commercial influence may extend far beyond dollars transacted as it increasingly taps its knowledge of users' social graphs not only to facilitate Facebook Credits transactions, but perhaps transactions based on more ethereal concepts like trust and time.

For now at least, Consumer Watchdog's complaint looks at more familiar questions: Is Facebook abusing its monopoly on social media to coerce developers to operate under onerous conditions, and are they giving unfair treatment to one partner in particular? As Stephen Shankland points out on CNET, Consumer Watchdog has been a critic of Google, thanks in part to a grant to monitor Google's activity, but with this charge it expands its scope, taking on another online giant.

Square collects $100 million in one swipe

How often do you get to tweet about a $100 million infusion to your company? I guess if you're Jack Dorsey, it may not qualify as a once-in-a-lifetime experience, but it's still worth noting that's more than $700,000 per character in Dorsey's tweet reporting that Square had landed another $100 million in funding.

Thrilled to announce that Mary Meeker of @KPCB is joining @Square's board! And we raised $100 million. Putting more people into business.less than a minute ago via Twitter for iPad Favorite Retweet Reply

Just as surprising was the new valuation reported: more than $1 billion. Six months ago, it was $240 million. What changed? GigaOm noted the increasingly high-powered board (that now includes Mary Meeker, Vinod Khosla, and Larry Summers), "charismatic founder, [and] seasoned operator Keith Rabois" as key reasons why the company's so hot.

I think equally important were the two new product offers that Square has introduced this year. Square Register expands on the original handheld app, but its additional capabilities are aimed at tablet users (giving them the ability to see quick analytics on their businesses) seem to raise its capabilities from the swap meet and farmer's market to something that could be a serious retail tool. Perhaps more importantly, Square Card Case shifts the focus from the merchant to the consumer, creating a product that consumers can use — specifically, setting up tabs that let them pay quickly at their favorite places. If it takes off (and we're yet to see if merchants enable it in great numbers) it introduces a whole new, larger class of users to Square, along with all the data and marketing possibilities inherent in those relationships.

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.


June 09 2011

ePayments Week: eBay's ecommerce platform

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

EBay buys rest of open source ecommerce platform Magento

MagnetoEBay's announcement this week that it would buy the 51% of open source ecommerce platform provider Magento that it doesn't already own moves eBay closer to its goal of having an end-to-end commerce platform that integrates online, mobile, and physical retail spaces. Earlier this year, eBay put up $2.4 billion to buy GSI Commerce, which provides eCommerce services for retailers whose primary sales channels are physical retail stores. By integrating Magento's platform, which already serves tens of thousands of merchants online, eBay widens the scope of its merchant partners and the services it provides to them.

A video message from eBay CEO John Donahoe (below) lays out the ambition for the company's newly formed Open Commerce Platform group. In the presentation, Donahoe says Magento's capabilities complement those of GSI to make eBay "the strategic commerce partner of choice for retailers of all sizes." As part of this effort, eBay is adopting and expanding on its subsidiary PayPal's developer program, changing its name from X to X.Commerce ahead of this year's developer event, which is scheduled for October.

EBay and PayPal have supplemented these major purchases with several smaller scale acquisitions this year, detailed nicely by Ryan Kim on GigaOm. These purchases include: Milo, for helping people find products locally; Where, with its location-based ad services; and Fig Card, which helps merchants accept payments (including as SMS texts).

Magento's senior executives are clearly pleased in their video announcing the deal, which shows them in front of palm trees with downtown L.A. in the background — perhaps to emphasize their independence from Silicon Valley? It will be interesting to see how eBay and PayPal treat the open source version of Magento, as eBay is eager to expand developer interest in its entire platform and the open source version represents a broader playing field that expands their developer audience. While there are many ways to measure the success of an open source development project, one of those is a successful commercial exit strategy. And as Alan Shimel noted on NetworkWorld, Magento's sale represents "another commercially successful open source project that returned money to its investors," which, he adds, is further proof of a healthy open source ecosystem.

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

Report: $50 billion in NFC payments by 2014

A bullish report from Juniper Research released this week proposes that NFC payments — that is, mobile transactions that rely on near-field communications wireless technology — could rocket from about zero today to $50 billion in only three years. That's a steep climb, and it will only be possible with the support of a lot of other growth curves working together. That includes wider NFC adoption by handset makers, broader uptake of NFC-capable smartphones, agreed-upon ecommerce standards for NFC payments, and greater consumer acceptance.

On that last point, CNET's report on the Juniper study pointed to a recent survey by Mastercard that displayed a striking generational gap on the issue of comfort with payments. Mastercard's survey found that 63% of those between 18 and 34 said they would be comfortable using their phone to make a purchase, while only 37% of their older cohorts said they were comfortable using their newfangled contraptions in this way. It will be interesting to see how the carriers and merchants promote the security and convenience (or appearance thereof) of mobile payments to this older demographic. And, of course, they may not need to: if mobile payments follow the path of other tech innovations like the web, texting, and Facebook, it's likely that where the young'uns lead, their elders will follow.

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.


June 01 2011

Search Notes: Connecting Google's dots

Here's what recently caught my attention in the search space.

Google Wallet

Google WalletLast week, Google unveiled Google Wallet, which on the one hand, might be the future of payments, but on the other hand, seems like it's just using your phone instead of your credit card to pay for things. And phones so far are bulkier to carry around than credit cards. But Google says:

... because Google Wallet is a mobile app, it will do more than a regular wallet ever could. You'll be able to store your credit cards, offers, loyalty cards and gift cards, but without the bulk.

Wallet will be integrated with Google Offers (Google's answer to Groupon) and one can imagine the possible future integrations. For instance, Google could manage travel from start to finish by integrating elements of its ITA acquisition for booking, Hotpot and Places for reviews and maps, and Wallet for paying on the go.

Google Wallet will be available this summer, initially on the Nexus S.

After the unveiling of Wallet, PayPal sued. They said that Google had been nearing the end of negotiations with PayPal to make it a payment option in the Android marketplace, but instead of signing, Google hired away the PayPal executive they'd been negotiating with and built their own version.

Of course, this isn't the first time Google has been sued for hiring talent away from a competitor. And since they had the two key ex-PayPal employees introduce Google Wallet publicly, they weren't exactly keeping things on the down low to avoid this lawsuit.

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 Correlate: Mine search trends using uploaded state-based or time-based data

Google CorrelateGoogle Correlate, new in Google Labs, takes the idea behind Flu Trends and makes it available to anyone, for any data. You can enter data by state or by time and find out what searches are most closely correlated. You can also simply enter a search term and see what other queries are most closely correlated (by state or by time).

This is all U.S. data for now. Google Correlate was launched in Labs, so hopefully when it graduates from there it will be launched worldwide.

Google's comic book about the product stresses that correlation does not imply causation. This data simply shows similar search patterns. But data patterns can provide insight. Flu Trends, for instance, predicts when and where flu is spreading based on how much people are searching for flu-related information. "We found aggregated flu-related queries which produced a seasonal curve that suggested actual flu activity," Google notes. They have corroborated these trends historically with government data about flu activity.

Google's worldwide market share

This column is "Search Notes," not "Google Notes," so why so much Google coverage? The fact is Google is the dominant search engine worldwide, more so even outside the U.S. Along those lines, as I was finalizing slides for a conference session in Germany, I double checked Google's search share there. I found that Google's share was relatively unchanged year over year, at more than 90% for Germany, France, the UK, and Spain. This week, comScore noted that Google is at more than 90% share in Latin America as well.

Removing content from Google

Last fall, I wrote two fairly detailed articles about removing content from Google search results:

Now, Google has made it easier for content owners to remove content. Just verify ownership of your site in Webmaster Tools, and then you can specify what pages from your site you want Google to remove from its results.


May 27 2011

Radar's top stories: May 23-27, 2011

Here's a look at the top stories published on Radar this week.

Mobile apps and the quiet handling of data
PC-based applications often have to get clearance from users before they can gather and transmit data. Mobile apps, however, follow a different path. Peter Bennett takes an in-depth look at the differences.

Want to know where to build a new store? Check your human density data
During a recent interview, Skyhook co-founder and CEO Ted Morgan discussed "human density data." Learn what that is and how Skyhook's SpotRank product harnesses it.

Lessons of the Victorian data revolution
Transaction costs. Crowdsourcing. The politics of data. You might think these are modern concepts, but Pete Warden traces all of them back to the Victorian age.

At the eG8, 20th century ideas clashed with the 21st century economy
While the first eG8 Forum in Paris featured hundreds of business and digital luminaries, some of the policies discussed should be of serious concern to citizens around the world.

Google opens its Wallet
Dave Sims digs into Google's new Wallet to see if this latest combination of mobile devices and a payment system is ready for mainstream adoption.

Velocity 2011, being held June 14-16 in Santa Clara, Calif., offers the skills and tools you need to master web performance and operations.

Save 20% on registration with the code VEL11RAD

April 07 2011

ePayments Week: Tapping our hunger for Facebook Credits

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

IFeelGoods wants to help you get your Facebook Credit fix

IFeelGoodsThe winner of the Startup Showcase at the Web 2.0 Expo in San Francisco last week wants to make a business based, in part, on their understanding that people want Facebook Credits but don't want to pay for them. IFeelGoods, which describes itself as a virtual goods platform, helps companies offer Facebook Credits as incentives for trying or buying.

Scott Silverman, co-founder and VP of marketing at IFeelGoods, says the offer is enticing because, like shipping, virtual currency is something that people want but don't necessarily feel is worth paying for. "You look at the demographics of people who are playing [social games on Facebook]," Silverman said in a phone interview, "and it's people who are controlling household spending." These social gamers start playing free games and "they get wrapped up in it, they want to advance, but it's uncomfortable for them to spend money [on Credits]." But if they can find a way to get those credits "off budget" as it were, they'll go for it.

To test their theory, IFeelGoods ran an A/B test of ads on Facebook — ads targeting shoppers, not necessarily gamers. One ad offered $5 off a purchase at an Internet shoe retailer and an identical second ad offered 50 Facebook Credits, worth the same cash value. Silverman says the clickthrough rate was double on the ads that offered credits. Their theory: when presented with a chance to earn credits for doing something they would do anyway (buy shoes), gamers grab them.

These kinds of offers are sure to become widespread as Facebook finds more opportunities, beyond social games, for members to buy or rent things with Credits. Last month Facebook dipped a toe in the movie rental business in a deal with Warner Brothers that offered a stream of 2008's "The Dark Knight" available for 30 credits ($3).

If you're wondering how far this can go, read Venessa Miemis' thoughtful piece, "The Bank of Facebook: Currency, Identity, and Reputation." One of the interesting ideas in her essay comes from Kevin Kelly, who points out that currency evolves from community, and that by creating a community of more than 500 million, Facebook has laid the groundwork for a commercial explosion. As that happens, IFeelGoods wants to be at the forefront, handing out the coupons.

Where 2.0: 2011, being held April 19-21 in Santa Clara, Calif., will explore the intersection of location technologies and trends in software development, business strategies, and marketing.

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American Express serves up mobile plays

A couple of announcements from American Express in recent weeks show that the number three credit card provider has been laying the groundwork for a major mobile push. In mid-March they demonstrated a new partnership with Foursquare that puts them at the forefront of geolocation commerce. AmEx cardholders attending SXSW were encouraged to link their card to their Foursquare accounts. Like all Foursquare users, they were sent special offers from nearby merchants. But when they checked into those offers, they were given an option to load their AmEx cards with the value of the deal, which they could redeem on checkout. It was an experiment, but one that combined two important trends in ways that many other companies have been trying to achieve: make an offer based on a person's location, then make it easy (and a bit enticing) for them to redeem the offer using their mobile phones.

A week later AmEx announced Serve, a new debit-based payment service that (among other things) lets you send funds to other people — just like PayPal. As we reported a couple weeks ago, Visa announced partnerships to do the same. Both represent yet another move to nibble away at services that once-upon-a-time were offered only by banks.

The Street's coverage of the new AmEx service said it had been in the works since January 2010 when AmEx paid $300 million for Revolution Money, the Steve-Case-backed "e-wallet" platform. To earn that money back, AmEx's Serve will carry transaction fees that some users might find a little steep compared to comparable services: free for six months, but after that $0.30 to load the card, a 2.9% fee on transactions, and $2 for an ATM withdrawal. Membership has its privileges, but they don't come cheap.

Isis plans a tap-and-pay transit trial

Isis, the joint venture between three (or maybe two?) telecoms, AT&T Mobility, Verizon Wireless, and T-Mobile, signed a deal to test a near-field communications (NFC) payment service with the Utah Transit Authority next year. Katie Deatsch at Internet Retailer writes that the Salt Lake City pilot will let transit riders carrying Isis-enabled NFC chips (which aren't in production yet) to tap and pay with their phones — something that subway riders in Chicago and Washington, D.C. can do today with chip-enabled cards. As we noted in our post on Isis in February, the consortium is aiming to get Isis chips into phones by spring 2012, so there's plenty of time to get the hardware in place.

Welcome to the real world, Boku

BokuBoku, which offers direct billing on mobile phone bills for digital and virtual goods, has teamed up with Telefonica O2 in Germany to offer its direct-billing service for real-world goods. Subscribers will be able to pay for goods (ranging from about $0.13 to $42) by entering their mobile number during checkout. The system sends a quick text to the phone, and hitting "reply" confirms the purchase. The amount is added to the subscriber's next mobile phone bill. It's a big step out into the world of real goods for Boku, which earlier this year received a vote of confidence from investors to the tune of $25 million. Also significant: It's a test of whether the mobile phone will work as a de facto credit and purchasing device for buyers who don't have (or don't choose to use) a credit card or bank account.

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.


March 03 2011

ePayments Week: Is iTunes the fifth most populous country?

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

Jobs: 200 Million Apple IDs

iTunesJust slightly overshadowed by Steve Jobs' introduction of the thinner, dual-camera, black-or-white (but still somewhat evolutionary) iPad 2 was his announcement that 200 million people now have Apple ID accounts. Jobs noted that Amazon doesn't release comparable numbers for the accounts it holds, but suggested that this may be the largest collection of credit-card-backed accounts anywhere on the Internet. If it were a country, iTunes would be the fifth largest in the world, smaller than Indonesia but bigger than Brazil.

Jobs gave some other interesting numbers: developers have earned more than $2 billion through the App store and 100 million books have been sold through the iBooks store — an impressive number for the lesser-known third of Apple's trilogy of stores. It remains to be seen whether Apple has ambitions for its 200 million accounts beyond selling digital goods. Certainly there's a treasure trove of information in there about buying behavior and the opportunity to sell more through the stores. For now however, Apple seems content to keep its iTune members — and its plans for them — close to its chest.

Hearst Media's least sexy product: online bill portal

Hearst Media wants to cash in on its know-how in managing subscription renewals by creating a bill-paying portal that would compete with the post office to deliver bills and other barely wanted communications to the paying public.

ManillaOn Monday it launched the beta version of Manila (named for manila folders), which Hearst is pitching as a place to manage all your accounts, bills, frequent flyer miles, and reward programs. Manila is free for consumers; billers pay monthly for every customer they convert to paperless billing — a small amount, but something that Hearst hopes will add up. And there will be advertising in the bills.

The new venture is led by George Kliavkoff, whose background includes leading NBC Universal's digital efforts and helping to develop Hulu. Kliavkoff told David Kaplan at that the idea came from looking around to see which areas were "the most inefficient and the ones most ripe for disruption." According to Kliavkoff: "That's where we started the idea of tackling junk mail ... Essentially, we're challenging the US Postal Service's business."

They're entering a crowded field that includes not only other third-party financial management sites like, but also just about every bank and credit union that offers online banking. Still, with traditional media models crumbling, and media, marketing, and financial companies all pretending to be each other, who can fault an old-school media company for challenging an even older institution?

Reports of the death of credit cards are greatly exaggerated

While Hearst takes aim at one icon of the 20th century (the US Post Office and its junk mail delivery), online payments services are taking aim at another: the credit card. Back in the "Mad Men" era it may have been the height of smooth to drop a Diners Club card on the silver tray after dinner. But the card was never designed for online or mobile payments, writes PayPal's Bill Zielke on Mashable. Zielke notes that the recession contributed to a decline in use of credit cards for online purchases — down from 44% of online purchases in 2009 to 40% in 2010. He suggests this trend will get worse even as times get better. For exhibit A in his argument that credit cards and the Internet are a poor match, he cites the ridiculous act of typing a 16-digit code over and over again to make purchases. He argues that the ubiquitous cards will fade over time in favor of "services that were designed for the online experience from the start."

PayPal would prefer users link their online payments directly to bank accounts so that it wouldn't have to pay those credit card interchange fees. Some services like Boku and BilltoMobile are taking a different tack, looking to add those mobile and online purchases directly onto your phone bill.

But the credit card companies won't slink away quietly. They heard the news that it's no fun to key in that number, and they're working on ways to leave that pain behind. This is particularly notable on mobile devices, with programs like Isis (which we wrote about recently) that would make it easy to buy products by swiping or tapping a phone that stores credit card data in the SIM card.

And, of course, swiping a credit card hasn't gone completely out of fashion. Even as online and mobile options try to move away from plastic, Square is making a business by updating the credit swipe in the iPad era — and making a go of it. The closely watched startup announced this week that it was now processing more than $1 million a day.


ePayments week will be taking a two-week break. We'll return on March 24.

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


February 24 2011

ePayments Week: More Androids banking

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

More Androids banking

Android logo As the number of Android users swells past the number of iPhone users, it should come as no surprise that as of December, 2010, there's more mobile banking on Android than on iPhones. However, Carlo Cardilli suggests that could change as the number of Verizon iPhones grows and those users take up mobile banking.

A recent Forrester survey says 12% of the US online population banks on their phones, up from 5% two years ago. Forrester says that's about 10 million users, and predicts that will grow to 50 million by 2050. That growth seems reasonable, given that users who discover mobile banking tend to, over time, use it more as they get used to it, especially for simple transactions like checking balances and transferring funds between accounts. Still, Penny Crosman with Bank Systems & Technology notes that 35% of online users shy away from mobile banking because they worry it's not safe and 24% don't see the point and would just assume wait until they reach the ATM.

Discomfort with the mobile wallet

Speaking of people who are wary of mobile transactions, remember all that stuff we've been reading about mobile payments being a disruptive technology that catapults new players into the driver's seat and leaves old-school players in the dust? Well, turns out not everyone is all that excited about handing over the keys to the kids. What's more, they're not even sure they want to get in the car with them. A new survey by UK researchers Vision Critical finds a majority of Britons "uncomfortable" with the idea of using their phones for mobile payments. The survey found women more skeptical, while men and people already poking around on smart phones were more open to the mobile wallet concept.

Perhaps most significantly (and interesting) was that those surveyed trusted banks more than telecom carriers, credit card issuers, or handset manufacturers to handle the transactions. "Banks could play a strong role here," said Mike Stevens, Vision Critical's head of research in London, in an interview with Sarah Clark at Near Field Communications World. "They are generally more trusted by their customers than other players in the mobile payments game." It's a striking vote of confidence for the banks whose credibility had seemed to suffer in the wake of the financial crisis, and perhaps an affirmation that however much we dislike our banks, we like our telcos even less.

Square simplifies

SquareSquare founder Jack Dorsey tweeted the news Tuesday that the mobile payment service would drop its transaction fee (15 cents) on purchases and collect only the 2.75 cut. @jack followed that with a retweet from @stevecheney: "A merchant doing 500 transactions a day just saved over $27K a year with @square. Remarkably impressive."

Kat Aharya at Mobiledia wrapped some nice context around the move, noting that it fits nicely with Square's goal of simplifying the whole process of collecting payments on credit cards, especially for small merchants. From the cute dongle that plugs in to a smartphone's audio jack to the straight 2.75% cut (compared to merchant vendor accounts, which have variable rates depending on transaction amounts and volume), the Square sells itself as the simple and straightforward alternative for the forward-looking merchant crowd.

Few remembered that the fee was an experiment, but Kevin Woodward at ISO & Agent offered a reminded that Square had added the fee just last April and was now reverting to its earlier payment structure. I guess that explains how Square already had a smooth promotional video ready to roll.

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.


February 17 2011

The tricky mix of payment, identity and trust

A new O'Reilly/PayPal report on web-native payment platforms, "ePayments: Emerging Platforms, Embracing Mobile and Confronting Identity," is now available for download. Among the topics covered in the report are the rise of payment platforms, the mobilization of money, and the significance of online identity in mobile commerce.

The following excerpt considers some of the dimensions of online identity in mobile payment applications and what it means to users and payment providers. Additional excerpts from the report were featured here on Radar last week.

To process a payment, the payment service needs to determine who someone is, not only to make sure they get paid, but also to understand their broader interests and preferences so they can deliver an online experience that suggests content, merchandise, and other opportunities.

But the significance of online identity obviously goes far beyond this. A platform that holds someone's identity is the easiest place for that person to do business. Consider the rise of Google's Android platform: Many people who were comfortable on iPhones are now shifting to Androids, in some cases because they work better with Gmail and Google calendar where they have been doing business for years. With an Android phone in their pocket, it's also likely that those users may choose mobile commerce solutions from Google rather than from a third party like Apple or Amazon — presuming that it meets their needs.

Payment platforms today confirm identity primarily through credit card or banking information. Privacy concerns dictate that sites generally get this information from you before your first transaction and — barring any security breaches — they keep it to themselves. For example, because you've already given Amazon your billing information at some point in the past, you can buy a Kindle edition of a new bestseller today with one click. But wander off Amazon to a site that specializes in, for example, ironic T-shirts, and you'll find yourself having to re-enter all of your shipping and billing information — unless that site offers Amazon Payments.

Compare this to the way ad networks track your identity as you move from one site to another. Search DIY sites for information on fixing a printer problem and as you later browse unrelated sites you'll see ads for ink cartridges. How is it that ad networks have grown so sophisticated they can make offers across various sites — indeed, they can even predict future romantic interests based on historical browsing patterns — but we still have to re-enter our financial and identity information at every e-commerce site we buy from?

Perhaps the main reason is that users are less chary about sharing their browsing history than they are about sharing their credit card numbers. But they do appear to be increasingly comfortable giving billing, shipping, and identity information to one or two trusted sources and then referring purchases to them.

Something like this has already begun to happen with PayPal and Google Checkout. Users place their financial information with these trusted sources and then reference other sites to that account when they make a purchase. Merchants who use platforms like PayPal or Amazon Payments can identify you without asking the same series of questions. This secure, centralized financial identity is the current realization of the long-sought-after digital wallet. Like a physical wallet, your identity with a payment platform carries data that fulfills at least three functions: your identity, your ability to pay (debit and credit cards, cash), and the history of your payments (the receipts you've stuffed in after purchases or ATM withdrawals).

Currently, each payment platform (indeed, most e-commerce sites you do business with) maintains a separate version of your identity data. While this constrains their ability to simplify payment by collaborating across sites, it does achieve an important goal of many users, which is segmenting identity. A person may be comfortable with Facebook knowing who her friends are, Foursquare knowing her favorite coffee spot, iTunes knowing her favorite performers, and Amazon knowing her credit card number. But she may be less comfortable with each of those sites knowing all those things about her.

Thus, one of the goals of emerging online identity standards should be to ensure that users have control over which aspects of their identity get shared with whom. Facebook's recent embarrassments around third-party apps (such as Zynga's Farmville) leaking personal, identifiable information about users highlights the risks that platforms face. Users who were comfortable sharing that information with Facebook balked at Zynga redistributing it.

Efforts to standardize the rules of online identity — based on levels of assurance that range from low to high confidence — seek to clarify the ways that individuals manage elements of their identity online. While the rules of identity will likely be defined and enforced by private organizations with dominant platforms, those rules will also draw on developing industry identity standards.

Additional excerpts from "ePayments: Emerging Platforms, Embracing Mobile and Confronting Identity" are posted here. The full report is also available as a free download.


February 10 2011

3 mobile payment products hint at the future

A new O'Reilly/PayPal report on web-native payment platforms, "ePayments: Emerging Platforms, Embracing Mobile and Confronting Identity," is now available for download. Among the topics covered in the report are the rise of payment platforms, the mobilization of money, and the advent of contactless payment in mobile commerce.

The following excerpt looks at three early mobile payment applications and what they might mean for mobile payment's widespread adoption. Additional excerpts from the report will be featured here on Radar throughout the week.

Stop me if you've heard this before, but by this time next year you'll be buying stuff with your phone. Oh, you have heard that before? Like, every year since the '90s? Me, too. And like flying cars or 3D printers, they're always just a little further down the road. But at the risk of being embarrassed again, I think the day is finally upon us.

You can already buy things using your smart phone, of course. On an iPhone, for example, you can buy digital goods like music or movies at the iTunes store. You can add an Amazon app and buy just about any kind of real good they sell and it'll show up at your door. But it's still rare to use your phone like a credit card in the physical world, waving or tapping it at a register and having the payment processed through the cloud.

PayPal and Bling NationIn the past year or so, we've seen several experiments that signal the real deal is not far off. One involved PayPal and Bling Nation, a startup that offered RFID tags that mobile phone users could stick onto their phones for use at 150 or so merchants in the Silicon Valley area. Users could pay for services at the participating merchants by tapping the tag on a piece of hardware (called a Blinger) at the point of sale. Bling subtracted the purchase amount from a prepaid account or could bill it to the user's PayPal account. It then texted a receipt and any relevant balance information to the user's phone. A key feature of Bling's system was the follow-up with future offers (for example, coupons on subsequent purchases) and rewards.

To protect against fraud, Bling's technology used the equivalent of a one-time password, which was updated after each tap transaction to prevent replay attacks. The system had the potential to include real-time risk analysis that could trigger the request of a PIN for a transaction that falls outside of normal parameters. If the customer exceeds a predetermined rate of transactions, purchases an expensive item, or if Bling Nation notices a lot of geographic variability over a short period of time, when a consumer taps a BlingTag, she could be asked to supply a PIN. In this way, Bling Nation adapted from single-factor to multi-factor authentication based on a series of real-time risk analysis algorithms. (In the months since then, Bling Nation's business model appears to have shifted from the technology to the rewards platform. )

While Bling Nation's RFID and the upcoming near field communication, or NFC, technology we're likely to see from Apple and Android rely on a close-range wireless system, Bump Technologies' system works through the cloud, making the connection based on the proximity and similarity of "bump" of two devices. Bump's system allows two mobile phones (iPhone, Android, or Blackberry) to exchange data when tapped together. That data, which travels through the network rather than via radio waves between the two devices, could be photos, contact information, or payment. PayPal's mobile app relies on Bump technology to let two phone users tap payment from one phone to the other.

Starbucks mobile payment screenStarbucks' recently widened mobile payment platform uses yet another technology: a simple visual scan of a bar code. You can install the Starbucks mobile app on your phone and enter the number of a Starbucks card you buy at the register. (You can add more funds to the card online, too.) When you want to make a purchase at a Starbucks register, you simply launch the app and hit "Touch to Pay." The app displays a unique bar code that you scan at the register to debit the amount of the transaction (known by the register, which is attached to the scanner). Your card amount is debited and off you go with your coffee cake.

These three examples, and other experiments like them, are harbingers of the coming wave of mobile payments. As new versions of the iPhone, Android phones, and others from RIM, Nokia, and HP/Palm roll out with payment capabilities, subscribers may need some convincing to change their habits from the wallet-based credit card to the phone-based digital wallet. For merchants and payment providers, the math is easy: they welcome the opportunity to know more about where you shop, when you go there, who you're with and what you buy. The value proposition for consumers is a little less clear: What will they get in return for giving up that information? While we would like to think they will receive good information (reviews, directions, notifications) and maybe even a coupon or discount, we can't count on it. After all: think of how much information hundreds of millions of Facebook, Foursquare, Twitter, Yelp, and Gowalla users have been willing to give up, just to say "hi" or to get a 100-pixel badge.

Excerpts from "ePayments: Emerging Platforms, Embracing Mobile and Confronting Identity" will be published throughout the week. You can download the full report here.


February 08 2011

Big data thwarts fraud

A new O'Reilly/PayPal report on web-native payment platforms, "ePayments: Emerging Platforms, Embracing Mobile and Confronting Identity," is now available for download.

Among the topics covered in the report are the rise of payment platforms, the mobilization of money, and the advent of contactless payment in mobile commerce. This excerpt looks at the role big data is beginning to play in fraud detection for these services, and the new opportunities that development brings. Additional excerpts will be featured here on Radar throughout the week.

Web-native payment platforms have a tremendous challenge combating fraud — greater in complexity than that faced by traditional payment processors. But the solutions they have devised to deal with it have created some enormous new opportunities.

First, the problem: payment platforms have to process orders from many more sources than do credit card companies. "Traditional processors have to deal with tens of thousands of sources of fraud at each individual point-of-sale or merchant site," said Matthew Mengerink, VP of Platform at PayPal. "PayPal has to be able to identify potential sources of fraud from the almost 90 million browsers and mobile phones that are constantly connecting to our payment processing services. We're dealing with a much larger challenge, and we've designed systems to identify and manage fraudulent activity often before it has started."

PayPal, Amazon, and Google have all developed sophisticated analytical tools and infrastructure to identify patterns of fraudulent activity. Paypal, for example, has a series of Fraud Management Filters that screen payments and sort out transactions that warrant review because of their amount, their origin, or other factors that can be set by a merchant. But the opportunity to identify fraud reaches far beyond this virtual point of sale. PayPal and Amazon have developed fraud detection tools that depend on massive datasets containing not only financial details for transactions, but IP addresses, browser information, and other technical data that will help these companies refine models to predict, identify, and prevent fraudulent activity. PayPal and Amazon have had years to amass databases of the transaction details for hundreds of millions of customers across thousands of merchants.

These tools vastly improve on the periodic, offline analysis that has been the norm. Institutions traditionally sampled existed data and ran nightly or weekly analyses using fraud-detection models. The newer approaches perform continuous, real-time analysis on large datasets, applying some of the lessons that Google and others have learned for indexing the web to the problem of calculating the risk of fraud for individual consumers or merchants. There's a swarm of activity around a new crop of "big data" tools like Hadoop, MapReduce, and BigTable that can deal with huge amounts of data. The fraud question is a large driver of all this activity.

"Sampling is dead," said Abhishek Mehta, a big data lead at a large U.S. bank institution. "When banks stored petabytes of information on magnetic tape, it was impossible for them to develop appropriate models to measure risk without resorting to sampling techniques. Today we can run analysis on upwards of 50 petabytes of data to more accurately calculate risk. Technologies such as Hadoop allow us to do things that were previously impossible."

Mitigating risk is just one use for all this data. With everything that payment platforms know about their customers — transactions, searches, messages, likes and dislikes — they can increasingly use this information to devise sophisticated advertising models or predictive analytics for selling products and services. Privacy advocates might be alarmed, but the payment providers are just continuing a model pioneered by financial institutions decades ago for identifying consumer preferences and identifying fraud risks. The emergence of tools for processing big data creates new opportunities for payment platforms and vendors to get better at what they already do.

A payment system built on top of systems that facilitate real-time analytics creates some interesting possibilities. Consider the architecture of a modern advertising network like Google's DoubleClick. DoubleClick and other ad networks have refined real-time auctions that deliver targeted ads to users in milliseconds. When a request for an ad comes in from a browser, it's quickly passed to one or more advertisers, each of whom has between 10-20 milliseconds to match that user to a profile and assign a potential value to its bid. The high bidder gets to place its ad — and it all happens in under a second. These interactions are happening with every click, generating a massive amount of real-time modeling and calculations that drive an efficient market for advertising.

Imagine a similar system for electronic payments in which a payment platform offers potential transactions to competing credit issuers. As you browse an e-commerce site, your browsing history and the item you're considering come together to create a risk profile. The site or payment platform may offer that profile and the details of the transaction to a handful of competing lenders so that at checkout you receive several offers for financing from different banks. If you have previously chosen to pay automatically with the most advantageous offer, the site could automatically select the credit source offering the best terms. From your perspective, your funding sources and credit card don't have a fixed APR; the rate is variable and can change depending on your evolving real-time risk and the risk of the merchant.

Real-time analysis like this was, until recently, an impossible idea. But the innovations of ad networks like DoubleClick and Google AdSense have shown their potential and created an efficient market for advertising. A real-time approach to analytics in payment will undoubtedly lead to a wave of innovation among merchants and banks at the point of sale.

Excerpts from "ePayments: Emerging Platforms, Embracing Mobile and Confronting Identity" will be published throughout the week. You can download the full report here.


February 07 2011

Open question: Will you use mobile payment?

open questionWith near field communications technology built into rumored and released devices and lots of jockeying among large companies, it certainly feels like big things are afoot in the mobile payment world.

But the success of mobile payment is contingent on consumer perception. If it clicks, you've got a winner. If not, you've got yet another idea that just didn't catch on.

That's why I want to take a step back from the current excitement and focus on a different part of this discussion: How you, as a consumer, might incorporate mobile payment into your daily life.

Here's what I'm curious about:

  • What would it take for you to use mobile payment? (Or, if you're already using an app or tool, what convinced you to give it a try?)
  • Which companies -- or types of companies -- do you think are best positioned to offer mobile payment?
  • Do you see mobile payment as an additive payment option? Or do you think it will be a full-fledged replacement for credit cards and cash?

Please weigh in through the comments.

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


October 19 2010

Opening up the mobile wallet

Among the most transformational aspects of mobile are the effects it's having on consumer purchases. In the same way that plastic has more or less killed cash as the legal tender of choice, mobile will eventually kill plastic -- and perhaps sooner than you might expect.

In case you missed it, one of the more grandiose announcements of the summer came when AT&T and Verizon teamed up to displace credit and debit cards with smartphones. That was just one of many recent initiatives and announcements in the mobile payment space. Other include: Starbucks unveiling a mobile rewards program, JC Penney experimenting with mobile coupons, commuters paying for fares with mobile devices, fans at live events ordering concessions without leaving their seats, and transit authorities developing smarter parking meters.

I recently caught up with three innovators working deep within the mobile commerce space: Naveed Anwar, senior director of PayPal's Developer Network; Kevin Hartz, founder and CEO of Eventbrite; and Humberto Roa, co-founder of iConcessionStand. They share their thoughts on mobile payments and ecommerce below.

How are smartphones changing the ecommerce space?

Naveed Anwar, PayPal: The mobile commerce industry is booming. By the end of 2011, Nielsen predicts smartphones will overtake feature phones in the U.S. market. And Gartner predicts that by 2014, mobile and Internet technology will help over three billion of the world's adults to electronically transact. In addition, emerging economies will see an increase in mobile and Internet adoption through 2014. The worldwide mobile penetration rate will reach up to 90 percent.

How will mobile wallets affect consumers?

NA: Consumers want to live an on-demand lifestyle, and that trend is driving consumer purchasing behaviors. The mobile wallet is necessarily an on-demand wallet, meaning it's accessible from different devices and platforms and can hold more than any wallet in your back pocket: multiple funding sources, coupons, receipts, loyalty cards, private label cards, and business cards ... and that's just the start.

What has been the biggest challenge for micropayment platforms?

NA: The biggest challenge they face right now is keeping up with -- and getting ahead of -- the pace of change. The mobile space, for example, is innovating so fast that we need to be focused and strategic about the opportunities we pursue and the tools we offer. When everything is moving at a hundred miles an hour, that's a lot easier said than done.

What is the most important thing you've learned about building mobile apps on an ecommerce platform?

Kevin Hartz, Eventbrite: The one thing that's always struck me as being most important is simplicity -- the ability to create accounts and conduct transactions is essential to adoption. If you have a platform that anyone can build an app on, then innovation will run rampant and everyone involved has something to win.

How many of your users prefer electronic payments to a more conventional payment option?

KH: The last stats I saw showed that over 60 percent of the volume of Eventbrite transactions use some form of electronic payments, and that figure has been pretty steady over time. We have some exciting plans for mobile forthcoming and expect that number to grow as mobile devices continue to penetrate transaction volume in our market.

How has mobile changed event planning?

KH: One of the biggest changes is the imminent death of the paper ticket. Eventbrite is a big opponent of the conventional paper ticket, and the mobile wallet concept only helps us to kill it dead even faster. It boggles my mind that we still use physical tickets for sporting events, concerts, etc. We'll definitely see a lot of innovation on this front over the coming months, because it'll only make things simpler for people. Simple sells.

How have micropayment systems helped you as a small business?

Humberto Roa, iConcessionStand: We offer an exclusively mobile marketplace that's location-based and that allows people to interact with stores relative to a particular venue, so we're a small company but have many of the needs of a much larger company. Micropayment systems makes it possible for us to be able to pull off those kinds of logistics.

What aspect of mobile payments needs to change?

HR: I really hope that mechanisms such as chained payments will go mobile. We monetize our app by charging a small convenience fee on each transaction, and ultimately we'd like to be able to collect that convenience fee immediately and pass on the rest of the funds to the ballpark. [Note: iConcessionStand is an app used to purchase concessions at venues, such as ballparks.] Right now, we aren't able to do that because chained payments aren't available for mobile, so we send all of the money to the ballpark and then invoice them for our convenience fees.

This post is part of a collaboration between PayPal and O'Reilly exploring the future of payment.

The rise of mobile wallets will be discussed at the Innovate 2010 Developer Conference, being held October 26-27 in San Francisco. Full details are available here.

September 21 2010

Open source cuts microlending complexity

Integrating any sort of technology into the developing world requires a deep understanding of the available tools and usage patterns. The degree of difficulty -- already considerable -- increases exponentially when you're dealing with bank and financial software.

The Grameen Foundation's Mifos Initiative is tackling those integration challenges in a unique way. Rather than develop proprietary software with hundreds of country-by-country variations, Mifos is making its code available via open source. Financial institutions can repurpose the software for their unique microlending needs.

In the following Q&A, Mifos director of engineering Adam Feuer explains the rationale for pursuing the open source option. He also discusses some of the unique mobile and integration challenges his team is encountering.

Mifos is an open source technology. Why did you go that route?

Adam FeuerAdam Feuer: Mifos source code is free and you can download it from our website. We're hosted on SourceForge.

We chose open source for several different reasons. Transparency is one: We believe that banking software, especially microfinance software used in the developing world, needs to be transparent and open. That means open source so that people can see how it works and verify that it's operating correctly.

We also believe Mifos should be free so you can modify the software and make it suit your application. If we went out of business (not likely to happen but it is possible), or if people didn't like the direction we were going, they wouldn't be stuck with what we had accomplished or the direction we were going. That helps banks feel a lot more secure.

How many contributors are touching the code?

AF: Mifos is a small open source project, but it's spread all over the world. Twenty of the 40 or so contributors are paid by the Grameen Foundation and they directly report to me. Another 10 contributors are third-party developers who are working with us to develop software. They work for partner organizations. Another 10 or 15 are volunteer developers who are just contributing to make the world a better place.

We have plenty of work and would love to talk to you if you are interested in helping and you program in Java or JavaScript and you know user interface technologies.

How are you addressing mobile?

AF: In Africa and India you send SMS messages with your phone to access your bank account. It takes a few messages back and forth to move money from one account to another or to make a payment. But it's way better than having to drag yourself across a dusty city and use public transport to visit a bank branch where people may or may not discriminate against you because you're poor. Toward that end, we're integrating with a major mobile money system in Africa, a prototype called M-PESA. There's also a mobile money system in India that we're looking at for pilot projects.

What are the major challenges you're encountering?

AF: Information technology in the developing world is a challenge for a variety of reasons. One of them is finding power to run a computer. Finding a good Internet connection is also challenging. We have to design our software to work in these conditions.

Another problem is that if you know information technology in say Kenya or India, you can get a better job. So microfinance banks have a hard time keeping employees that know anything about computers. We have to design our software so that it's relatively easy to use and easy to learn. You can be sure that you'll be training new people on it very frequently.

The main challenge that we are facing right now is how to open Mifos up in a modular way so that we can enable someone to write a plugin to customize Mifos for their particular country or environment. We see supporting plugins as the way to welcome everybody in the world to the promise of usable financial services for the poor.

This excerpt was edited, condensed and adapted for Radar. The full interview, available at the PayPal Developer Network, is part of a collaboration between O'Reilly and PayPal exploring the future of payment.


May 24 2010

Datenschutz an der Supermarktkasse

Datenschützer und Verbraucherschützer beklagen nach einer Meldung der Nachrichtenagentur ddp Datenschutzverstöße des Handelskonzerns Rewe in seinen Supermarktketten.

Kunden unterschreiben dort bei einer EC-Kartenzahlung mit Unterschrift, also beim Lastschriftverfahren, angeblich gleichzeitig eine Erklärung über die Weitergabe ihrer Daten an ein Unternehmen für Zahlungsdienstleistungen und an zwei Wirtschaftsauskunfteien.

Wer im Supermarkt öfter per EC-Karte bezahlt, der weiß, dass man den Begleittext auf dem Unterschriftsbeleg nicht nur wegen des Zeitdrucks nicht liest, sondern auch wegen der fehlenden Vorlage einer Lupe durch die Verkäuferin.

Nach § 4a BDSG ist eine datenschutzrechtliche Einwilligung allerdings nur dann wirksam, wenn auf den Zweck der Datenverarbeitung hingewiesen wird und die Einwilligung besonders hervorgehoben ist, sofern sie zusammen mit anderen Erklärungen schriftlich erteilt wird. Ungeachtet dessen, wird die Klausel auch AGB-rechtlich wohl schwerlich wirksam einbezogen. Die Praxis von Rewe ist deshalb in der Tat rechtswidrig.

Reposted bykrekkurfin

April 16 2010

March 31 2010

Thoughts from the front lines of payment's big shift

There's a lot brewing in the payment space and much of that activity traces back to developers. You can get a sense of the seismic shift by looking over the winners of the recently concluded PayPal X Developer Challenge.

Rentalic, Paypal X Developer ChallengeThe big winner in that competition was Rentalic, a service that uses PayPal to let regular folks rent out their gear. And by "gear" I mean virtually anything -- sporting goods, electronics, tools, toys, etc. This video and the company's FAQ spell out its process.

Rentalic CEO Punsri Abeywickrema has a unique vantage point in the payment world. He's in that interesting spot where code is turning theory into application. I asked Abeywickrema for his take on the current and future state of payment and the role startups will play in shaping that landscape.

Mac Slocum: What have been the most important recent innovations in payment?

Punsri Abeywickrema: An important change is that companies like PayPal and Amazon are opening up APIs to provide more flexibility for the developers to build their payment solutions. This will result in a big wave of innovation and a whole new line of payment apps in the months and years to come.

Also, as a result of more flexible APIs, companies will figure out new ways to monetize their features and technology. That will result in more innovation and revenue growth while providing convenience and better security to the users.

MS: Do developers bring a unique perspective to payment?

PA: The way I see it, companies that provide goods or services online are the best ones to know the challenges their customers face. And it's not just the developers. It's the product people, architects, business development, marketing, sales and all other parts of the organization that come together to build the next generation of payment solutions. Empowering organizations to come up with their own solutions to address their own problems in their own business segments will continue to drive activity in the payment space.

MS: What's the upside to a competition like the Paypal X Developer Challenge? Is it the prospect of funding? Is it the focus competition can bring?

PA: I'd say both. Initially we were planning to release our new transaction solution at the end of March. Then we got to know about the competition and really had to speed up the development effort. Definitely, the competition helped us to focus. Prospects of funding is another huge advantage.

If it weren't for competitions like the PayPal X Developer challenge or events like Maker Faire, a small company like Rentalic, which has a great idea and a business model with huge potential, would have gone unnoticed.

MS: Could you run Rentalic through traditional credit cards, checks or cash?

PA: Probably not. I don't know of a way for credit cards or checks to process chained or split payments and handle deposit refunds. I would have been able to handle the pre-approval part through traditional cards and Automatic Clearing House, but the rest of the requirements would not have been possible. Or even if it was, it would have been too expensive to implement.

Note: This interview was condensed and edited.

February 16 2010

The Convergence of Advertising and E-commerce

With hundreds of millions of users paying to download music, applications and ebooks on mobile phones, with reports of Zynga generating hundreds of millions of dollars from selling virtual goods in social games, with startups like Square making mobile payment systems the hot new startup category, it's clear that e-commerce is poised to supplant advertising as the business model of choice for new startups.

But that's only the beginning. A few weeks ago it occurred to me that there's a very real possibility that the next breakthrough in advertising itself is its convergence with e-commerce. Buying an app from the Android Market, I realized how those of us with smartphones have become accustomed to seamless purchases on our phone. That is, we search for an app, and then we buy it, directly from our search vendor.

Isn't that after all the goal of advertising? To cause a transaction. So why not do away with the intermediate step of sending someone to a website for more information? Especially with the limited screen real estate on the phone, there isn't really room for the contextual text advertising that made Google its billions. Interstitial or popup ads are intrusive and unwelcome. But how much search activity on the phone is tied to commerce already? Find a restaurant nearby and make a reservation? Why not pay as well? Point Google Goggles at a bottle of wine you enjoyed at that restaurant, and have a few bottles more show up on your doorstep?

This line of thought led me to the conclusion that Google, Apple, Microsoft, will soon be announcing e-commerce programs akin to Adsense, in which retailers will register with "app stores" to allow physical goods and services to be bought as easily as apps. We can also expect announcements of partnerships between phone providers and Amazon or Wal-Mart or other big retailers who can fulfill e-commerce requests from the phone. I have no inside information to support this contention, just the logic of the marketplace.

Interestingly enough, it was only a few days after I had this thought that I met with the folks at Siri, which bills itself as "Your virtual personal assistant." Siri does pretty much what I was imagining for Google or Apple: it searches, and then does something. In our conversation, one of the founders referred to it as a "do engine" rather than a search engine. Right now, Siri mainly interfaces with services that provide APIs for reservations, like OpenTable or TicketMaster. It isn't a general purpose e-commerce engine. But that is clearly in the future, if not from Siri, then from some other startup, and then, inevitably, from the big guys.

E-commerce is the killer app of the phone world. Anyone whose business is now based on advertising had better be prepared to link payment and fulfillment directly to search, making buying anything in the world into a one-click purchase. Real time payment from the phone is in your future.

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