Paypal Ready to Fail Again | The Smartphone Champ

PAYPAL READY TO FAIL AGAIN

Paypal has done away with the NFC capabilities of their app they just added last year.  For those that may not be aware, last year Paypal released a new form of peer to peer Paypal payments that allowed you to pay someone buy tapping your phone against their phone.  I said it then and I’ll say it now, that was and is a stupid idea.  I don’t want to tap my phone to pay my friend who’s standing in front of me, and I’d think most people would echo my sentiments.  Unsurprisingly that functionality was a massive failure and Paypal has now pulled out of the NFC race.  Instead now Paypal wants to move forward with a mobile payment solution that does not involve the use of NFC.  Their concern with NFC is that retailers with NFC capable terminals are not very widespread yet.  Paypal’s vision instead is for you to be able to go to the checkout counter, select Paypal as a payment option, input your phone number and then a pin, and then your purchase is complete.  A receipt would then be emailed to you.  While this may sound nice in theory, Paypal would still face the exact same problem NFC faces today, there wouldn’t be very many retailers with compatible terminals.  I don’t see very many retailers going out and upgrading terminals just for Paypal.  Chalk this one up as another Paypal effort that will fail miserably.

Source:  Wall Street Daily

via Paypal Ready to Fail Again | The Smartphone Champ.

NFC vs. cloud-based payments: Which will reach scale first?

NFC vs. cloud-based payments: Which will reach scale first?

By 


February 14, 2012

Google has suspended new prepaid cards for Google Wallet

Following a flurry of announcements around NFC-enabled mobile payments last year from Google and Isis, there has been very little news on the NFC front so far this year while cloud-based payments such as is offered by PayPal appear to be picking up some steam.

Google’s NFC-enabled mobile wallet took a hit this week when the company said it would suspend new prepaid cards for Google Wallet after security flaws were detected in the app that make users’ information vulnerable. At the same, there is growing interest in cloud-based solutions that address some of the issues with NFC but have their own issues as well but, will it last?

“There is momentum behind cloud-based solutions,” said Lara Albert, senior director of global marketing at Globys, Seattle. “But I wouldn’t count NFC out yet – you have some of the biggest players in mobile behind these services,” she said.

“I think people are realizing that there are alternatives to waiting for NFC and Secure Element chips to be embedded in all of the mobile phones,” she said. “Solutions that do not require large infrastructure investments such as merchants having POS terminals capable of communicating with an NFC enabled mobile handset to carry out purchase transactions have their advantages.

 

“Then again, let’s face it, if or when Apple’s next iPhone contains an NFC chip in it, the whole game changes.”

Ecosystem issues
Companies are beginning to take a closer look at cloud-based solutions because they want to hurry along the potential in mobile payments and NFC may be moving too slowly for their taste.

Google Wallet and Isis – a joint venture of Verizon Wireless, T-Mobile USA and AT&T – were both introduced with a lot of fanfare. However, nothing is likely to happen on the Isis front until April, when its two test markets in Austin, TX, and Salt Lake City, UT, go live.

Google is dealing with limited availability.

Currently, Google Wallet is only available on Samsung Galaxy Nexus phones from Sprint. However, once the Google deal to acquire Motorola goes through, new phones with Google Wallet could be out by the end of the year.

“Everybody is out there thinking about how to leverage mobile and most of it has ecosystem issues,” said Mark Beccue, senior analyst at ABI Research, New York.

“Making purchases on a smartphone through a Web site or an app – that is rolling along and growing pretty well,” he said.

“Proximity payments, whether software based or online – these are moving slowly. What we really need to see this year for the momentum to carry on is handsets that have the wallets loaded.

Part of the problem around NFC is the complexity associate with it as a payments option.

There are a lack of standards and a complex ecosystem of stakeholders, which makes NFC a more expensive proposition.

As a result, cloud-based solutions make look more appealing.

“I think that more companies are looking at cloud-based payment options,” Globys’ Ms. Albert said. “In a way they have been forced to look at alternative enablers that have the potential to accelerate adoption of mobile payment systems.

“The cloud-based payment solutions that require only downloadable applications for both consumers and retailers may make things easier,” she said. “I suspect there may be more openness toward security and payment card credentials being stored in the cloud rather than having to store and manage the credentials in the consumer’s mobile device.”

Retail strategy
Still, Google is a formidable player and has built up a strong retail strategy.

Google Wallet is available at a number of retailers in five markets – including Subway, CVS and Walgreens. Together, these retailers have a significant number of retail outlets.

“Google knew they could not control too much of the handset stuff right now but they could be smart about getting the right retail partners, which they have done,” ABI’s Mr. Beccue said.

“They went out and got Subway, CVS and Walgreens,” he said. “Most consumers are going to run across a CVS, Walgreens or Subway as they go about their day – that was a good strategy.

While is also looking to create a strong retail strategy, it faces its own challenges as well.

“PayPal is totally dependent on the quality of the mobile network in those places,” Mr. Beccue said. “In a very busy cell, or somewhere rural, the speed of getting things done is going to be dependent on the network.

“PayPal has some momentum,” he said. “What will be interesting is if, over a 6 month period, to see what the market acceptance is. If it does not work fast, that will be the determining factor.

The challenge both solutions face is getting enough consumers to adopt them for a meaningful reach.

To reach scale, these experiences have to be convenient, easy, and worthwhile from the standpoint of having enough participating merchants.

The key will be delivering personalized, relevant communications based on knowing, for example, that a user has registered in the last 14 days but has yet to make a purchase.

“Enabling mobile wallet providers to identify the contexts associated with certain behaviors, access real-time contextual profiles of customers, take action when a customer enters a context, predict the likelihood a customer will enter a context, and recommend the right tip, information, alert, incentive, etc. given a customer’s context is what is needed to minimize the fall out and get more people using a mobile payment option,” Ms. Albert said.

Running Toward Mobile Payments | Backbase Blog

Running Toward Mobile Payments

Posted on February 14, 2012 by Sara Palmbush

The idea of being able to send and receive payments with mobile phones has been around for many, many years. Except it’s not an idea anymore. Cash, checks, and finally, cards are going by the wayside. Still, most researchers estimate that mobile payments won’t catch fire for at least a few more years. Huh? The past dictates that it’s customer behavior and not research, which serves as the best indicator of technology adoption.

In this case, customers are running toward every chance they get to use their mobile devices for payment. PayPal, for example, is projecting that it will process $7 billion in mobile payments in 2012, almost double the $4 billion mark recorded in 2011. Tap-based payments facilitated by Near Field Communications (NFC) chips that are being built into mobile devices are the next phase. (Think tapping movie posters for tickets, your home speaker system for music, etc.) Square, a forerunner of such payments (using a card reader) is being used by US Presidential candidates for campaign contributions. And there are plenty of other examples of successful experiments from retailers. All of this speaks volumes about when customers will adopt full-on mobile payment technologies. It also says a lot about the lag that exists between those who currently offer mobile payment capabilities and those who don’t.

As Brett King writes on a recent Finextra blog post ‘Forget the NFC argument – look at payments behavior’: “If Visa and Mastercard don’t convert their networks to phone-capable in the next 24 months, I fear Square, PayPal, iTunes and a myriad of others are just waiting in the wings to circumvent their rails. Argue all you like about NFC adoption, that’s not what you should be watching. The tipping point is the behavioral shift on the mobile phone – that is what will kill plastic, and it has already happened.”

The moral of the story then for banks: Stop waiting around for someone to tell you when mobile payments are going to happen. Evidently, they are happening now.

via Running Toward Mobile Payments | Backbase Blog.