Brett King

Posts Tagged ‘Bump’

Mobile Payments: More than P2P and NFC…

In Customer Experience, Mobile Payments on June 29, 2011 at 10:37

Today I’ve been in Beetsterzwaag, Opsterland, Netherlands, about 150 kilometers from Amsterdam at an offsite strategic retreat with the ICS (International Card Services) team. Initially part of Bank of America’s presence in the Netherlands, ICS today is an independent subsidiary of ABN Amro NV, but works in the provision of a range of card services around issuance, promotion, processing and so forth. ICS has around 3 million customers today, and the session we had was around the implications of mobile payments in the form of NFC, P2P and other initiatives such as cardless loyalty program implementations.

What emerged was a very interesting realization in respect to opportunities in the mobile payments ecosystem that hadn’t fully occurred to me until this planning session.

More than just a payment

While I’ve often discussed the contextuality of payments and the massive opportunities that companies like Google are trying to leverage in respect to messaging around payments (before, during and after the payment event), it is interesting to think about different payment executions. We need responsible partners in the ecosystem to start handling not just straight through payments, but multiple variations on a theme, understanding the various parties and implied contracts involved.

P2P Direct or Merchant one-off payment

The simplest payment journey to conceptualize is when you walk into a retail store and pay a merchant according to the cost of the purchase, or when you have a service event where you simply take your NFC phone and execute a live person-to-person payment. Today you can already use PayPal Bump to execute a live phone to phone or person-to-person payment, but in the future, I’ll just put my phone into send or receive mode for an NFC payment and the respective individual’s wallet will do the rest (discounting all the back-end complexities, of course).

PayPal is slated to do $3.1 Billion in Mobile Payments in 2011

This is a fairly simple execution – take a payment from one person, send to another via either NFC, bump or a wallet. We can use location services, authentication and NFC to simplify and secure the phone to phone interaction, or we can use an App like PayPal to transfer to a unique individual via their phone number, email address or similar. The ability to split payments amongst a number of individuals, such as paying for a bill at a restaurant would also fall into this category.

The value here is the simple execution of a person-to-person transfer without requiring adherence to the current bank-led wire transfer or ACH equivalent which requires a routing number, an account code, the bank address, etc, etc. The opportunity for NFC phone to an NFC POS or another NFC phone is also obvious.

The credit facility or installment plan

Another powerful in-store implementation will be the ability to offer a real-time credit facility to back a payment. It might be a line of credit, a personal loan facility or a 12-month, low-interest payment plan with regular monthly payments. The ability to offer you real-time finance options that are more competitive than using a competitors hefty credit card APR program is pretty compelling at the point-of-sale, and can steal you away at the most critical moment – when you are about to pay for a big ticket item.

Mobile offers payments providers this sort of contextual opportunity, which currently is too difficult or erroneous to do with a plastic card and traditional advertising offers. Give me an offer in-store and help me execute the line of credit in real-time. Powerful enough to get me to change payment partners right in the midst of a transaction.

The Contract Payment

In this scenario we may have an upfront payment, but the full transaction is only effected with completed, successful delivery of the required goods or services. In business we have constructs like an LOC (Letter of Credit) which facilitates such payment contracts, but in the individual merchant/service provider and consumer space, these sorts of payments contracts are implied and managed informally. However, there may be an opportunity for this to be managed in an semi-automated fashion through the payments ecosystem.

Whether it is time based for hurdle payments to occur as specific milestones are reached, when physical goods are delivered, or when a contracted service is rendered – there is an opportunity to simplify the payments journey by authorizing the subsequent payments via a mobile device or online.

Facilitating the platform

As we move increasingly to person-to-person electronic payments, the ability not only to execute an individual one-off payment, but also variations on a theme with either a payment agreement/plan or a underlying credit facility adds value to the P2P ecosystem.

Today we have the likes of PayPal working on P2P, individual merchants offering some payment facilities, but we don’t have an emerging player combining these different capabilities and relationships to create journeys supported by a range of more flexible, automated payment variations.

When you mix analytics, always on IP layer or the cloud, a mobile device, location and the ability to offer a variety of payment mechanisms, the future of payment journeys looks very, very interesting. Payment journeys offer massive opportunities for reinventing and simplifying the way we currently interact in this space.

Advertisements

Pervasive Banking or Irrelevance? You choose… (Huff Post)

In Mobile Banking, Retail Banking, Strategy, Technology Innovation on March 15, 2010 at 22:16

Why do we use cash? Why do we use banks? The basic premise is that banks are necessary to create a flow of cash and enable commerce, with built in protections. Secondly, they can hang on to our money securely, and although we don’t get much interest these days, we do generally have the protection of the FDIC or some other mechanism to ensure we never lose our deposit. However, these days when we deposit money it just generally sits on some computer as ones and zeros, we don’t physically (or vary rarely) go down the the bank and actually deposit cash over the counter. In fact, I can’t remember the last time I ever deposited or withdrew cash from a bank branch. I know I go to the ATM to get cash out, but all my deposits these days are generally electronic.

Banking is just not in your face anymore, it’s simply a utility we make use of day to day. The banks are the wires, the FED is the generator, and while the banks have traditionally owned the ‘meter’ (e.g. the branch, ATM) we’re seeing a rapid disintermediation of banks from the retail coal face. We are about to see the end of

Today I downloaded the new Bump enabled PayPal application for my iPhone. The app was launched at the SXSW event (South by Southwest) and on the iTunes platform yesterday, and it is a retail banking killer! We knew this was in the pipeline, but the launch of the app is something that we’ll look back on as one of those defining moments of this decade.

When PayPal launched none of the banks really took it seriously. In fact, most banks to this day don’t really interface with PayPal at all. Yet, for sites like eBay and Amazon approximately half of the payments made are done through PayPal today. Banks totally missed out on the opportunity to capture the online payments space, as did Visa, Mastercard and Amex largely – they took their time worrying about security, fraud prevention, and such things and in the meantime PayPal took truckloads of market share off them.

The same thing is happening in the mobile payments space right now. PayPal, POPMoney, Square, Verifone and others are making a play for the mobile payments space in earnest. Apple has a patent for integration of NFC (Near-Field Contactless or Near-Field Communications) payments into their next generation or 4G iPhone. Bankers are sitting back wondering what all the fuss is about…

Bump your phone to pay with PayPal

When PayPal came along bankers I knew said “no one would trust these guys enough to use them for online payments…” – they were so wrong. Now with mobile payments being discussed I’m hearing “no one will abandon cash for mobile payments, that’s not realistic…”. I’m not saying it will happen in the space of a few months, but over the next 5-7 years in developed economies I expect this to have a huge impact on the viability of ATM networks.

The problem with pervasive mobile payments is that the value proposition for my bank just got cut in half. In a very short period of time, I may never even have to use my bank’s ATM at all. I certainly won’t be using checks. In fact, the last check I wrote was more than a year ago – so I won’t miss them.

My phone becomes my debit and credit card. I can pay the plumber who comes to my house by just bumping phones with him. I can pay at McDonalds, Bloombingdales, Sears, Wall Mart or Marks and Spencer by swiping my phone across the top of a point-of-sale unit. When exactly would I need cash? Taxi cabs maybe? Nope, I can already pay for those with my contactless debit card – so my phone will work with that too. Buses and trains? Nope, in cities like Hong Kong, London and elsewhere I just use a contactless card (in HK it’s the Octopus, and London the Oyster). I’m guessing my NFC will work with those conventions too.

So where is the value of my bank in this equation? Remember the electricity network analogy? It’s not in the meter because banks aren’t pervasive enough. Banks have let card issuers (Visa, Mastercard, Amex, etc) become pervasive at the point-of-sale, and they’ve relied on branches and ATMs to be pervasive. But branches and ATMs are based on our need to physically deal in cash or checks. Those days are quickly disappearing.

The only solution for banks is to become more pervasive with their solutions and services. I won’t be going down to the branch to apply for a personal loan or a mortgage, you need to be ready as a bank to provide me that product when and where I need it. Point-of-impact is what I call this concept. When I’m online booking my next holiday, offer me a great personal travel loan built into the online experience. When I am walking into my favorite retailer offer me a cheap line of credit instead of me using my credit card, or offer me a discount for using your bank’s debit card – you could use location based messaging or point-of-sale technology to deliver the message. Put bankers out on the road at property shows with the ability to sign me up for a mortgage there on the spot, instant approval.

Go where I need you – don’t wait for me to come to you. Chances are, I’ll bump you off…