With the acquisition of Fig Card PayPal is laying down a marker that the pioneer in disruptive payment won’t be left behind in the coming e-wallet revolution.
The still arguably pre-nascent business is attracting new big tech players, like Apple and Google, while the traditional credit card players move towards creating systems that would make your smartphone your credit card.
The primary approach to building in-store systems involves near field technology (NFC), which requires technology that almost no smartphones have yet. NFC lets you put your phone near a payment device where a radio signal captures information now stored on an electronic strip that needs to be swiped.
But Fig Card uses text messages to complete transactions — something any mobile phone can already do.
With the acquisition PayPal gets this tech and Fig Card’s founders, Max Metral and Hasty Granbery. PayPal, owned by eBay, is best known for completing transactions online but has been fortifying its smartphone app. A year ago PayPal even restored Palm Pilot-era functionality which makes it possible to make phone-to-phone payments — a direct challenge to Square, which is also disrupting the e-wallet space.
The race is on, but there is a general consensus emerging that NFC — which operates on frequencies similar to RFID chips and tags — could become the industry standard within the next year, according to Sarah Clark of SJB Research, who is also editor of Near Field Communications World.
There are technical challenges with NFC, however, including the fact that it requires a separate antenna and a secure element chip in order to guard the privacy of users, Clark told Wired.com in a phone interview from London, where she is based.
“Most mobile phone manufacturers are looking at 2012 as the year that NFC is going to happen,” Clark said. “This year, all the big names are exploring it, and they all have teams that are working on it. They’re asking, ‘Who should I partner with, and how do I build a great consumer experience with this?’”
At present, there is only one smart-phone available in the United States which supports NFC, according to Clark: Google’s Nexus S handset.
Last month, Bloomberg reported that Google plans to begin testing its own mobile payments system within the next few months. Google will install thousands of special cash-register systems from VeriFone Systems, which uses NFC, at merchant locations in New York and San Francisco, the wire service reported.
Clark said that NFC technology could help Google on its mission to dominate mobile advertising.
“NSC has a enormous potential in mobile advertising,” Slark said. “The ultimate vision that people have on that side of the business is that if your mobile phone provider knew that you were on way to a shopping mall, it could send you a voucher or a coupon at that moment, and that could be really useful for consumers.”
“Mobile advertising is absolutely crucial to Google and my belief is that NFC is going to play a key role there,” Clark said.
And then there’s Apple. Last November, Cult of Mac’s Leander Kahney reported that the Cupertino, Califonia-based tech juggernaut is experimenting with NFC technology on its iPhone line of smartphone devices.
“Apple is undeniably working on this and they have some very interesting patent applications that show that they are serious about it,” Clark said. “If Apple puts NFC into the iPhone, that’s going to be day one of the commercial marketplace for NSC technology.”
There are other big players jockeying for position in the mobile payments space as well, including ISIS, an initiative being spear-headed by AT&T, Verizon, T-Mobile (which AT&T is in the process of acquiring) and Discover Financial Services, which sells the Discover credit card.
In 2009, financial services giant American Express purchased Revolution Money, a company backed by former AOL executive Steve Case, for $30o million.
Meanwhile, Seattle-based coffee giant Starbucks announced in January that its mobile phone application is now accepted in all 6,800 of the company’s retail locations.
As for Fig Card, it’s quite understandable that PayPal would buy the startup. After all, PayPal pioneered the online payments market. Founded in 1998 in Palo Alto, California, PayPal was acquired by eBay, the giant online auctioneer, in 2002.
Since then, PayPal has come to dominate the market for online payments. Last year, the company processed $92 billion in online payments. In the first quarter of 2011, the company handled $27.3 billion.
Mobile payments are poised to explode. This year, the PayPal expects to process $2 billion in paperless payments — nearly triple the amount of mobile payments the company processed in 2010, company spokesperson Sara Gorman told Wired.com.
PayPal has actually been experimenting with mobile payments since 2006, Gorman said, but as the dream of paperless point-of-sale transactions comes closer, the company is intensifying its focus on the space, both internally, and though acquisitions, such as Fig Card.
“This is a really hot space to be in right now, but it’s still early, which is why we’re taking a platform-agnostic approach,” Gorman said.
Whether it’s SMS or NFC — or some other technology — it’s clear that we’re approaching the day when mobile payments will become a reality on a mass-consumer scale.
“People are putting their toes in the water and finding out what’s going to work best,” Clark said. “But it’s now clear that the end of the road is in sight.”
PayPal’s parent company, EBay, said Thursday that its revenue rose 16 percent to $2.55 billion in the first quarter, exceeding Wall Street’s consensus expectation of $2.48 billion. Ebay’s shares closed up 1.15 percent on Friday.
Saturday, April 30, 2011
2 days ago, Visa invests in Square; Now, "PayPal Pokes Into POS ‘E-Wallet’ Market (Wired). Money is moving mobile.
Thursday, April 28, 2011
Blue Ocean Strategy + The Long Tail = Visa Invests in Square for Mobile Payments (NYT).
12:43 p.m. | Updated Adding comment from Visa.
Visa said Wednesday that it had invested in Square, the mobile payments start-up that turns phones and iPads into credit-card readers.
The investment, which the companies declined to quantify, is the clearest sign yet that Square is becoming a major player in the payments business, which has long been dominated by entrenched companies. A Visa executive will also join Square’s advisory board.
Square, which was founded by the Twitter co-founder Jack Dorsey, threatens the business models of payments companies and those that sell terminals to merchants that process credit-card payments.
But Keith Rabois, Square’s chief operating officer, said the relationship between Square and Visa was a natural one because Square could convert the 27 million businesses that don’t accept credit cards into Visa customers. Square is trying to become more mainstream through a new partnership with Apple to sell Square devices in its stores.
“We’re empowering people to accept credit cards that historically have not,” Mr. Rabois said.
Many payments companies are interested in the enormous small-business market. Visa, along with other companies like VeriFone, have recently introduced products that could compete with Square. Visa offers cashless person-to-person payments, so people can send funds to someone else’s Visa account. It also offers devices for merchants to accept Visa payments from customers who wave their iPhones at checkout.
But Ryan Donovan, a Visa spokesman, said Square does not compete with Visa’s products. “On the contrary, we believe that Square helps to drive acceptance of payment cards in a segment that has been historically underserved,” he said.
Square’s customers are individuals and small businesses that previously accepted only cash, like housekeepers, farmers and artists. Users get a free reader through Square’s Web site or from the Apple Store to plug into an iPad, iPhone or Android phone. They can then accept credit-card payments for a 2.75 percent fee, avoiding the typical complicated contracts and fee schedules of payment processors.
One of Square’s biggest hurdles was convincing merchants, shoppers and credit-card companies that it could prevent fraud. Visa’s vote of confidence is a sign that it has successfully done that. Square says it has security features that typical credit card processors don’t, because it can show the photo and location of the shopper and send receipts via e-mail.
Square, which competes with Intuit’s GoPayment, says 100,000 merchants are signing up for its service each month. It processed $66 million in the first three months of the year and expects that to triple this quarter. Square previously raised $37.7 million from Khosla Ventures and Sequoia Capital.
Wednesday, April 06, 2011
This is gonna be a long discussion. From GigaOm: Newspapers & Social Media: Still Not Really Getting It.
Updated: Many traditional media entities have embraced social-media services like Twitter and Facebook and blogs — at least to some extent — as tools for reporting and journalism, using them to publish and curate news reports. But newspapers in particular seem to have a hard time accepting the “social” part of these tools, at least when it comes to letting their journalists engage with readers as human beings. A case in point is the new social-media policy introduced at a major newspaper in Canada, which tells its staff not to express personal opinions — even on their personal accounts or pages — and not to engage with readers in the comments.
The policy, which I received from a source close to The Toronto Star (the full version is embedded below), has a number of sensible things to say about using social media, including the fact that these tools “can be valuable sources for story ideas and contacts for journalists, and as a means of connecting directly with the communities we cover.” The paper also says that it “encourages journalists – reporters, columnists, photographers and editors – to take advantage of social media tools in their daily work.” But it warns that any comments posted using such tools “can be circulated beyond their intended audience.”
This all makes perfect sense. Social media is useful for journalism, and it does connect reporters to the communities they cover — better than just about anything else does. And yes, it is wise to be aware of the unintended consequences of even offhand remarks.
No talking about what you do
Then comes the part about being impartial and objective, and that’s when the trouble starts. The policy says staff should “never post information on social media that could undermine your credibility with the public or damage the Star’s reputation in any way, including as an impartial source of news.” And that’s not all — the document goes on to say that:
Anything published on social media – whether on Star sites or personal platforms – cannot reveal information about content in development, newsroom issues or Star sources. Negative commentary about your colleagues or workplace will not be tolerated.
In other words, no posting about stories that are being worked on, no comments on newsroom-related topics, no talking about people who might be used or are being used as sources for Star reporting. And this prohibition doesn’t just apply to Star accounts or services under the newspaper’s name — it applies to any comments that a reporter or editor might make on their own personal accounts as well. Obviously the paper doesn’t want staffers bad-mouthing each other or talking about sensitive internal issues (something the New York Times also confronted
last yearin 2009), but a blanket ban on anything related to content seems unnecessarily harsh, not to mention completely unrealistic. Of course, the Star is far from alone in this.Never talk to your readers
It gets worse. The policy goes on to say that journalists who report for the Star “should not editorialize on the topics they cover,” because readers could could construe this as evidence that their news reporting is biased — and then tells reporters and editors that they shouldn’t respond to reader comments either. It says:
As well, journalists should refrain from debating issues within the Star’s online comments forum to avoid any suggestion that they may be biased in their reporting.
This last prohibition is a classic case of missing the point completely. According to the Star, apparently, comments on news stories are something that exists to allow readers to talk amongst themselves, not something that a reporter or editor should get involved in. That’s just wrong. As someone who was intimately involved in social-media strategy for another major metropolitan newspaper in Canada (full disclosure: the paper in question competes with The Toronto Star to some extent), one of the main features of having comments is the ability for readers to interact with writers and editors at the paper.
Treating the comments section as something that journalists shouldn’t get involved in turns it into a ghetto, and also contributes to the problems that many newspapers have with flaming and trolls and other issues — why should anyone behave properly in a comment forum if none of the staff at the paper are going to bother getting involved?
Never express an opinion on anything
The Star is not the only media outlet making these kinds of errors — while they are happy to use social media to push their content, most major newspapers have failed to take advantage of these tools when it comes to building relationships with their readers. The biggest single factor holding them back seems to be fear — namely, a fear that they will no longer be seen as objective, something NYT executive editor Bill Keller reinforced in a recent column, in which he suggested that the paper was one of the few remaining holdouts in a world where everyone feels free to state their opinion.
Here’s a news flash for Bill, and for the rest of the newspaper world: that particular genie is already out of the bottle and has been for some time now. As journalism professor Jay Rosen has argued, the “view from nowhere” that mainstream media continues to defend is not only dying, but arguably does readers a disservice — since it often distorts the news in order to maintain a perfectly balanced view of events. Although some journalists have started to admit they have personal interests and causes, that remains rare.
But the main point being missed is that social media is powerful precisely because it is personal. If you remove the personal aspect, all you have is a glorified news release wire or RSS feed. The best way to make social media work is to allow reporters and editors to be themselves, to be human, and to engage with readers through Twitter and Facebook and comments and blogs. Is there a risk that someone might say something wrong? Of course there is. But without that human touch, there is no point in doing it at all.
Update: Toronto Star spokesman Bob Hepburn got back to me and said that the paper’s policy was “well in line with what mainstream media organizations have always done. We’ve always placed some limitations on journalists in terms of them expressing their opinions, either in the newspaper or outside of the newspaper.”
Post and thumbnail photos courtesy of Flickr users Hans Gerwitz and Zarko Drincic
Related content from GigaOM Pro (subscription req’d):
Monday, April 04, 2011
Let the (Sponsorship) Games begin...online! |The Guardian: Olympic outdoor ad auction begins online
London 2012 organisers are firing the starting gun on a £250m eBay-style online auction of outdoor advertising space as Olympic sponsors including Coca Cola, McDonalds and Adidas begin bidding for prime sites across the UK.
Sponsors and their agencies will be hunched over keyboards across the globe on Monday to secure the pick of some of the most sought after outdoor advertising sites in the UK.
London 2012 organisers are thought to be the first in the history of the Olympics to attempt to sell advertising space for a Games by online auction, a system they believe to be the most fair and transparent way of dividing up the inventory that must be offered to sponsors first.
Around £250m in media space will be up for grabs in the online sale, on a platform developed by a technology company called Media Equals, covering 10 cities where events are being held such as London, Cardiff, Birmingham, Glasgow and Coventry.
In total about 4,000 packages of advertising will be up for sponsors and partners to buy – covering everything from billboards and posters right next to event sites to what is termed as "spectaculars" such as the Imax theatre on the Southbank as well as the London Underground – up until 1 July.
However, industry sources believe that up to £100m in ad space will go under the hammer during the auction period, with the unsold inventory then being put on sale to advertisers who are not Olympic partners.
London 2012 organisers plan a "controlled drip" for the auction to make sure that the sale process can't be abused by any one Olympic partner. While there is no limit on how much advertising space any brand can buy, the careful control of auctions – which open at 8am and close between 10am and 5.30pm daily – means that sponsors are unlikely to lose prime sites and packages to rivals who are faster on the button.
"We wanted to provide a level playing field for everyone and of course partners are located all over the world," said Chris Townsend, commercial director for the London Olympic Organising Committee for the Olympic Games. "We are making it a drip process over a number of weeks to keep it easy for the buyers. What we have here is a fair, open and transparent process."
For the first two weeks only the 18 worldwide, tier one sponsors are being allowed to bid – brands such as Coca-Cola, BP, Samsung, Lloyds TSB, BMW and Visa.
The first lots on the block are prime "vicinity" sites right by Olympic venues. These will be followed by what is referred to as "spectaculars", unique eye-grabbing sites such as those at Heathrow or the Imax. Tier two and tier three sponsors will be allowed to participate after the third week, which will bring the total number of bidders to more than 40.
Townsend also points out that the "vast majority" of what will be available to buy online will be "premium" packages at a fixed price.
"There isn't allowed to be advertising in stadia so it is key for sponsors and partners to own cities and event environs," said Mike Baker, chief executive of industry body the Outdoor Advertising Association.
Baker said that because the sale process is for inventory in 2012, the level of interest will be a critical bellwether for general advertiser appetite next year in what is looking to be an increasingly fragile market recovery.
"It is an important step. From the perspective of media owners it is a key indicator over how much uplift there will be in general in 2012," he said. "It will give us an idea if we are going to be disappointed or not [in the ad market next year]."
Friday, April 01, 2011
Only means more integration w/ DOOH to me. Mobile Marketer: What are the hottest trends in mobile right now?
What are the hottest trends in mobile right now?
By Dan Butcher
April 1, 2011
Where Ads aims to increase the relevancy of local merchants' mobile ads
The hot-button issues in mobile generating the most buzz at the moment include location-based services and marketing, the rise of mobile commerce and payments, as well as applications for smartphones and tablets.
Tablets, of course, are the device of the moment, with consumer adoption booming and plenty of iPad 2 competitors reaching the market—from Android-based tablets such as the Samsung Galaxy Tab and Motorola Xoom to Research In Motion’s BlackBerry PlayBook and Hewlett-Packard’s TouchPad. Brands and retailers are placing an increasing emphasis on applications for various smartphone and tablet platforms, but the trick is encouraging repeat usage and fitting apps into a marketer’s overall strategy.
“From all directions—app development platforms, apps themselves, marketers and thought leaders—[at CTIA Wireless 2011 in Orlando] I was hearing about the need for brands to think about usage and engagement measurement and metrics for app strategies,” said Melissa Parrish, New York-based analyst at Forrester Research.
“I agree that thinking needs to move beyond the application download numbers to see how and how often users are using those applications post-download,” she said.
“This is particularly important for marketers to understand how their branded application is really changing and deepening their relationship with their mobile consumer.”
Melissa Parrish is analyst of interactive marketing at Forrester Research
Based on the buzz at International CTIA Wireless in Orlando, FL, 2011 is the year of mobile commerce, location-based advertising and apps for all types of devices.
App craze
Apps have been hot for some time now, but their importance has been amplified tremendously with the launch of the iPad and competing tablet devices.With tablets, a whole new array of applications have been launched in an effort to gain loyalty, sell goods and for branding.
The Amazon Appstore for Android enters the mobile content distribution arena
It is imperative for brands and retailers to market their applications to drive downloads. However, getting onto consumers’ handsets—while definitely invaluable—is not the be-all-and-end-all.
Tracking how often consumers are using a particular application, and what actions they are taking once they do open an app, can provide key insight to help the marketer optimize the experience.
Monetization tactics for applications range from free/ad-supported and in-application transactions for virtual goods to pay-per-download, freemium and subscriptions.
In addition, Ms. Parrish said that mobile technologists who are looking for marketers’ dollars are getting much more adept at addressing marketers’ needs.
“Conversations are focusing on the question of business goals, brand presences, measurement and scale—where previously those conversations focused on technical themes, tactics and differentiators that may have been sexy but didn’t help marketers understand how to best reach the mobile consumer,” Ms. Parrish said.
Location, location, location
In 2011, many retailers are shifting their focus to delivering relevant, location-based offers to consumers on their mobile devices to drive them in-store.Location-based services promise big returns through linking a user’s physical location with key consumer demographics.
Delivering highly relevant deals and incentives are key to getting consumers in-store.
Consumers want to see deals and they want to see local retailers and restaurants offering them an incentive to come to their locations.
“At CTIA, we felt some palpable buzz around T-Mobile and AT&T, and the whole mobile commerce and payments category seemed to be big,” said Dan Gilmartin, vice president of marketing at Where Inc., Boston. “The thing that I loved is to hear more people talk about location-based advertising.
“We’ve been in the game for a while, and the market is really starting to catch up,” he said. “We just landed a quarter-million ad buy yesterday.
“It is a different way to think about location—it is ‘What is going on in this area that I can influence through advertising and drive an action?’ in a very contextual way,” he said. “We have a saying, ‘Relevance equals location plus context.’”
Mobile commerce and payments
Brands and retailers want to transact and sell products through the mobile channel.A CTIA panel that included executives from JPMorgan Chase and Visa Inc. outlined various evolving mobile payments mechanisms that are having an impact, from SMS, the mobile Web and applications to carrier billing and near field communication.
A PayPal executive said that mobile payments are growing exponentially and provided his own company’s figures as proof during the keynote at International CTIA Wireless 2011′s Money Over Mobile pre-conference program.
PayPal’s mobile payment transaction volume has grown from $24 million in 2008 to $140 million in 2009 to $750 million last year. It is projected to top $2 billion this year and is expected to reach $7.5 billion in 2013.
Many merchants still have reservations about NFC and mobile payments that must be addressed to convince them to make the necessary upgrades to their point-of-sale systems, according to a panel at CTIA Wireless 2011.
While the panelists all agreed that mobile payments are gaining momentum, panelists had differing views about what is necessary to take the ecosystem to the next level.
The fees must make sense for merchants to really make mobile payments a priority. In the case of contactless mobile payments, it may require retailers to upgrade their point-of-sale system with NFC/RFID technology.
As NFC continues to gain momentum, merchants and marketers should realize that it enables more than just contactless payments—it can be used to inspire consumer loyalty, according to a panel at CTIA Wireless 2011.
NFC is fundamentally changing the way we view payments, and that the various ecosystem players must find common ground from a technological standpoint, but more importantly, from a business perspective.
While there are key infrastructure pieces that still need to align, tremendous progress has been made, especially with more handset manufacturers embracing this technology, including Nokia and Samsung with the Google Nexus S.
Mobile content distribution
Another highly contentious area is mobile content distribution, where Amazon is making a big play.“CTIA yielded little in the way of revolution,” said Josh Martin, senior analyst at Strategy Analytics, Newton, MA. “Instead, I thought the Amazon app store launch was the most significant event, even though it was not at CTIA.
“Amazon is really looking to redefine what we have come to expect from an app store and they will become a major player,” he said. “We are forecasting they will reach at least 30 percent of Android U.S. downloads by the end of the year, skewing higher on paid and lower on free.”
Final Take
Ovum's Eden Zoller
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