Tag Archives: Google wallet

Apple poised to deliver mobile payment system that just works

Screen Shot 2014-09-04 at 9.06.31 PMI started off my week with a trail run and then a quick stop off at a downtown locally owned coffee joint. The coffee shop is filled with laptop toting Silicon Valley types, local Lululemon wearing trail bunnies and a myriad of salon and spa employees on their way to bill $150 for a 1-hour deep tissue massage. I stood in line and waited to pay for my overpriced cup of coffee. I’m an old school guy and paid in cash while most people paid using their debit/credit card. It seems strange to me to pay for something so cheap with plastic…but, hey, I AM old school right? However, of the 10+ payment transactions I saw, no one paid with his or her phone using the NFC feature of the payment reader. Now don’t panic…you are not the only one who has not seen the NFC technology in action. Very few merchants even have a card reader that includes NFC technology. Forbes magazine ran a piece in mid 2013 that asked the question if NFC payments were dead. After all, the only major retailer to include NFC technology at checkout is Walmart…and adoption is LOW. However, this will most likely all begin to change on September 9.Screen Shot 2014-09-04 at 9.01.31 PM

Apple yet again has the media and its loyal customer base all in a flutter with what will be announced at their big event on September 9. Of course everyone is super excited about what’s happening with the iPhone 6 and the expected announcement of their first wearable device. There is also buzz around a key feature of the iPhone and wearable – will these devices enable customers to make payments for goods and services at retail? Will Apple finally break into the payments space and push mobile payments into the mainstream? This buzz, of course, is mostly coming from technology people, but will have massive implications for consumers and merchants now and in the future. A big shift is coming.

Reports from the Financial Times and tech bloggers indicate that the iPhone 6 will include a near field communication (NFC) chip to enable mobile payments. Adding fuel to the mobile payments speculation, CNET recently reported that Apple has forged partnerships with all the major credit card providers and payments networks including American Express, Visa and MasterCard. Wow, these relationships are great leading indicators that Apple is poised to bring a true mobile payments tool, or wallet, to the mainstream audience. Color me stoked.*

Looking at this a little more closely, however, the media focus is on the consumer side of Apple’s payments technology.   But wait…I thought NFC payments was dead with very few retail shops and big box stores offering this form of payment? Is Apple setting itself up for a black eye if their payments tool is not accepted at most locations? Did Apple only think of the consumer side of this equation and totally miss the merchant? Not at all. Apple thought through this quite nicely and I’m surprised there is not more technology media focus on this strategic partnership that ties it all together. Once again, Apple has proven the importance of controlling the complete ecosystem to create products that revolutionize consumer behavior. Here’s how.

Screen Shot 2014-09-04 at 8.55.09 PMApple announced a few months back a strategic alliance with Big Blue. I provided my point of view in an earlier post on how the Apple/IBM partnership will affect the banking industry. This partnership will also affect the technology these banks provide their business banking clients (merchants) at point of sale. For example, the infusing of Apple technology into the bank provided payment terminals will enable merchants to collect payments using NFC in addition to accepting card swipes. Apple strategically addressed the biggest roadblock in enabling adoption of mobile payments – how can merchants accept payment from a mobile device without undoing the POS payment system that is already in place.

The Apple/IBM relationship enables Apple to create the complete system required to connect consumers with merchants through a single payments technology. No other technology provider can do this. However, Samsung sees this happening and is quickly putting together their “me too” plan for the Android market. There are rumors flying around that Samsung is partnering with Loopt to connect consumers to merchants through one payments system as well.

There will be a lag between what Apple announces around payments and the launch of the complete ecosystem.   However, given the amount of iPhone users who already have their credit card on file in iTunes, the major credit card providers will be HOT to get the NFC card readers in place to enable card use in the online and offline world. We can expect a lot of pressure on the banks to get the NFC enabled payment terminals out to market quickly.

How we pay for things will be very different a year from now. Now if Apple can solve how to securely store my driver license, loyalty cards and annual memberships cards as well, I can finally stop carrying around my wallet!

* I’ve sprinkled many “Easter Eggs” through out my posts to make reading more fun. These eggs include cultural references from the ‘80s, ‘90s and present day. If you get the reference, send me a tweet (@ericdunstan) with the answer.


Will the real mobile wallet please stand up? Please stand up.

A recent study by Consult Hyperion found that over 64% of US consumers say that they would never use a mobile wallet.  Additionally, consumers were asked whom they would trust most to issue a mobile wallet.  The most trusted issuers were (in rank order):  banks at 20%, Google at 10%, major retailers at 3% and phone service providers at 2%.

American Consumers Dubious About Mobile Wallets

What intrigued me most was the statement of a Hyperion consultant who was offering an interpretation of the data:

“The study shows that issuers of mobile wallets need to do a better job conveying what mobile wallets really are and what benefits they bring,” says Dave Birch, a spokesperson for Consult Hyperion.

I think more effectively conveying the benefits of a mobile wallet is only a small part of the challenge. Agreed, the definition of a mobile wallet is not clear. Nodding to Eminem, will the real mobile wallet please stand up. Please stand up.

Does a mobile wallet enable P2P payments only?  Or can a user apply a credit card number to make a purchase through the wallet?  To make the definition even more confusing, does the mobile wallet include the myriad of loyalty cards as well?  If so, does Apple’s Passbook qualify as a wallet?  What about the lucky penny I carry in my wallet?  Can this penny, and the luck it has, be transferred to my mobile wallet? The Leprechaun lobby will have something to say about this.  They may be short, but they articulate a very clear point of view.

The biggest challenge facing increasing adoption of mobile wallets is the industry itself and the many different wallet technology providers available.  At this time, the mobile wallet industry is very fragmented and no clear leader has emerged.   There is no widely adopted wallet technology that a consumer can try to ease into this new payment tool.  Until this happens, consumers will be afraid to engage for fear of their financial data being compromised.

A similar problem plagued consumers around the concept of buying a vehicle site unseen through the Internet. I remember a friend who I thought was just insane for buying an Acura MDX off of eBay Motors from a guy in Phoenix.  eBay Motors has done a fantastic job in making the transaction process easy and safe. Now a vehicle sells every 60 seconds.  The mobile wallet vertical needs a leader like eBay to emerge to break ground into mass consumer adoption. Hmmm….maybe PayPal?

Now who will this leader be?  Based on the Hyperion study, it sounds like a bank could emerge as a leader.  From personal experience, I know banks are very slow to innovate…so I don’t think this will happen.  However, I think the provider of a mobile wallet platform that can connect to multiple banks’ online banking backend can emerge as a leader and industry standard setter.   Through the right strategic partnerships this technology provider can drive adoption fast before competitors can make “me too” solutions.

As I side note, I snickered at the Hyperion study data point that 10% of responders said they would trust Google to provide a mobile wallet.  Though small, this percentage I think can be accredited to brand advertising and marketing from Google.  The Google wallet technology is struggling and adoption on the merchant side is very low.  The power of marketing is very present in that statistic.


%d bloggers like this: