The
competition for supremacy in mobile payments services heats up with Discover
announcing its official partnership with Google in support of Google Wallet, a
Near Field Communication (NFC) pay-by-phone application. Google is also
partnered with Citigroup to enable Citi's Mastercard-holders to use this
service.
In
2011, mobile-payment transactions were valued at $105.9 billion world-wide, and
this figure is expected to reach $617 billion by 2016. No wonder then that startups,
technology, financial, and telecom companies are all in the race to popularize
their mobile payment solutions:
- Best Buy, Target, and Walmart announced the formation of a company called Merchant Customer Exchange, or MCX, that will make an app for mobile payments
- Square, struck a deal with Starbucks with regard to mobile payments
- American Express is promoting its own digital wallet called Serve which is similar to eBay's PayPal, and
- Apple is expected to come out with a Passbook app in its forthcoming iPhone 5
Google’s
Wallet is a cloud-based service that supports all credit and debit cards, is compatible
with six smartphones and can be used at more than 200,000 U.S. locations. Since
the service is available beyond a specific mobile device, due to cloud-based
storage, the security risk of losing one's phone is diminished. Losing your phone won’t mean losing your card
details since they are now stored on Google servers rather than on the phone. Also
Google provides an additional protection by nature of the facility to remotely disable
payments from a specific mobile device.
So now the old excuse of forgetting your wallet at home will not be as effective, because you can now use the phone...
2 comments:
Sign up for SERVE. Once again, technology has revolutionized the way I live my life. Girls' dinner have never been so wonderful. We all use our serve accounts to split the bill, there is never any awkwardness around who will be the first person to reach for the check. And it is only the beginning. I can't wait to hand over my cell phone to pay for groceries, or open a tab at a bar. Then I'll never have to wonder if I've forgotten to get my card back or the more plausible example of forgetting to close out my tab and shamelessly having to go back the next morning to reclaim it.
But with lifestyle improvement always comes risks. Now, more than ever, my entire identity will be locked up and stored on my mobile device. Creepy right? In fact, it reminds me of the time I was in Italy, sitting outside for lunch, and left my cell phone on the table right beside my plate as I was eating some meatballs. Within the blink of an eye, a no helmet wearing guy on a vespa, snatched it right off the table. Good thing, it was just a pre-paid phone that I had planned on throwing away on my return home, but still. The thought of that being the iPhone that I love and treasure today, would have sent me into a spiral.
I still believe that the toughest part of this whole market will be around merchant adoption. Not only is it difficult to sign up merchants, but you have to think about the actual experience at the point-of-sale. There's only so many services that cna truly be integrated at a wide scale there, which means there will be clear winners and losers. In my view, its not the best consumer service that will win, but the best merchant adoption system.
The problem with competing for merchant adoption is that there's only one real way to differentiate yourself - be cheaper than the next person. Which means the transaction prices are in a race to zero, which will pinch margins.
This market has all the trappings of an industry that will spur dozens of similar, unprofitable companies.
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