Comments on: Why Make Mobile Payments Easy when you can Make it Hard (and expensive)

by: Steve Roberts

Tue, 30 Jun 2009 02:50:10 +0000

Hardware is not the solution to real mobile commerce. It is simply too expensive and will take too long to deploy. It may happen, but not for another 5-7 years at best.

Consumer behavior is the key to mobile commerce, not more hardware. Furthermore, the bridge to commerce is promotions…coupons, rebates, sweepstakes and more.

It’s hard to imagine how text based payments have limitations of scale when the capability is available on over 95% of all phones. And, even Nielsen has reported recently that nearly
half of the U.S. Population is now an “active” texter. We’re now sending over 2.5 Billion text messages PER DAY in the U.S. alone , up from 1 Billion/day in early 2007.

Will any piece of hardware EVER be able to make the same claim of scale and adoption as texting? Doubtful.
As I said, consumer behavior is the key to mobile promotions & commerce. From our perspective that means only one thing: If you can text, you can ShopText: Win, sample, save and buy from your phone the moment a brand’s ad engages you. Oh yeah…no pre-registration required. ShopText connects any ad to fulfillment, eliminating a cumbersome search process on a website from a 1×2 inch mobile screen.

Viewing the mobile commerce puzzle through the carrier, handset and hardware lense creates a massive blind spot. The Carrier billing framework has not only technical limitations, but an even larger consumer behavioral limitation driven by the U.S. Carriers’ own billing model: We have all been trained that variation in our cell phone bill is a bad thing when we’ve just signed up for the family plan.

Beyond handset based digital goods (ringtones, wallpaper, games and music) lies the much larger world of physical goods. The core value proposition for mobile promotions and commerce lies with brands, retailers and their customers. We’ve successfully framed this value proposition while driving response and conversion metrics not achieved even in the early days of internet marketing.

by: Siva Narendra

Wed, 24 Jun 2009 21:56:06 +0000

While most points made are valid, I do want to point out that text based payments have limitations for scale. Fraud ownership with scale cannot be solved without involving the existing eco-system of payment players who own transactional revenue part of which is used as insurance for fraud. This statement is true of any other electronic payment solution, mobile or otherwise.

In my opinion, for payments it is important to have a clear value proposition for a critical mass of merchants, consumers, and the existing eco-system. When the value proposition isn’t there for even one of the three, it is rare to see such a payment solution successful beyond niche scale (e.g. SIMPay, Pay-by-Touch, PayWI). This problem is further complicated by bringing in the MNOs when you talk about mobile+payment. Without a clear win-win for mobile+payment industries I find it difficult that we will have scale.

NFC is a prime example — it defines an challenging trade-off between handset investments vs. transaction revenue sharing and/or secure element ownership vs. fraud liability ownership, resulting in a win-lose or a lose-win business model.

Of course we can stay with plastic RFID or magstripe cards. But we all know that there is clear value for mobile payments for consumers and merchants. If we could solve the business model challenges between the mobile and payment industries, then we have a viable scalable solution. We, at Tyfone, believe that a neutral secure element, such as Tyfone u4ia(R) Memory Card, has that ability to do just that, by creating a level playing field and the win-win necessary for mobile+payments.

by: Steve Klebe

Wed, 24 Jun 2009 20:53:11 +0000

I very much agree with your take on the situation. So far, much ado about nothing. The phone is simply becoming the browser on your hip, albeit most people are too cool to carry them on their hips anymore (me included). With smartphones having real browsers and real internet connectivity, there really isn’t any need for all these add’l layers, at least as it relates to the ecommerce channel. We have plenty of existing payment mechanisms and all the plumbing is already in place to support them. At the POS, all the talk about RFID has not gotten us very far either. Another technology, like chip cards, looking for a home. With customer activated terminals proliferating and no signature needed for sales under $25 with an ordinary (less than $1.00 to produce and mail) regular old mag stripe card, who needs an overhaul of the infrastructure and mass issuance of new fancy cards?

by: Philip Andreae

Tue, 23 Jun 2009 17:59:16 +0000

Much of the analysis is clear and well thought through; although I would argue there is a business case for mobile payments when we look to the world of the unbanked and clearly many Mobile Network Operators see this opportunity and are investing heavily. Look at Kenya, the Philippines as two countries where Mobile payments are succeeding. We must acknowledge that there are more pre-paid cell phone accounts than there are bank accounts and in those markets where banking is not affordable for the lower income segments the MBOs can develop a compelling business case. Then there is the interesting announcement Zoompass by the three dominate MBOs in Canada where they are deploying a P2P solution that clearly given most every phone is managed by one of the three operators.

If we isolate our analysis to the USA then yes Mobile Payments is not an easy sell.