Embracing Innovation is Answer to Tech Disruption at the WSSA Conference

By Randy Smith,
Mobile Wallet Media
September 29, 2012

The Western States Acquirers Conference had high impact statements and speakers delivered in a small package. Two of the general sessions were "Embracing Change; Staying Relevant in the Changing Payments Landscape" and "Future of Acquiring . . . Will you Wipe Out or Catch the Big One?" The wake-up call to reality is ringing and it is time to answer the call. If you can't beat the join them, might provide the answer.



It seems like the overarching message being delivered here was, don't panic, but do take action now! Attending diverse trade shows in this past year and past 15 years, I've come to hear the words 'Disruption' and 'Innovation' a lot. These two words, in 2012 have lead the pack for trendy words used in business and technology. The words address the issue of change and remaining 'relevant,' also another trendy word in our vocabulary today.

The word Disruption in Silicon Valley and the tech industry represents a method of being innovative by creatively solving problems or providing a solution that could be done in a much better, simpler, quicker or more cost-efficient way. Disruption is innovation and vice-versa. It is only when it is you that is being disrupted that it is viewed with disdain or threat. But this is business and competition and change is always the constant. To stick your head in the sand and think that things will remain the same as they have always been is strategy that will deliver your worst fears to become reality.

Innovation is offense. It is moving the ball forward and the best defense is a great offense. The SR-71 BlackBird was developed in the 1960's by Lockheed Corporation. It can fly as high an altitude as 100,000 feet with 3 times the speed of sound (3.5 Mach). It was in use by USAF for 40 years and was retired in 1998. It actually had no defensive weapons, but relied solely on it's speed, stealth and maneuverability to evade it's enemies. In all it's years of service it was never shot down. But even it was retired after 30+ years in service. Why? It was retired because the next generation of technology was ready to replace it. And now is the time that new innovation is replacing the status quo.

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Tour de Mobile Payments - The Mobile Wallet & Main Street

By Randy Smith,
Mobile Wallet Media
September 12, 2012

How will mobile payments mesh best with Main Street?

It seems like it's gotten as complex and confusing as can be for retailers and even the mobile payment service providers themselves. 

We'll provide a legend to map out all the pieces, as well as strategy and opinion. At Tour's end the future of mobile commerce may be a bit more clear.

A foundation was laid for this article with our feature 7-Week Series, just completed on September 10th, "The 7 S's Required for Success in Mobile Payments." If you have not read it, you've missed much.

Before we begin the tour, let's look back at the history of contemporary mobile payments and wallets that has brought us to this point.

In 2008, Mocapay debuted at ETA and showed us an early vision of what a Mobile Wallet might look like. Another company, Mobibucks, also debuted at ETA in 2008, showcasing a solution that looks exactly like PayPal's 'Mobile Phone + PIN' entry on terminal solution (I reached out to Mobibucks, but never heard back for comment about PayPal's solution).

In 2009, MFoundry built the foundation for what would power the Starbucks Card Mobile App.

In 2010, SquareUp turned our heads by turning our iphones into a credit card terminal.  Also in 2010, TabbedOut launched by integrating directly to POS systems, thus enabling 'Pay at Table' transactions from the mobile phone without requiring a mobile POS device or to wait upon the server to pay and close out a tab. In the Summer of 2010, ISIS announced it was forming a carrier network. In the Fall of 2010, my former company, MobilePayUSA, followed by debuting at TechCrunch, giving us the first vision of what a 'Universal Mobile Wallet' might look like (Yes I'm a Homer). Paydiant and Cimbal showed us the way to turn a 2D bar code into a transaction ID and way to pay by scanning with a smartphone. And, Dwolla also launched reducing fees to 25 cents a transaction for merchants. 

In January of 2011, Starbucks Card Mobile launched and by March had already provided a solid proof of concept for the Mobile Wallet. Corfire was developed and would become the platform of choice for Dunkin Donuts. Google Wallet utilized MasterCard's PayPass to launch it's Mobile Wallet in the Summer of 2011.

2012 saw Visa debut V.Me at ETA, but has yet to make a push as a Mobile Wallet. PayPal, though it debuted a Digital Wallet in the Fall of 2011 and has showed us two alternative ways to pay, but has yet to debut a Mobile Wallet in the USA. PayPal has however shown us a preview of their Mobile Wallet plans in the UK.

This past Summer, Levelup and Kuapay showed us how to sprint with flair and relevance. After a Spring announcement, MCX revealed it's identity as a Merchant Coalition Mobile Wallet. Dunkin Donuts also got into the race and is powered by Corfire. And Moneto just recently announced it's Mobile Wallet works with PayPass. 

Will Apple's Passbook, teamed with the iphone5 (with NFC) and iO6 soon become a Mobile Wallet? 

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NFC and 2D Lead the Way to Scale Mobile Wallets, but is there a Black Swan?

By Randy Smith, Mobile Wallet Media
Monday, September 10, 2012



Scalability - Week 7 of 7-Week Series

The less barriers to adoption and the more universal or "Future-Proofed" solutions are, the greater the chance of adoption by all tiers and types of stores. The biggest winners will be the solutions that are ubiquitous as cards are now.

Retail commerce has never been at such an exciting time as now, nor has is been at such a technological crossroads. In the late 90's it was e-commerce, loyalty and gift cards that retailers and service providers were busy implementing. Now a mirror-image of the 90's is being re-enacted with the goal of enabling mobile to replace plastic and paper cards & coupons. With literally next to zero infrastructure in place to date, the solutions that can move fastest, in their move to mobile, will win the most market share. View rest of article at MobileWalletMedia.com.

The Mobile Wallet Olympics Have Begun!

By Randy Smith, Mobile Wallet Media
Monday, August 27th, 2012


This is week 5 of a 7-Week Series: The 7 S's Required for Success in Mobile Payments

Let The Games Begin!

Time is money in business and retail and possibly even more so with Mobile Wallets. The wallets that will make the biggest impact will be the one's with the most transaction SPEED at Point of Sale and most easily and seamlessly integrated with POS.

During and since the London Olympics, a fast and furious slate of news about Mobile Wallets strolled across our screens seemingly every other day. With all the pomp and positioning on par with the actual Olympics, I believe the 'Opening Ceremony for the Mobile Wallet Olympics' has officially taken place.  But rather than just two weeks of competition, the 'Mobile Wallet Olympics' will play out over the next 2-4 years.

The race for victory in mobile payments is much like the actual Olympics. In the actual Olympics there are a multitude of athletes, events and countries with clear-cut favorites and the underdogs, of which we love to see both win medals. With the Mobile Wallet Olympics, rather than people and countries competing for medals, there are products and companies competing for market share vs. medals. The top 3 companies that end up on the medal stand will garner most of the money and market share, but like those that make it to the finals in the actual Olympics, there will be victory and rewards to share in as well. And of course there will be many companies partnered to support and give their marque product, their Mobile Wallet, the best chance for success.

In replacing our good old friend the 'Mag-Stripe Card,' mobile payments cannot be slower. At POS the NFC Tap and the 2D bar code scan appear to be the clear front runners. Either of these mobile payment methods seem to be just as fast as cards or cash.

For Mobile Wallets to succeed they need SPEED of adoption and integration. The more simple, more options and more reasons merchants have to adopt technology, the more likely they will do so. Be it Usain Bolt or Michael Phelps in recent Olympics or Dale Earnhardt Jr. of Nascar on the race track, less drag and better mechanics are two key differentiators that set them apart from the rest. Of course a high level of talent must serve as the foundation for success to redeem these benefits. A merchant without a 2D bar code reader rigged for coupons or payments will soon be requirements to compete in market that is getting ever faster and efficient.

For readers not akin to sports analogies, please forgive me as I am a avid sports fan and ex-athlete (football, basketball, volleyball, hockey and baseball). Hopefully it still helps with perspective and vision.

For a POS mobile payment method to become a standard, the easier and more quickly it is for merchants to integrate, may make all the difference. Right now is seems that 'NFC is the turtle and the 2D bar code is the hare' in the race for standardization, but this race will tighten as more reasons are added for merchants to adopt new NFC or 2D bar code equipped terminals.

I found a good summary article, describing 'Future-Proofing' payment terminals. This article by MerchantAccountGuide.com, quotes Mike Duffy, president of Chase Paymentech: "As emerging payment options gain adoption in the U.S., merchants are looking to make the customer check-out process as easy and safe as possible. The Future Proof terminal is a one-stop solution for merchants to keep accepting today's forms of payment and prepare for new consumer payment preferences on the horizon."

While Chase and Verifone lead the market in showcasing of 'Future-Proofed' terminals, Merchant Account Guide describes Merchant Wherehouse's terminals as follows:

"The company introduced its "agnostic" Genius platform, which can be integrated into any POS system, regardless of device or operating system. Like Verifone and Chase, Merchant Warehouse has also been throwing around the "future proof" label. And it claims that Genius can "integrate every conceivable transaction technology, payment and type and customer engagement program" -- including  NFC, EMV, QR codes and mobile payments, as well as loyalty, gift and reward programs."

In my opinion the 'Four Horseman' of the Future-Proofed terminal must include the following types of readers: 1) EMV, 2) NFC, 3) 2D bar code and 4) mag-stripe. Of course 2D bar code readers are an investment ($150 - $300 each) some retail merchants have already made. It's my strong bet that many more of the Mobile Wallet apps will use, like Starbucks and LevelUp, the display of a 2D barcode to enable mobile payments. If the payment terminal has a 2D scanner, it will be able to capture the card credentials, actual or tokenized, and process the transaction with any POS system, without integration.

A 5th horse in the race for alternative payments may very well be Pay-Pal's 'In-Store Checkout's Mobile Number + PIN' solution. I know I said in my last article this solution, "as is," is not secure enough to scale without massive potential for fraud, but I think they will soon rectify this problem. When they do, this will be a very convenient and secure product.

Most POS software allows for configuration of their software to scan 2D bar codes for the purpose of payment. This is already being done with gift cards. However, is there enough value for the merchant to buy and configure their software to do as such if they have not already done so? Well, with Square and LevelUp already processing their mobile transactions as such, I think there might be. An additional question that must also be asked is:"Will there be added difficulties to connect closed loop with open loop or the proprietary Mobile Wallet platform? I believe that the 2D bar code will become a standard for processing mobile payments and that all Mobile Wallets must have a 2D bar code display option to process payments.

Future of Mobile POS
I believe 2013 is going to be a huge year of adoption of mobile POS solutions. This is due to the perfect storm of mass adoption of smartphones, payment apps and ipad mobile POS solutions that increase speed, convenience of checkout for merchants and consumers alike. Plus mobile POS checkout can also enhance margins for merchants and discounts for consumers. All the momentum in the media with major retailers like JCPenny and Starbucks making moves to fully embrace mobile POS and payments, will readily move the adoption meter to include Tier 2 and 3 stores. Don't be surprised if you see signs at the mall this Fall featuring mobile payments during our first 'Mobile Christmas.' It is prime time to be in the retail POS industry!

Merchant service providers or resellers need to provide case studies or paint the picture how employee costs may be cut by improved SPEED of order processing and checkout combined with the opportunity to "up-sell customers." I see mobile POS being used to accomplish both by extending the reach and capacity for order-taking and checkout.

In restaurants, mobile POS enables a server to add an order in seconds without duplication, delay or increased chance of errors. The time freed up for servers will enable ample time for up-selling and providing better service, thus consumers will be more satisfied and more likely to return sooner and more often. At a busy night at the bar, a "line-busting" mobile order capability could increase orders by 15-30% or more. Bottom line is adding Mobile POS technology can cut employee costs and enhance service and sales.

Merchants can effectively market these solutions by tying to loyalty and 'Offers tied to enrollment.' Smartphones and tablets are everywhere now and "Cool, Convenient and Savings" is the way to sell. The new mobile channel will move to eventually tie all campaigns under one coherent marketing umbrella. Loyalty programs tied to paper or plastic have long restricted the adoption rates of consumers. Who wants to carry around a card for every store they frequent? Merchants may empower their customers to "Go Mobile and Earn Special Rewards." Once customers are on a Mobile POS or Mobile Wallet platforms, merchants are enabled to extend personalized offers based upon past order history or proximity offers using GPS and coherently tie to all other marketing channels.




About Mobile Wallet Media
Mobile Wallet Media is a news media, analyst, marketing and consulting firm focused on the future of mobile: payments, marketing, loyalty commerce, security, prepaid, virtual currency, daily deals and the convergence of them all with social and local. The Chief Editor, Randy Smith, was the primary founder, inventor and former CEO of MobilePayUSA, a TechCrunch Disrupt Award Winner.