ePayments Week: Mobile payments target the point-of-sale

Google offers NFC stickers, Square branches out, banks improve transfers.

Here’s what caught my attention in the payment world this week.

Google opens its Wallet

Google WalletGoogle’s long-awaited digital wallet appears to borrow a page from Bling Nation, one of the big names in last year’s mobile commerce story. Bling’s system, you may remember, worked by attaching an NFC-enabled sticker on the back of phones. Users could then tap the phone onto specialized hardware (the Blinger) at the register and Bling could debit the user’s PayPal account to pay the merchant. Bling tried the program out in Silicon Valley and San Francisco (and later Chicago), but others in the payments community poked some fun at the kludge factor of attaching a BlingTag onto the back of your phone.

Unless you have a Sprint Nexus S 4G on Sprint, you’ll be attaching an RFID tag onto the back of your phone if you want to try out Google Wallet this summer. Google Wallet is an Android app, so presumably even though the RFID hardware is a sticker, the system won’t work on any non-Android phones. Even so, Google should be applauded for getting its program rolling without having to wait on the handset makers.

Google Wallet partnerships are limited right now (you can pay only with a Citibank Mastercard or a Google Prepaid card) and you have to find a MasterCard PayPass terminal to tap and pay. Google says it’s shaking the program out in San Francisco and New York initially and plans to broaden the scope later this summer. Ryan Kim on GigaOm has a good write-up detailing Google’s partners in the effort and the likely gains to NFC as the dominant mobile payment platform.

Just as Bling did, Google is pinning the hopes of its payment system to users’ interest in loyalty programs and rewards. Google plans to bring its own Groupon-like daily offer to a wide audience after its current trial in Portland, Ore., and it will integrate those discounts and others into the tap-and-pay scheme where that works.

Square and PayPal at the register

Payment companies are converging at the cash register — the point of sale, or POS in payments lingo — to try to bridge the gap between what they know about us online and how they can make the most of that offline. The various check-in services that some of us have been playing around with for several years now (Foursquare, Gowalla, Facebook Places) can be considered a sort of dry run — an attempt to answer the question, “Will mobile users consent to third parties knowing where they go in exchange for small rewards?” The answer for many seems to be “yes,” and rewards are hardly necessary.

Square Card CaseAmong payment companies, Square has always been firmly rooted in the physical realm, with its plug-in dongle for swiping credit cards and its focus on small merchants that need to accept credit card payments in person. This week Square reached beyond its merchant base to offer something to the buyers: Card Case. Card Case sets up a directory — visually, it’s a “wallet” with cards in slots — of frequently visited merchants within the Square app on your Android or iPhone. The idea is that, after an initial setup you’ll run something like a tab at your favorite spots and can pay just by telling them your name and then confirming the process with your phone. (Fast Company reports on their experience trying out the service.) There’s a nice data payoff for both sides: the buyer gets a handy little record of how much they’ve spent at their favorite, Square-enabled spots; the merchant gets analytics from Square about their customers.

Card Case looks kind of cool, especially to those of us who increasingly rely on our digital trail to remember what we’ve done and to verify that fun was had. But there’s no getting around the uncomfortable truth that, for the level of transaction Square is pitching, it may be more hassle than handing over $3 for your coffee. Still, it’s an encouraging sign that Square is after something more than a simple cut of the small merchants’ credit card transactions. As Square COO Keith Rabois told Fast Company, they’re hoping to “create magical experiences” and they’re tuned into the connection between good design and consumers wanting to come back for more.

But just as we use different payment methods for different purposes — cash for our cappuccino and a mileage card for our monthly membership fees — it seems like there will always be room for multiple payment systems online, too. And maybe that’s why PayPal spokesperson Anuj Nayar didn’t seem too worried in an interview with Fast Company (Square is on track to process $1 billion in payments this year; PayPal processed $92 billion last year).

As Square moves closer to PayPal’s online customers, PayPal is moving into the physical retail space to meet the challenge. As we’ve reported previously, PayPal’s acquisitions of GSI, Where, and Fig Card this year help put it in a position to do that. A blog post earlier this month by Sam Shrauger, PayPal’s vice president of global product and experience, says they plan to be at the retail point of sale by the end of this year. If Square can boost the speed of adoption beyond coffee shops and farmers markets, it might just meet PayPal at the POS.

US banks try out PayPal-style money transfers

clearXchangeThree major banks announced an initiative that copies PayPal’s system for sending person-to-person payments with just an email address or phone number. Bank of America and Wells Fargo have been testing the system, called clearXchange, among customers in Arizona, according to the Los Angeles Times, and now they plan a larger national roll-out with Chase joining the effort. In doing so, the banks are trying to catch up not only with PayPal, which has offered a similar system among its customers for several years, but also with mobile banking systems like M-Pesa, Safaricom’s similar service in Kenya.

Reuters’ financial correspondent Felix Salmon has a great write-up that gives a broad perspective of clearXchange’s place among other money transfer services, from the banks and from challengers like PayPal and Square. His hope is that they all remain competitive to keep services like clearXchange more or less free (like sending checks) rather than loaded with lots of little fees (as some debit cards have done). The competition from web-native services is clearly on the minds of bank executives, as evidenced by a comment attributed to John Feldman, a Bank of America executive in charge of the program. The LA Times says Feldman believes consumers will feel confident in the security of the program because it relies on email addresses and cell phone numbers rather than old-school account and routing numbers.

Got news?

News tips and suggestions are always welcome, so please send them along.


If you’re interested in learning more about the payment development space, check out PayPal X DevZone, a collaboration between O’Reilly and PayPal.

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  • George K.

    Speaking of Bling, what happened? Places that accepted them have taken away that capability. No one seems to know what happened.

  • http://www.youtube.com/watch?v=IilfQXVVUNQ tony

    wow the banks are just figuring out paypal’s style? the interent has been around for a long time, they shouldve figured it out years ago

  • http://gumption.typepad.com Joe McCarthy

    Back in 2005, I remember reading about KDDI, Oki Electric and iNAGO Start Testing Mobile Phones with Electronic Tag Readers (i.e., phones with RFID readers vs. RFID tags). I don’t know what became of such efforts, but putting the reader vs. the tag on a phone offers an interesting variation on not just the technology but issues such as power and privacy.

  • Matthew Smith

    Mobile payments have attracted tons of buzz over the past year, but even with all the hype, the tough rules of business apply, particularly for those companies that can’t find the right niche or powerful cheerleaders, or run afoul of stringent regulations. Mobile payments have intricacies that are more complex than e-commerce or social media, there’s nuance with regulations, currency exchange, languages for the website, tax handling, remittance, reconciliation and other factors. It’s far from easiness of cash advance applying.