Commerce Weekly: Facebook finds a mobile commerce partner

Facebook looks to make mobile pay, Google Wallet's security problems, and shopping on subway walls.

Here are a few items that caught my eye this week.

How will Facebook cash in on mobile?

Facebook logoWith Facebook’s public filings ahead of its imminent IPO, we know now that advertising accounted for 83% of its revenue of $3.71 billion in 2011. But we also know that almost none of its revenue came from mobile users — which is a bit of a problem since mobile users are an increasingly large part of Facebook’s user base. Facebook members have embraced mobile apps on smartphones and tablets, and Facebook has encouraged their use by developing and releasing apps that deliver a UI experience that is, in some ways, superior to the traditional browser-based interface.

Now, Facebook has to figure out how to make mobile pay. A deal signed this week with mobile payments firm Bango aims to help. Bango provides mobile payment services and direct billing to carriers (like Boku and BilltoMobile), so that the cost of buying things on your mobile shows up on your mobile bill. That seems like a convenient way to buy, and such services have sometimes touted themselves for nobly serving “the unbanked” — even if many of those unbanked are largely American teenagers who use the services to buy virtual goods in games. The drawback is that mobile carriers have been lukewarm to the systems because they worry about customers seeing huge mobile phone bills and complaining or switching, even if what they’re seeing is made up of virtual poker chips and Smurfberries. Direct billing services have helped the carriers get over these anxiety by giving them a cut of the revenues much greater than most payment providers get, often as high as 33%.

There’s no word yet on how Bango and Facebook will manage payment or what percentage of those payments will go to the telecoms. But we can imagine what goods will be sold: Facebook Credits, as Facebook last year began insisting that mobile game providers sell their virtual goods using only Facebook credits. But I would expect Facebook’s position on Credits to evolve as mobile commerce grows on the site. It’s one thing to force users to buy Credits so they can be dispensed within social games; it seems unnecessary when consumers are buying a wider range of digital (or physical goods) throughout their Facebook experiences, and a restriction that could limit the potential. As long as the mobile carrier is taking a cut, why couldn’t Facebook take a cut as well, without having to force Facebook’s virtual currency into the equation?

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Google Wallet’s glitches

Google Wallet is stumbling through some embarrassing growing pains as it comes under the scrutiny of white-hat hackers who are finding and publicizing security flaws. Engineers at Zvelo developed a Google Wallet Cracker app that appears to be able to break Google Wallet’s encryption in seconds. Google is working to find a solution for the glitch, which exposes users’ Google Wallet PIN numbers on rooted Android phones. Kate Knibbs at Mobiledia writes that the breach “validates Verizon’s decision to block Google Wallet on the Galaxy Nexus,” due in part to its concerns about security on the Android platform.

Meanwhile, over at TheSmartPhoneChamp.com, there’s a video that highlights another security flaw in the phone. Since the Google prepaid account option within Wallet is tied to the device, not a separate Google account, someone who finds the device can open the Wallet app, clear the data, and then re-launch the app. Although the “new owner” will need to enter a PIN, the old prepaid Google account is still tied to that smartphone. I’m not certain how big a hole this is because I have no idea how much people store on their prepaid accounts — though I would hazard a guess it’s not more than $300. All right, so nobody wants to lose $300, but it’s not like being upside down on your mortgage.

Add to these issues the growing awareness that malware and crapware are a problem on the mobile side. To fight the malware problem, Google developed Bouncer, a program that scans for malware and spyware on Android apps. To keep out known troublesome apps, the service performs a malware and spyware scan on all submitted material. It also uses behavioral analysis to determine if a given app is trying to do something suspicious. Google doesn’t stop there; it also performs fraud and abuse detection to ban and remove malware writers posing as legitimate developers. Google says it’s already deployed the service and has seen a 40% drop in “potentially malicious downloads” thanks to it.

What would you buy with a QR code?

PayPal has launched a pilot with “shopping walls” in subway stations in Singapore, where you can purchase stuff by snapping a pic of the QR code while using a PayPal app on a smartphone (see a shopping wall in action here). It looks like a swell way to get some of your Valentine’s Day shopping done while you’re waiting for the Circle Line. Another nifty experiment would be ordering dinner from a shopping wall while waiting for your train in one station, so that it would be ready for you when you exit another. Snap the QR codes of the meals you want and checkout with PayPal. The system could even be smart enough to know when you’ll pick it up, based on the station you ordered from. And there’s no question of the food going to waste: The restaurant has your money and your mobile number.

That’s my idea — and I freely admit that it’s just because I’m late for dinner. Let me know if you’ve seen anyone selling meals or other interesting items via QR codes.

Got news?

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


If you’re interested in learning more about the commerce space, check out DevZone on x.com, a collaboration between O’Reilly and X.commerce.


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  • http://www.miteksystems.com/ Mobile Commerce

    This was a great article. I never knew that Mobile Commerce would have an impact on Facebook. I thoroughly enjoyed what you had to say and your insights…