You might have noticed I’m not David Sims, who has been writing this weekly payments column since its inception. David’s talents now are required elsewhere, and I am delighted to have the honor of highlighting news from the payment space for you going forward. And now, onto the commerce stories that caught my eye this week.
Facebook buys into e-commerce
Continuing its startup shopping spree, Facebook late last week acquired Tagtile, a customer loyalty and direct marketing startup that blends social engagement for the consumer with custom direct marketing for the retailer. In a recent post for ZDNet, Eileen Brown noted that with its pending IPO, Facebook will need to look beyond ad revenues to satisfy shareholders:
“Ad revenue brings in over 83 per cent of the $3.71 billion total revenue reported. The potential for this revenue stream to fail is just too great … After IPO, Facebook must diversify its revenue streams. And the only way it can currently do this is through online games and e-commerce.”
This latest acquisition is a clear move in the e-commerce direction. Emil Protalinski at ZDNet described how Tagtile works:
“You walk into a store, tap your phone against the Tagtile Cube … and you get discounts or rewards. Customers have to first download the Tagtile app … which pushes targeted marketing material to their smartphone based on stores they visit. The Cube meanwhile provides data to help businesses pinpoint marketing efforts that work.”
“Data” is the key word there — if Facebook has anything to sell, it’s data, and if Tagtile has an organized system to manage and analyze consumer data, there’s no need to reinvent the wheel. Brown pointed out in a later post that “[Facebook] needs to be able to mine its data stores to identify trends in customer spending to sell on to its business partners … [It] needs to be able to bundle a solution to sell to brands who want to tap into Facebook’s store of data for closer customer connections.”
Apple is ripe to disrupt the payment space
Jason Calacanis (@jason) argued over at Launch that “Apple will become a trillion-dollar company based not on iPads and Apple TV, but payments.” His argument follows the line of why Apple (and Amazon, for that matter) are so successful: convenience and ease of use. Not to mention, Apple likely already has the data:
“Buying apps is easy and we do it all day long — on iOS at least — because our credit card number is already in the device … Buying on Amazon is easy and we do it all month long — because our credit card number is already stored … The person with hundreds of millions of stored credit cards wins big. There are only two people on the planet who have stored over a hundred million active credit card numbers that I can think of: Apple and Amazon.
One is in commerce and one isn’t — yet.”
There has been much speculation (going back a couple of years) about when and how Apple will enter the mobile payment space, but many agree the disruption that will occur in the payments space when it does happen will be profound. Likening Apple in the payments space to a “PayPal on steroids,” an analyst told Computerworld in January that “[Apple has] 160 million users with digital wallets in iTunes accounts. They don’t have to do anything other than to NFC-enable their phones.”
Calacanis points out the flipside to that — Apple not only could corner the payments market, but also further secure its place in the smartphone market:
“Start doing the math and it gets scary: Apple would have massive margin, and vendors who didn’t accept iPhone payments would be at a massive disadvantage the same way folks who didn’t take credit cards were in the 70s and 80s.”
His piece is well worth the read.
The future of money is mobile
Two surveys and a study this week shed some light on the current state of mobile money and what the future may look like. E-commerce company RichRelevance conducted a study of 4.4 billion mobile shopping sessions that took place between April 2011 and March 2012. As pointed out on Payments.com, the study found that “shoppers on their iPads account for 89 percent of all dollars spent through mobile shopping sessions.” You can view the study infographic here.
Click here to see the entire infographic.
And though, based on the graphic above, it seems people are becoming more comfortable purchasing TVs with their iPads, a survey (PDF) conducted by the Federal Reserve showed they’re a bit more reluctant to conduct their banking via mobile devices. Ann Carrns at the New York Times took a look at the study and reported that “many consumers still don’t see the need for mobile banking, and many also are skeptical of the level of security around banking with their phone.” She also noted a statement made by Sandra F. Braunstein, director of the Fed’s division of consumer and community affairs, to the Senate banking committee in March: “Specifically, consumers expressed concerns about hackers gaining access to their phones and exposing their personal financial information.” You can view the full Federal Reserve survey report here (PDF).
A survey conducted by Elon University’s Imagining the Internet Center and the Pew Research Center’s Internet & American Life Project found that, regardless of any current fears or hesitations, the future of money is definitely mobile. In answering “What is the future of money?” the survey found that 65% of 1,021 “Internet experts and other Internet users” agreed with this statement:
“By 2020, most people will have embraced and fully adopted the use of smart-device swiping for purchases they make, nearly eliminating the need for cash or credit cards. People will come to trust and rely on personal hardware and software for handling monetary transactions over the Internet and in stores. Cash and credit cards will have mostly disappeared from many of the transactions that occur in advanced countries.”
You can view the full survey report here.
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