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Commerce Weekly: Mainstream mobile payment a decade out?

Don't toss out your leather wallet just yet, Wal-Mart is innovating, and Project Oscar is a go.

Here are a few stories that caught my attention this week in the commerce space.

Gimmick to mainstream — the difference a decade can make

With Square teaming up with Starbucks, PayPal partnering with major chains like Home Depot and McDonald’s, and all the hype and speculation around the new iPhone having or not having NFC to facilitate payments for Passbook, mobile payments are getting a lot of ink. But when will mobile payments be fully mainstream? Not for at least 10 years, writes Christina Bonnington this week at Wired. Bonnington points to slow adoption and infrastructure holdups as the major bottlenecks:

“Forrester Research estimates only one-fourth of U.S. consumers will own an NFC-enabled phone by 2016, with 100 million shipping in 2012. Until a solid majority of consumers own such devices, merchants have little incentive to create an infrastructure as receptive to smartphone payments as it is to cash and credit cards.”

Bonnington notes that credit card companies are pushing for merchants to upgrade their systems to accept contactless payments, but as analyst Mark Hung told her, this alone could take up to a decade. Bonnington points out that even after that happens, mainstream mobile payments will still face obstacles similar to those that credit card payments face now: competing platforms that force consumers to carry multiple credit cards to accommodate merchants who accept MasterCard and Visa but not Discover, for instance. Imagine a merchant accepting PayPal and whatever Apple develops but not Google Wallet or Isis. Adding to the chaos, processing fee distribution between banks and hardware/software developers will need to be sorted out, she says, as will agreements on how data gathered via mobile payment will be handled.

In a similar vein, Chris Ziegler at The Verge also argued this week that mobile payments are not ripe for the mainstream and pointed to the ultimate hurdle: consumer frustration and distrust. Ziegler shares a personal experience that highlights the cumulative result of the issues Bonnington noted together with the unreliability of cellular networks: even mobile payments in stores that are set up to accept them don’t always work. Until mobile payments become as reliable and ubiquitous as cash and credit cards, he argues, they’ll remain a gimmick.

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Commerce Weekly: Mainstream mobile payment a decade out?

Don't toss out your leather wallet just yet, Wal-Mart is innovating, and Project Oscar is a go.

Here are a few stories that caught my attention this week in the commerce space.

Gimmick to mainstream — the difference a decade can make

With Square teaming up with Starbucks, PayPal partnering with major chains like Home Depot and McDonald’s, and all the hype and speculation around the new iPhone having or not having NFC to facilitate payments for Passbook, mobile payments are getting a lot of ink. But when will mobile payments be fully mainstream? Not for at least 10 years, writes Christina Bonnington this week at Wired. Bonnington points to slow adoption and infrastructure holdups as the major bottlenecks:

“Forrester Research estimates only one-fourth of U.S. consumers will own an NFC-enabled phone by 2016, with 100 million shipping in 2012. Until a solid majority of consumers own such devices, merchants have little incentive to create an infrastructure as receptive to smartphone payments as it is to cash and credit cards.”

Bonnington notes that credit card companies are pushing for merchants to upgrade their systems to accept contactless payments, but as analyst Mark Hung told her, this alone could take up to a decade. Bonnington points out that even after that happens, mainstream mobile payments will still face obstacles similar to those that credit card payments face now: competing platforms that force consumers to carry multiple credit cards to accommodate merchants who accept MasterCard and Visa but not Discover, for instance. Imagine a merchant accepting PayPal and whatever Apple develops but not Google Wallet or Isis. Adding to the chaos, processing fee distribution between banks and hardware/software developers will need to be sorted out, she says, as will agreements on how data gathered via mobile payment will be handled.

In a similar vein, Chris Ziegler at The Verge also argued this week that mobile payments are not ripe for the mainstream and pointed to the ultimate hurdle: consumer frustration and distrust. Ziegler shares a personal experience that highlights the cumulative result of the issues Bonnington noted together with the unreliability of cellular networks: even mobile payments in stores that are set up to accept them don’t always work. Until mobile payments become as reliable and ubiquitous as cash and credit cards, he argues, they’ll remain a gimmick.

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Commerce Weekly: Google Wallet vs Apple Passbook

Google gears up to compete with Apple, a look at the effect of technology on currency, and a wallet competition roundup.

Here are a few stories from the commerce space that caught my attention this week.

Google prepares its Wallet to compete with iOS 6

Robin Dua, Google’s head of product management for Google Wallet, participated in a video interview (embedded below) this week to talk about Wallet features and plans. Technology reporter Cromwell Schubarth notes in a post at Silicon Valley Biz Blog that the future plans for Google Wallet look a lot like Apple’s newly announced Passbook that’s due to release in iOS 6 this fall. Schubarth quotes Dua:

“‘One of the types of things we’re trying to do is make it easy for airlines, transit providers, and other types of issuers of credentials to make it super simple for them to get their credentials stored in the wallet,’ Dua said. ‘That’s the goal. We want you to be able to leave your leather wallet at home and carry your phone and transact with that as your primary transaction device.”

Dua said they plan for the Wallet to hold credit cards, loyalty cards, IDs and things like boarding passes and transit passes. Very much like Apple’s description of Passbook.

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Commerce Weekly: Bringing mobile payment to the mainstream

PayPal snags two big partners, NFC is in the "Trough of Disillusionment," and a look at mobile commerce trends.

Here are a few stories that caught my eye this week in the commerce space.

The race is on

Earlier this month, mobile payment company Square teamed up with Starbucks to bring mobile payment to the coffee mogul’s 7,000 locations and millions of customers. This week, PayPal stepped up its game with two announcements. First, according to a report at Reuters, the company confirmed rumors that it’s running a mobile payment test with fast food giant McDonald’s at 30 of its locations in France.

Alistair Barr describes the program in the Reuters report, explaining that customers can order lunch on their smartphones or online, pay with PayPal, and pick up their orders in a separate line. McDonald’s has more than 30,000 locations worldwide — landing this partnership not only could catapult PayPal ahead of Square in the mobile payment race, but it will bring mobile payments to the everyday lives of the masses, further mainstreaming the idea of mobile wallets and mobile payment.

Upping the ante further, PayPal also announced a partnership with Discover that, according to Ryan Kim’s report at GigaOm, will bring PayPal payments to some seven million U.S. merchants. Through the deal, Discover will integrate PayPal’s payment system into its point-of-sale software, which alleviates involvement and investment from merchants. During its launch, planned for April 2013, the system will be a bit clunky, but it’s expected to smooth out quickly thereafter — Kim reports:

“At launch next year, PayPal users will be able to pay with a PayPal Access Card, which connects to a PayPal account and can be funded from a bank account or credit card. Users will be able to use the card in conjunction with a PayPal mobile wallet app, which will deliver e-receipts, offers and other services. But a few months later, PayPal users will be able to pay directly through point-of-sale terminals by entering in a PIN or phone number or by authorizing a payment through their mobile app after sharing their location with the merchant. That will eliminate the need for any cards or traditional wallets and will enable consumers to get the benefits of a digital wallet to receive offers, track spending and tap into loyalty programs.”

PayPal’s VP of retail services Don Kingsborough told Kim this deal with Discover will be “key in achieving ubiquity” to help facilitate consumer adoption.

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Commerce Weekly: U.S. merchants take on mobile payment

U.S. retailers launch a mobile payments network, tech is driving the future of shopping, and East vs West Coast shopping stereotypes.

Merchants enter mobile payment arena

With mobile payments on the brink of booming, everyone is angling to get in the game, from payment companies like PayPal and Square to mobile carrier ventures like Isis and Vodaphone to Internet giants like Google. This week, a group of U.S. retailers announced they were taking payment matters into their own hands and planning a joint merchant mobile payments network called Merchant Customer Exchange (MCX). And there are some big players involved.

Robin Sidel at The Wall Street Journal reports that 14 merchants have signed on so far, including Wal-Mart, Target, Best Buy, 7-Eleven, and Lowe’s. Wal-Mart corporate VP and assistant treasurer told Sidel, “We’re open to all partners, but it has to be beneficial to member merchants in a way that improves the system and doesn’t layer on additional costs.”

Saving money appears to be one major motivator behind the new network. Ryan Kim at GigaOm asserts that member merchants are setting themselves up to save money in multiple ways. He writes:

By banding together, they may be able to get better interchange fees from the credit card networks. And in a mobile wallet, they may be able to steer consumers to use their own issued cards or prepaid gift cards. And if an issued card is pulling funds directly from a bank account, they can avoid card fees. You might see retailers offer deals on the spot for consumers who fund a purchase using their bank account through their mobile wallet.

Kim also notes that by launching their own system, the retailers will retain control over their own data and keep it out of third-party hands, pointing out that “Google, for example, is trying to get at the purchase data through Google Wallet.”

No launch date has yet been set for MCX, and Sidel reports that the search for a CEO is underway.

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Commerce Weekly: Starbucks gives Square’s mobile payment a big push

Commerce Weekly: Starbucks gives Square’s mobile payment a big push

Square and Starbucks unite, same-day delivery from eBay and checking in on the mobile wallet wars.

Here are a few stories that caught my attention in the commerce space this week.

Square gets Starbucks, cash and Howard Schultz

SquareSquare announced a new partnership with Starbucks this week. Peter Ha at TechCrunch reports:

“Beginning this fall, Square will begin processing all U.S. credit and debit card transactions at participating Starbucks stores across their 7,000 locations. Pay with Square users will be able to find a nearby Starbucks in the Square Directory from their iPhone or Android smartphone.”

Ha notes in his post that as part of the partnership, Starbucks also is ponying up $25 million in series D funding for Square and offering up its CEO, Howard Schultz, to serve on Square’s board of directors.

Harry McCracken points out in a post at Time Techland the partnership will put Square in a much better position to compete on the mobile payment front. McCracken writes:

“At the moment, Pay with Square is accepted at around 40,000 locations — mostly neighborhood businesses such as independent coffee shops, restaurants and beauty salons. The agreement with Starbucks will put it in a major nationwide chain for the first time, and therefore puts it in closer competition with Google Wallet, which is already accepted at Home Depot, Office Depot, Starbucks rival Peet’s, Macy’s, RadioShack, 7-Eleven and other major merchants.”

Another important aspect of the agreement is that Starbucks will promote other local Pay with Square merchants “from within a variety of Starbucks digital platforms, including the Starbucks Digital Network and eventually the Starbucks mobile payment application.” As Ha notes in his post, “this catapults Square into the mainstream consciousness for the millions of drones who drop by their local Starbucks on the way to work.”

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Commerce Weekly: Apple buys into NFC security

Commerce Weekly: Apple buys into NFC security

Apple to buy AuthenTec, PayPal teams up with a newspaper, and Google puts its Wallet in the cloud.

Here are a few stories that caught my attention in the commerce space this week.

Apple looking to secure NFC?

Further fueling the rumors the next gen iPhone will include NFC (there hardly seems to be much doubt at this point), Apple announced this week that it will shell out more than $350 million to buy AuthenTec, a technology company that, as Poornima Gupta and Sinead Carew at Reuters describe, “provides mobile security software licenses to companies like Samsung, and fingerprint sensor technology to computer makers such as Hewlett-Packard Co and Dell Inc.”

As with most things Apple, much speculation ensued as to what this pending purchase will mean for the next iPhone. As noted in the post at Reuters, AuthenTec’s fingerprint sensors are used in mobile phones in Japan to authenticate mobile payments. Erica Ogg at GigaOm runs through the evidence pointing to a pending “iWallet,” including: the launch of Passbook; the 400 million credit cards stored in iTunes; and the fact that “[o]ne of [AuthenTec's] key products is an NFC chip with on-chip encryption, which is designed specifically for mobile payments.” Ogg notes that it’s possible Apple purchased the company so its competitors couldn’t, but points out that “AuthenTec is considered a leader in the secure mobile payments field.”

After the recent NFC hacking demonstration at Black Hat, Apple’s intended acquisition of AuthenTec has also fueled speculation that Apple is looking to provide a level of NFC security that nobody else has. Ian Paul at PCWorld points out that “AuthenTec’s expertise could help Apple bolster the security of any NFC feature it implements. This would also make the iPhone and iPad more appealing to security-conscious IT managers at large corporations.”

Mobile payment conjecture aside, Maribel Lopez at Forbes argues that, sure, Apple could use this company’s technology to help advance the “stalled” mobile payment market in the U.S., but the potential of the technology goes far beyond a mobile wallet. Lopez points out it can be used to manage and verify digital identities, a function that, she argues, will become an inherent part of daily life as services become “people-centric, but device and network agnostic”:

“The future is contextual identity that will be based on multiple factors, including location, device, username/password and possibly biometric authentication. … Fingerprinting recognition in Apple devices could unlock a new age of usability where each user’s preferences and customization could be retrieved by simply pressing a finger on a screen. This could also be combined with the next generation of Siri to enable seamless navigation with voice. The post-PC world needs a new set of navigation and identity tools. It’s clear that Apple is trying to build this via home grown products and strategic acquisitions.”

Lopez’s piece is this week’s recommended read — you can read it in its entirety here.

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Commerce Weekly: Square disrupts, PayPal shrugs

Square's frictionless payment doesn't worry PayPal, NFC gets hacked, and mobile payments head to the Olympics.

A look at Square’s new payment app and why PayPal isn’t concerned, an NFC security hack is demoed at Black Hat, and Visa takes mobile payments to the 2012 Summer Olympics. (Commerce Weekly is produced as part of a partnership between O’Reilly and PayPal.)

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Commerce Weekly: Amazon chases immediate gratification

Commerce Weekly: Amazon chases immediate gratification

Amazon's business strategy is showing, JC Penney CEO drops strategy bomb, and PayPal's strategy turns mobile.

Changes of heart in its war against state taxes illuminates Amazon’s next strategy, JC Penney will have mobile checkouts by the end of 2013, and PayPal acquires Card.io (Commerce Weekly is produced as part of a partnership between O’Reilly and PayPal.)

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Commerce Weekly: Paydiant’s white label mobile wallet gets Series B funding

A brand-agnostic mobile wallet gets $12 million, an argument that mobile will revolutionize retail, and Apple gets an iTravel patent.

White label mobile wallet platform Paydiant gets Series B funding, PayAnywhere’s CEO argues mobile is the biggest thing to hit retail since Visa, and Apple’s (presumed) inclusion of NFC may not (initially) be used for a mobile wallet. (Commerce Weekly is produced as part of a partnership between O’Reilly and PayPal.)

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