Square gets a bigger office, embraces Canada and plans to double its staff. Also, PayPal Here, Isis, Apple and Google Wallet news.
Here are a few stories that caught my attention in the commerce space this week.
Square gets international, plans major growth; PayPal Here hits retail
Square made a couple of big move announcements this week. First, the company literally will move to a new office space in the Central Market area of San Francisco by mid-2013, according to a report by Leena Rao at TechCrunch. Rao notes that the company has grown to more than 400 employees and reports Square plans to expand its staff to almost 1,000 people before the end of 2013.
Square also announced this week that its service is now available in Canada, at the same 2.75% rate it charges in the U.S., according to a report by Ingrid Lunden at TechCrunch. Lunden reports one of the obstacles for Square in Canadian as well as European markets is that its dongle depends on the magnetic stripe on the backs of credit cards; many credit card processes in these markets use a chip-and-pin system instead.
The obstacle isn’t insurmountable, however, as Lunden notes, Square’s partnership with Starbucks to incorporate its Pay With Square app service as a mode of payment might pave the way forward with retailers in other markets, making the card processing format irrelevant.
Square competitor PayPal Here was on the move this week as well — into retail shopping. Rao reports in a separate post at TechCrunch that PayPal CEO John Donahoe announced a U.S. retail deal with AT&T during eBay’s earning call this week. PayPal Here previously had a retail presence only in Japan with Softbank. Rao reports that Here will retail for $15, with the purchaser receiving a $15 discount upon signing up; Square is sold in 20,000 outlets in the U.S. and sells for $10, with a $10 purchaser sign-up discount, Rao reports.
MCX expands sans platform, Lemon opens its API, and QR codes stage a comeback.
Here are the commerce stories that caught my eye this week.
MCX’s mobile payment vision draws in more big names
The Merchant Customer Exchange (MCX) got a boost this week as several more big brands joined the mobile payments network. Nivedita Bhattacharjee reports at Reuters that the new members include Gap, Bed Bath & Beyond, Dillard’s and Dunkin’ Brands, bringing the total to 21 publicly traded members to date.
“MCX said its platform is under development and the company is trying to focus on integrating payments with offers and promotions delivered to a smartphone. But a source familiar with MCX’s effort said the consortium is still working through an RFP process to find technology vendors to help bring its solution to market.”
Wester says MCX officials described the vision for the payment solution as including discounts and promotions, and requiring little involvement from merchants in terms of equipment and technology investments. The platform also reportedly will “take a ‘hands-off’ approach to retailer’s transaction and customer data,” which is a major factor in some retailers choosing MCX over other payment options, such as Google Wallet. Mike Cook, vice president and assistant treasurer at Wal-Mart, one of the MCX partners, made it clear this week that Wal-Mart is not interested in sharing consumer and transaction data and that that played a role in the company choosing to back MCX over Google or Isis.
Retailers in Passbook, chaos in the payment space, and the importance of the mobile shopping experience.
Here are the commerce stories that caught my attention this week.
Passbook’s early merchants
Apple’s iOS 6 launched last week, bringing the Passbook feature to iPhones, and merchants from all walks of industry have started jumping on board. Target was among the first to push its app update, and Sarah Perez at TechCrunch argues it will be one of the most influential merchants in making mobile wallets mainstream. Perez notes the practical nature of Target’s app, as it focuses on saving and storing mobile coupons. Mobile coupons are nothing new, of course, but Perez argues, “becoming part of a more comprehensive system — one that even pushes you reminder notifications as you walk into a store — it has the potential to actually change user behavior” (e.g. make consumers more comfortable and intimate with their phones as part of the shopping experience).
Perez also looks at startup gift card company Gyft’s new Passbook integration in a separate post. The company sells cards from more than 200 retailers, and for those with which it has a relationship, the app will allow users to check gift card balances, too. The integration also is on a per-card basis, so each card must be transferred into Gyft individually, but Perez says it’s worth the trouble: “instead of having a generic ‘Gyft’ card stored in the Passbook app, you’ll have what appears to be the individual store gift cards there, powered by Gyft.” Perez also looks at a few other startups that were agile enough to jump on board early, ahead of many major brands, including Belly and SnipSnap.
One of the more surprising of the major brands to be slow off the mark is Starbucks. Alex Heath at Cult of Mac reports that the Starbucks app will be updated by the end of the month and points out why it’s such a surprise the coffee mogul is late to the game. Not only is Starbucks mobile savvy with its Square payment integration, but “Apple originally routed Passbook in the iOS 6 developer betas to the Starbucks app in the App Store,” Heath writes.
A few of the other major brands already on board with Passbook include Walgreens, Ticketmaster, Fandango, Sephora and several Major League Baseball teams. To give Passbook a whirl in the real world, Josh Lowensohn at CNET took it to a Major League game. He writes that he was able to get into the game by having his ticket scanned off his phone but that the experience wasn’t completely paperless: “In order to give Passbook users some sort of proof of purchase, the stadium prints out a paper receipt that you need to hold on to. … The stadium also requires those with higher level tickets, to somewhere like the suite levels, to carry an extra paper ticket.”
A little rough, but it’s a start. If you want to peruse all Passbook-updated apps, AppShopper has a running list.
Big data and mobile are changing retail. NFC? Not so much.
Here are a few stories from the commerce space that caught my attention this week:
Mom and pops sidelined by big data?
Gary Hawkins at the Harvard Business Review took a look this week at marketing and research in the commerce space and argued that the costs associated with big data advantages may be wiping out the little guy. Hawkins writes:
“In this war for customers, the ammunition is data — and lots of it. It began with transaction data and shopper data, which remain central. Now, however, they are being augmented by demographic data, in-store video monitoring, mobile-based location data from inside and outside the store, real-time social media feeds, third-party data appends, weather, and more. Retail has entered the era of Big Data.”
Hawkins points out that this level of consumer intelligence is highly advantageous and even more expensive, thus only retailers with adequate resources (read: deep, deep pockets) can compete. Citing a study (PDF) by the Grocery Manufacturers Association, he notes that “annual industry spending on shopper marketing at over $50 billion, and growing.”
In addition to sidelining smaller retailers, the shopper marketing trend is having a more pervasive effect on the industry as a whole by changing the distribution of budgeted marketing expenditures. “Trade promotion accounted for 44% of total marketing expenditures by manufacturers in 2011, lower than any other year in the past decade,” Hawkins notes. The reason for the shift is all about the ROI — quoting Matthew Boyle of CNN Money, Hawkins writes that “the partnership of Kroger and dunnhumby ‘is generating millions in revenue by selling Kroger’s shopper data to consumer goods giants’ … It is widely understood that Kroger is realizing over $100 million annually in incremental revenue from these efforts.”
This model not only caters to large retailers over smaller retailers because of the size of their wallets, but because it’s easier for brands to interact with the corporate headquarters of a major retailer with 1,000 stores than to interact with 1,000 owners of independent stores, Hawkins writes. He goes into detail about how this business model will affect the industry on several fronts — you can read his piece in its entirety here.
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.”