Here’s what caught my attention in the payment space this week.
PayPal demos tap-to-pay
PayPal demonstrated peer-to-peer payments using near-field communications (NFC) at this week’s MobileBeat conference. They showed how two mobile users could send payment to each other by tapping phones and confirming the transactions in the PayPal app. Laura Chambers, PayPal’s senior director of PayPal Mobile, wrote in a blog post that they expect to make the service available publicly later this summer. Right now, however, there’s only one NFC-capable mobile phone in the U.S. market — the Nexus S — so both the payer and the receiver would need to have that device.
A PayPal video (below) shows the recipient initiating the transaction, requesting $10 and then holding her Nexus S up to someone else’s. Both phones buzz and vibrate, and the recipient gets a request, which they can confirm. Both get an email confirming the transaction.
In practice, PayPal’s system doesn’t seem too different from what’s already possible with Bump, an app that lets mobile users share images or music, or send money from one phone to another — although Bump sends the transaction over the network rather than via NFC. Bump says its app has been downloaded more than 40 million times on Android and iOS platforms, but it still lacks the reach of PayPal with is 94 million users. What’s more, by launching its NFC capabilities now, PayPal will already have experience under its belt as more NFC-capable phones (and point-of-sale terminals) begin to appear later this year and next.
NFC tap-and-pay wasn’t the only gesture PayPal made this week to show it’s getting ready for the future. CEO Scott Thompson put out the challenge for five Bay Area employees of PayPal to try to live their lives for a week with only PayPal purchases, and apparently they’ve found five willing to give it a try. It’ll be interesting to see how they secure necessities like food and gasoline (not to mention rent or utilities, if those are due that week). But that experience may serve them well if PayPal’s other publicity stunt of the week transpires: the company produced a funny video that suggests PayPal’s one-tap payment system could prove useful during a zombie attack. (The short video is worth watching not just for laughs but also to see PayPal’s vision of how one-touch user clicks will be enabled on everything from soda machines to rental car windows.)
eBay buys Zong
In other eBay/PayPal news, eBay continued its acquisition trend, announcing it would pay $240 million for Zong, one of the leaders in direct billing via mobile phone accounts. Zong, Boku, and Bill2Mobile all offer services that let subscribers buy digital goods — often something in an online game — by entering their mobile number online and replying to an SMS text; the charge shows up on their cell phone bill. At times, these services have touted their capabilities as a form of banking for the “unbanked,” though in practice many of the unbanked are social game players who are too young to have bank accounts.
Zong brings along its direct billing relationships with 250 telecom carriers around the world, and it’s easy to imagine that users will be able to put PayPal payments on their cell phone bills. A spokeswoman for eBay told me the converse is already true in some countries such as Malaysia where, through a deal with telco Maxis, customers can use PayPal to pay their mobile phone bills.
Back in April, Zong competitor Boku announced a trial with Germany’s Telefonica 02 to pay for online purchases of real-world (that is, non-digital) goods. eBay’s says there are no plans so far to use Zong this way over at PayPal.
The three types of social commerce
Oodle CEO Craig Donato has posted an interesting short essay on social commerce on ReadWriteWeb. Donato breaks social commerce into three elements: social shopping, social marketing, social trading. Social shopping is nothing new, of course. Shoppers have always traveled in pairs or groups and shared opinions about purchases. But as commerce has shifted online over the past 15 years, the social aspect is now racing to catch up. Social marketing can be seen as merchants wanting to join this conversation. Donato points out that, here too, this is a restoration of a traditional two-way conversation that has only become a one-way marketing monologue in the era of mass communications. Social media offers a return to the days when buyers had a direct voice to the merchants, one that helps them decide what and how to sell.
Trading, Donato points out, is the weakest area right now — a hyperlocal activity that’s often managed through donations or trading goods with neighbors (sometimes with an assist from online services like Neighbor Goods or Freecycle). While there may still be opportunity here, it’s clearly the most difficult to monetize, given the very nature of these money-less transactions.
Oodle, the world’s largest aggregator of online classifieds, also powers Facebook Marketplace, which figures prominently in a new report from JWT on “The Rise of Social Commerce.” Perhaps not surprisingly, the report finds the Millennial generation driving social commerce, especially on Facebook where “they spend so much time … they might as well shop there, too.” The report says Millennials are more interested in conducting commerce through Facebook than Boomers or Gen Xers but, paradoxically, Millennials are also more concerned about privacy issues, particularly when Facebook shares information with third parties. Even so, 59% of Millennials in the survey say they appreciate personalized recommendations that help them cut through the volumes of marketing information. Now, if merchants could only find a way to offer personalized recommendations without knowing much about you, they’d really be on to something.
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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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