Commerce Weekly: The competitive push toward mobile payment

Many roads to mobile payment, an index of mobile payment readiness, and how to make mobile shopping faster.

Here are a few of this week’s stories from the commerce space that caught my eye.

Mobile payments are coming, one way or another

Square_AngleyHands.pngThe New York Times (NYT) took a look this week at the push toward mobile payments and the various paths toward that end. The push isn’t only coming from a consumer desire for a mobile wallet, but also from the payment companies. The NYT’s post reports:

“Merchants are facing heavy pressure to upgrade their payment terminals to accept smart cards. Over the last several months, Visa, Discover and MasterCard have said that merchants that cannot accept these cards will be liable for any losses owing to fraud.”

This could be the push needed for mobile payment, at least in the U.S., to get over the technology hump that has thus far been hindering it from catching on. Jennifer Miles, executive vice president at payment terminal provider VeriFone, told the NYT, “Everybody is going to be upgrading … Before the credit card companies made their announcements, almost no merchants were buying terminals with smart card and NFC capabilities.” She says VeriFone no longer installs payment terminals without NFC readers.

NFC technology, however, not only requires upgrades from merchants, but also consumers. The post reviews mobile payment solutions from PayPal and Square, noting the directive for these two companies may be more consumer centric:

“Both PayPal and Square say that asking customers to buy NFC-enabled phones and wait for merchants to install new hardware is folly. Neither company says it has plans to incorporate NFC into its wallet.”

This consumer-centric approach might be part of what’s behind VeriFone’s announcement this week that it would jump into the payment processing fray. Bloomberg reports:

“VeriFone Systems Inc. (PAY), the largest maker of credit-card terminals, will offer an attachment that lets mobile devices accept credit and debit cards, making a deeper push into a market pioneered by Square Inc. and EBay Inc. (EBAY)’s PayPal … VeriFone’s version will allow partners such as banks to customize the service to transmit coupons and loyalty points to consumers, said Greg Cohen, a senior vice president at San Jose, California-based VeriFone.”

VeriFone’s system will work with Apple and Android mobile devices.

X.commerce harnesses the technologies of eBay, PayPal and Magento to create the first end-to-end multi-channel commerce technology platform. Our vision is to enable merchants of every size, service providers and developers to thrive in a marketplace where in-store, online, mobile and social selling are all mission critical to business success. Learn more at x.com.

MasterCard releases PayPass

MasterCard announced its new PayPass Wallet Services this week. The company describes the global service in a press release:

PayPass Wallet Services delivers three distinct components — PayPass Acceptance Network (PayPass Online and PayPass Contactless), PayPass Wallet and PayPass API. These services enable a consistent shopping experience no matter where and how consumers shop, as well as a suite of digital wallet services, and developer tools to make it easier to connect other wallets into the PayPass Online acceptance network.

In other words, it’s designed to work with any sort of digital wallet used by its partners. According to the release, American Airlines and Barnes & Noble are in the initial group of merchant partners.

One of the big differences between MasterCard’s system and those of its competitors is its open nature. PC World reports:

What sets MasterCard’s offering apart from digital wallet systems announced by Visa, Google, PayPal and others is how much the company is opening up its platform to third parties, said Gartner wireless analyst Mark Hung. Banks and other partners will be able to adopt PayPass Wallet Services in two different ways: They can use MasterCard’s own service under their own brand or just use the company’s API (application programming interface) to build their own platform.

Mobile payment readiness, global edition

How ready is the world for mobile payments? MasterCard has that covered this week, too. In a guest post at Forbes, vice president of MasterCard Worldwide Theodore Iacobuzio wrote about the launch of the MasterCard Mobile Payments Readiness Index (MPRI), a data-driven survey of the mobile payments landscape. Iacobuzio says the index “assesses and ranks 34 global economies in terms of how ready (or not) they are for mobile payments of three types”:

  • M-commerce, which is e-commerce conducted from a mobile phone or tablet.
  • Point-of-Sale (POS) mobile payments where a smart phone becomes the authentication device to complete a transaction at checkout.
  • Person-to-Person (P2P) mobile payments that involve the direct transfer of funds from one person to another using a mobile device.

Iacobuzio says that “one of the top-level findings is that unless all constituents — banks, merchants, telcos, device makers, governments — collaborate on developing new solutions and services, the mainstream adoption of mobile payments will be slower, more contentious and more expensive.” He discusses the needs for mobile payments around the world, including in developed, developing and emerging countries.

But who’s ready? The following image is a screenshot of the index summary. Note that no country has yet hit the “inflection point”:

MPRIScreenshot.png
A screenshot of the MasterCard Mobile Payments Readiness Index (MPRI). Click here to access the full site.

Dan Rowinski at ReadWriteWeb has a nice analysis of the index. In part, he says much of the finance world, including MasterCard, may be viewing the mobile payment situation through “rose-colored glasses”:

“For instance, why do mobile payments skew heavily toward young males in developed countries? The answer, more or less, is because it is cool. The actual need for mobile payments (NFC or otherwise) is not as clear in the U.S. as it is in other countries, like Kenya and Singapore.”

Mobile shopping needs faster carts

Michael Darnaud, CEO of i-Cue Design, proposed a solution this week for one of the major problems with mobile shopping: speed, or lack thereof. In a post at Mobile Commerce Daily, he says the steps to a purchase simply take too long because of the number of data transfers involved:

“Just clicking a button to ‘add,’ ‘delete’ or ‘change quantity’ on the mobile Web requires sending transaction data from the shopper’s mobile device to the vendor’s server — average three to five seconds — via cell towers, not high-speed cables. These interim steps, long before checking out, are the challenge — it is all about time.”

“Time is money” is no joke in mobile commerce. Darnaud notes: “A recent Wall Street Journal article declared that sales at Amazon increase by 1 percent for every 100 milliseconds it shaves off download times.” To that end, he suggests an improvement to online cart technology that “reduces the time it takes to ‘add,’ ‘delete’ or ‘change quantity’ by virtually 100 percent because it eliminates the need for a server call for each of those commands.” He describes his solution:

“This ‘instant-add’ cart solution requires nothing but familiar HTML and JavaScript. It is an incremental change that can be inserted into virtually any new or existing cart.

And what that means to a customer arriving at your site on the mobile Web is that he or she can see a product, click ‘add to cart’ and have no forced page change or reload or waiting time at all as a result.”

Darnaud also notes the “elegance” of the solution: “… it forms a perfect bridge between desktop and mobile Web. The reason is simply that it works identically on both, via the browser.”

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