Wednesday, May 04, 2011

Future payment transactions - not as dumb as paper

Pay by phone, the smart way to pay
(Image from Mobile Marketer)
Mobile payments technology is a hot space at the moment. The ultimate goal is to make small retail payments easy, fast and cheap for businesses and consumers. This means that the solutions have to get away from paper, coins and magnetic swipe cards with huge costs attached to every transaction. Add consumer interest in everything about mobile device apps on iPhone and Android, with location services and the ability for the devices to communicate for themselves (something no credit card can do), and there is a huge opportunity for the company that owns your data to direct your future spending with loyalty programs and offers. It is with this in mind that PayPal announced its acquisition of Fig Card - this story in Mobile Marketer adds some nice commentary.

Now that's not to say there aren't challenges with mobile payments. If it was all as easy as just tapping your phone on a black box to pay a retailer, we'd probably not be carrying cash already. The challenges amount to these, and Fig thinks they know the answers:

  • Making the hardware retailers need simple, cheap and secure
  • Getting enough retailers interested in doing something different
  • Educating consumers on a new approach to payment
  • Ensuring that consumers don't need new hardware, just a new app
  • Building a secure infrastructure that can capture payments for a retailer without them ever storing consumer's details
  • Being able to scale the infrastructure to support a nationwide, then international payment infrastructure
  • Putting together value add features such as loyalty programs that offer consumers more and make the service pay for itself
PayPal seems to be in a good position to offer much of this know-how and the backing to make it happen. Fig Card gives them the opportunity to go out and chase the incumbent credit cards with a viable alternative, addressing most, if not all of the challenges above. And they haven't forgotten the appeal to retailers, consumers, and their own bottom-line in the power of information.

If future payment "transactions can be as smart as a computer and not as dumb as paper,” (to quote Mr. Chu, Senior Director of PayPal Mobile), then PayPal could be hot on the heels of more than just the payment card industry. Move over Groupon - if you don't own the payments, you know nothing about potential customers. They may just stop coming to you, when more appropriate offers come to them at no cost.

A post from the Improving It blog
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