By: eBay Strategies
January 31, 2012 at 12:08 PM EST
Update on the mobile payment wars (frm NRF): PayPal vs. Google Wallet vs. ISIS vs. NFC vs. ?
I've been following the mobile payment wars pretty closely as I believe the outcome of that battle amongst industry behemoths will have serious implications for overall online commerce. Essentially if consumers settle on one "mobile wallet", then it seems logical...
I've been following the mobile payment wars pretty closely as I believe the outcome of that battle amongst industry behemoths will have serious implications for overall online commerce. Essentially if consumers settle on one "mobile wallet", then it seems logical they will want to use that solution for their online purchases as well as offline.
Recently I attended the National Retailer Federation (NRF) Big Show in NY and was surprised by the amount of buzz around mobile payments. It seemed every POS vendor was talking about it and showing demos of every kind of device being used every kind of in-store experience, including mobile payments. Of course Google and PayPal/eBay were there in a big way as well.
Also, Howard Schultz from Starbucks (which is the largest mobile payments company right now) recently made some bold statements about Mobile Payments that fit in with our thinking on the topic:
"...the unbelievable way in which mobile payment and mobile commerce is going to change the way in which consumers buy things.”
To that end, Starbucks revealed:
Clearly if mobile payments are already having this impact @Starbucks, they are set to revolutionize the way people shop on and offline. Most people agree on that, what we don't know is what solutions will win and which will lose.
To that end, I wanted to update everyone on the latest changes and of course offer some thoughts on where we are in the Mobile Payment Wars. The sections of news are:
Note: This part of the industry is full of acronyms, here are two all readers may not know:
Google Wallet takes a couple steps back
Google Wallet (GW) has had a couple of high profile problems since a very strong launch (we covered here) summarized here in case you didn't see them:
Of course Google is Google and you can't count them out of this battle by any means, but this feels like a one-two-three punch that could put them out of the race for at least 2012. One wild-card is they are close to closing the Motorola acquisition so now they will have both the hardware and the OS assets, but still if the carriers are blocking them, it remains to be seen how they solve that problem (acquire a carrier?)
PayPal Wallet (PW) takes several leaps forward
While PayPal did take punch to the nose when it lost CEO, Scott Thompson, to Yahoo!, the PayPal Wallet (PW) mobile solution had a bunch of great news in the last 30 days:
While at NRF, I saw the first and best simulated demonstration of the PayPal solution and captured it for you guys to see here:
As you can see there are a couple of neat features that I haven't seen really covered anywhere:
If you want to try this out for real, have to go to: https://paypal.com/anywhere and sign-up. That link also includes a handy list of HD's that are participating.
Coming soon? ISIS
The big unknown in this whole space is called ISIS. ISIS is collaboration between the big three carriers: AT+T, Verizon and T-Mobile. It's NFC based and details are very scarce, but it does obviously have the support of the carriers. Here's what we do know:
History has shown mixed success with these kinds of co-opetition type efforts, so it will be interesting to see how this one plays out.
Thoughts on Mobile Payment Wars
Before diving into where we are in the Mobile Payment Wars, we have to answer the question - what about the other likely players?
Where does Apple Stand? Amazon? Facebook? Visa, MC, Amex?
Who will win the Mobile Payment Wars? I don't know, but there are three factors that are interesting to think about:
Key Factor 1: The buyer experience
All the fancy POS in the World won't make consumers use the system. It's got to be convenient for them as well. The Starbucks datapoint and experience proves that you can make the whole payment process more convenient for consumers and they will adopt it in large numbers.
The most convenient buyer experience in order of most to least convenient is:
So really I think to have a better experience than ATM+CC, we need the NFC capability.
Key Factor 2: The seller/merchant experience
There are two considerations for retailers:
Retailer Consideration 1: Will it drive sales?
Every retailer wants to grow so any solution that drives sales will get fast-tracked. For mobile payments, there are several ways it can increase sales:
Retailer Consideration 2: Will it lower costs?
This statement from Home Depot summarizes why they like the PayPal solution which they view as delivering both.
“We believe PayPal’s solution has the potential to improve the checkout experience as we know it today by making it fast, secure and more convenient for the customer while providing savings for Home Depot,” said Dwaine Kimmet, Home Depot’s treasurer and VP of financial services.
To beat PayPal's headstart on the space, the other solutions are going to have to deliver both - something that hasn't really been articulated well yet.
Key Factor 3: Who has the most leverage?
Finally, it's interesting to figure out who has the most leverage in this equation. Leverage is important, but even if you have the most leverage, you have to build an ecosystem which takes partnering vs. pure leverage. The alternative is you go around the 'stack' of players as PayPal cleverly has.
From a leverage standpoint, the carriers are the king of the hill and we'll have to see what happens when the credit card companies flex their muscles, if they do. Finally with all the complexity, a solution that is a) available now and b) doesn't require a 10-party system may actually end up winning this thing.
Mobile Payment Wars Cheat Sheet
There are a lot of players with a lot of different solutions and realizing that it can be confusing, we created this handy cheat sheet so you can see at a glance what's going on in this war.
Looking at this chart and thinking through the consumer, merchant and leverage points, it looks like we have three horse race between PayPal, Google and ISIS (distant third). But it's still early days, so while PayPal has won some battles, the war is far from decided.
Conclusions: Who do you think will win?
What do you think - will Apple swing this thing or what about Wal-Mart? Could the CC companies finally be on their way to being cut out of their fees, or will they have the leverage?
SeekingAlpha Disclosure - I am long Amazon and
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