Category: Mobile Payments

Apple’s iPhone 6 Could Be Contender in Mobile Payments

apple-mobile-payment_largeThe newest version of Apple’s iPhone is rumored to include a long-anticipated mobile payment system. Though Apple made fun of the technology when it introduced AirDrop, many analysts expect the next iteration of iPhone to have Near Field Communication, or NFC, for contactless payments. Other rumors point to partnership discussions between Apple and Visa.

This would all be on top of Apple’s existing payments and security strengths. The company already has access to over 800 million registered credit cards through iTunes accounts, which could make launching the new mobile payment platform significantly easier. And as Apple CEO Tim Cook said in January, “The mobile payment area in general is one that we’ve been intrigued with. That was one of the thoughts behind Touch ID. … You can tell by looking at the demographics of our customers and the amount of commerce that goes through iOS devices versus the competition that it’s a big opportunity.”

Apple’s former head of online stores, Jennifer Bailey, has reportedly constructed a team for a mobile payments project, and former members of the Visa and J.P Morgan Chase team have recently joined the Apple family.

By 2017, Forrester Research estimates U.S. consumers will spend $90 billion in mobile payments, and Apple may just be looking to influence a large slice of that pie with the iPhone 6.

Huge Week for Digital Commerce

What a week this has been for online payments announcements!

First, on Wednesday, Google released a new version of Google Wallet that finally adds gift card support. I can attest that this feature was a long time in the making. And with well over $100 billion in gift card purchases every year, a smart addition.

The same day, Visa announced their new Visa Checkout service, essentially the next iteration of V.me.

Then today, Facebook announced a test of a Buy button within Facebook posts and ads.

Finally (and most importantly!) Twitter today welcomed payment infrastructure and offers company Cardspring to the Twitter Commerce team.

Couldn’t be more excited to work with our new Cardspring colleagues, and for all the innovation taking place in our industry to build truly modern e-commerce platforms.

Changing Mobile Payment Technology

mobile_commerce_2Between November 2013 and January 2014, 32 percent of online sales were made with mobile devices, according to the IMRG Capgemini Quarterly Benchmarking Study. Additionally, this figure is predicted to continue to grow.

The easier it is for consumers to make purchases on mobile devices, the more likely they are to transact. This is why the bulk of mobile sales are  digital goods purchased using built-in single-click transaction systems, such as iTunes and Google Play. Cumbersome experiences, such as having to enter credit  card details for every purchase, limit mobile payment adoption.

The CEO of ETA, Jason Oxman states, “shopping cart abandonment is one of the major issues merchants are facing when it comes to mobile. The ability to make payments is a significant part of the issue—after all, without successful payment, no transaction can be completed.…Making mobile payments faster and easier is a big driver for the types of mobile technology that are being developed.” 

As mobile commerce grows, it is adapting to incorporate more of the commerce value change. As Ariel Bardin of Google states, “in this new world of constant connectivity, mobile is blurring the lines between the online and offline worlds. People are growing to expect the ability to transact instantly using their smartphones-whether they’re in cyberspace or standing in your retail space.” 

Tablets See Higher Value Purchases than Smartphones

For high-value mobile purchases more and more customers are turning to tablets as their preferred device according to transaction data released by payment processor Adyen. Adyen is an Amsterdam-based company that track mobile payments with its Adyen Mobile Payments Index, issued quarterly, which analyzes transactions on their global processing platform. The president of the North American branch of the company states that, “smartphones are very convenient devices, but their disadvantage is their small screen…we’ve found that, while people use smartphones for initials research, they increasingly make high-value purchases on their tablet, as it’s easier to enter data on a tablet. Also, because tablets are lighter than PCs, when consumers are watching TV at home, they are more likely to use their tablet rather than their PC to make a purchase.”

Adyen’s payment index breaks down information even further as to what consumers where buying when purchasing products on their mobile adyen-rgb_1_1devices. They differentiate between travel, digital goods, online game-playing, retail and ticketing.” Interestingly, of those five verticals, the only category that sells better on a PC than on a tablet is travel.

There is an important distinction to be made between smartphone and tablet purchases. While the transaction values were higher on tablets, the volumes of transactions were higher on smartphones. This may indicate that people trust a bigger screen with larger purchases than they do a small smartphone screen. It is easier to put in your information to a larger screen, therefore you don’t have to worry about experiencing an error with a big ticket item.

Incidentally, Google Wallet helps alleviate this problem, by providing secure, 2-click purchasing on any mobile device without the need to fill out forms on a small screen. As a result, mobile sites with Google Wallet’s online transaction API installed have seen substantial increases in both conversion and basket size (success stories linked here).

Bitcoin and Deposit Insurance

bitcoin-logo-3dOne of the world’s Bitcoin exchanges, Mt. Gox recently lost $400 million worth of digital currency and cash. This left many of the customers without any way to get back their money. While removing such an incompetent company is likely good for the ecosystem in the long run (indeed Bitcoin prices have rallied since), this event was devastating for many who  had accounts with Mt. Gox, and highlights the need for insurance for Bitcoin and other cryptocurrency held with third parties.

MtGox has filed for bankruptcy after losing almost all of its customers’ deposits. In addition to the financial risk of price fluctuation, Bitcoin held in third party accounts is more susceptible to theft and loss than other assets because it handles like digital cash, without protections like those in place for bank accounts (FDIC insurance) or credit cards (extensive CCPA protection). 

One solution many are now proposing is for increased government regulation of Bitcoin. This may be inevitable at this point, but it reduces many of the decentralization benefits for which Bitcoin was originally created. Two of the best arguments against knee-jerk government regulation are in letters written by Brad Burnham and Fred Wilson.

An alternative that is closer to the tradition of Bitcoin is for the community to introduce its own, free-market improvements such as private insurance. One company  trying this is a London startup called Elliptic. It has offline servers to prevent hackers and has negotiated a deal with a large international insurance company. Elliptic charges steep rates to keep your cybercurrency safe. They keep 2 percent of its value per year, but will take less if you hold a larger amount. The bottom line is that insurance for cybercurrency is expensive, but may be worth the risk.

Another company is Inscrypto, founded by Ryan Selkis, who was instrumental in breaking news of Mt. Gox’s insolvency. The company’s website describes Inscrypto as “Bitcoin’s privately funded, decentralized version of the FDIC. We help you reduce or completely eliminate the risks of owning Bitcoin.” Selkis’ company is still in a private testing period, but it could have big implications for the future of Bitcoin. There are many advantages to using cryptocurrency, but also many risks. If there was a means to insure holdings and mitigate risk, many more players may join the Bitcoin market, which is good for the currency in the long run.

 

Study Says Small Business Mobile Banking Services Lacking in the US

Mobile-Banking-Solutions

Small businesses often have to run their business while on the g0, but mobile banking services for small business has not kept pace with consumer banking services, according to a recently released study by the Aite Group. U.S. banks need to make a greater effort to provide specialized small-business mobile banking services rather than simply rebranding consumer mobile banking services. The research, performed in September, surveyed 1,003 U.S. companies with revenue under $20 million. The survey found that roughly 32% of those businesses do their banking via mobile device. Meanwhile, while 65% of U.S. banks with greater than $10 billion in assets offer some form of mobile banking to small businesses, only 30% of banks with less than $10 billion in assets and 20% of credit unions do so. Even amongst those that offer services, this includes both rebranded consumer banking services as well as true business-specific mobile platforms. Aite claims that the small businesses market is severely underserved in terms of mobile banking. Rebranding or repackaging consumer services into small business mobile banking platforms creates customer dissatisfaction due to  limited product capabilities. For example, while 15% of the survey respondents are currently able to send mobile ACH transfers, an additional 30% of respondents desire this capability.  Banks should include in their small business banking services more useful features, such as ACH and wire transfers. Adding those features that aren’t offered to consumers would prompt more small businesses to use mobile banking; especially with a full third of those surveyed by Aite Group said that they would like to move over to mobile banking by next year, and “banks that offer mobile banking services to small businesses find that the customers using these services are among their most profitable and loyal clients.”