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Online Competition: The Mobile Payment Shoot-out

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in Mobile Marketing,Online Competition

Well, I have to say that I’ve been fascinated with the idea of mobile payments — and slightly terrified. It strikes me that it’s yet another way to easily separate me from my hard-earned money. I digress…

Since my fascination is far more powerful than my fear, I’ve been digging into this and found that it looks somewhat like the Old Wild West. Competition to become the dominant technology is heating up.

A gunfight is likely over which of the “bumping” and “waving” technologies and protocols will become the de facto leader in this burgeoning an EXTREMELY lucrative arena. Can they all survive? Doubtful.

Wondering how this works? Take a look at this video produced by Naratte that describes its Zoosh mobile payment technology:

Here’s a peak at some of the competition for mobile payment supremacy:

  • Near Field Communication (NFC) technology makes it possible for smartphone users to pay for items/services by waving their phones over a sensor in another NFC device (POS terminal, smartphone, tablet, etc.). Of course, merchants need to have a sensor and smartphone owners need to have a NFC chip in their phone, which represents significant adoption hurdles.
  • Bump Technologies is a company that’s enabling smartphone users to “bump” their phones together and share contact information, files, music (coming soon) and photos. Now, companies such as PayPal, ING Direct and Citibank are using the technology to facilitate mobile payment transfers. And, miracle of all miracles,  iPhones can “bump” Android phones and coexist.
  • Zoosh is a technology developed by Narrate which transfers information between smartphones, and between smartphone and Posit-of-Sale terminals, using the equipment already present in smart phone. All you have to do is download a software update to enable this functionality. Zoosh works off of frequencies used by frogs, dolphin and other creatures (yes… really).

At first glance, implementation of NFC technology seems pretty daunting, until you notice the list of companies placing bets on this technology: Google, Verizon Wireless and Isis (the AT&T, T Mobile and Verizon Joint Venture), to name a few. Something about market dominance starts to make me think this has a chance even if the technology seems awkward for this day and age.

The big Zoosh advantage is no new equipment or NFC chip needs to be installed. Zoosh is also device agnostic so even die-hard Android users can communicate with their oh-so-hip iPhone brethren. Like NFC, this activates by waving the device.

There are other trials going on with variations in technology, such as a trial that Bling National had with PayPal. Their approach required customers to stick RFID tags on their phones to pay for products/services with merchants supporting the technology in their payment network. Starbucks is offering its mobile pay app in over 6,000 outlets as well.

So far, it’s not clear how businesses should embrace the world of mobile payment. Will it become a competitive differentiator? How will it improve or add burden to the operational infrastructure organizations depend upon for payment? Is it best to take a “wait and see” stance and let the Gunfight at OK Corral determine which technology and protocol dominates the future? A lot of unknowns. But surely an easier way to separate customers from their cash can’t be a bad thing for business — right?

One additional major hurdle, of course, is consumer adoption of this technology. Significant assurances must be made relating to privacy and security. Then there’s the issue of how you keep track of all of your transactions so you don’t drain your accounts in a spasm of waving and bumping over one happy weekend. Major behavioral shifts must take place to make this happen.

Regardless of what emerges from the Mobile Payment Shoot-out, it’s a technology on the move. What do you think?

{ 5 comments… read them below or add one }

catherineNo Gravatar August 17, 2011 at 9:21 pm

Amazing what technology does – we use SquareUp as our credit card device but this looks amazing!!! will need to check this out as well. Thanks for sharing.

Deb McClanahanNo Gravatar September 17, 2011 at 1:52 pm

As always, insightful and a great survey of the field. Thanks, Celeste, for keeping us up to date in this space.

JoeNo Gravatar February 3, 2012 at 5:40 pm

Mobile payments are an interesting up and coming technology. I have only used them once and it wasn’t a system like any of the ones you described here on your blog. The video was very interesting and I think the more and more people start to use and rely on smart phones, then this technology will take off more. There does seem to be a lot of competition to break into the market right now though.
The mobile payment system I used was at my stylists salon, she actually had a little device that she hooked up to her phone and I swiped my card through it and was emailed a receipt. I was curious because I had never used anything like that before and I guess the company provides the device and smartphone software for free and then they just take a percentage of whatever the purchase was, they received like 50 cents from my purchase and the rest went straight into her bank account. The phone to phone transfers seem very interesting but at the same time it seems like there is a lot of work that needs to be done to make sure that it is a secure transaction so people feel safe about using the technology.

JeffNo Gravatar July 23, 2012 at 12:24 am

Mobile payments are a growing field, I think that they will grow rapidly as customers move to “cut out the middle man” in their transactions. No seller wants to have to pay paypal, or Quicken for their financial services, if they can be assured of a risk free transaction. I think mobile payments will become, with security technology improvements necessary, the way persons exchange funds for many transactions. Pay your babysitter via a simple phone exchange, pay for those few items at the garage sale. No cards to be compromised, and no cash to be misplaced… passcode protected mobile exchanges will become convinient ways to make financial exchanges.

Celeste BishopNo Gravatar July 25, 2012 at 9:19 am

Thanks for your thoughtful contribution Jeff! In addition to competing technology approaches from entrepreneurs, there are other stakeholders that have major interests here, as you’ve pointed out – including the middlemen who have so much to lose if they don’t find a way to participate. Visa recently predicted growing momentum in US in 2013 with another two years beyond that to achieve consumer adoption. Still others are predicting a MUCH longer timeline to adoption, pointing out that there is no real incentive on the part of consumers or merchants to do this yet. A good insight into this was recently published in Tech Crunch: NFC is Great, But Mobile Payments Solve a Problem That Doesn’t Exist. As for me, I worry about how I’ll keep track of my spending with mobile payments!

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