Mobile Payments Update

I've been following mobile payments since I worked in the field a few years ago.  It is interesting in a few ways but mostly because I view it as a leading indicator of overall digital transformation.

Paper money will never die but we are increasingly likely to have our phones with us while having no paper money.

The reason retailers want it is for the digital relationship it enables with their customers.  After all, money isn't broken so what is the real driver of adoption?  Buy 10 coffees at Starbucks and get the 11th for free, that's what is driving adoption.

Here is an update on the state of mobile payment adoption:

https://www.clickz.com/mobile-payments-2019-beyond/222602/

Happy Reading,

J.W. Gant

Boston Mobile Payments Company LevelUp Gets $ From Chase

Looks like Chase is very, very serious about mobile payments for physical retailers.  After first acquiring the tech from retailer owned mobile payments company MCX they then took the next step and acquired the entire company and are now pouring a few bucks in to LevelUp.

A few?  $50M few in total from multiple sources.

LevelUp specializes in quick service restaurant rewards-based mobile payments.

Here is the story:

http://www.xconomy.com/boston/2017/05/16/levelup-bags-50m-from-jpmorgan-chase-others-for-mobile-payments/#

Here is a snippet from the piece:

LevelUp’s story is one of twists and turns and ups and downs. Right now, it looks like the company is on an upswing.

Today the Boston-based mobile payments firm announced a $50 million funding round, which includes $37 million in equity funding and $13 million in debt financing, according to an e-mailed statement attributed to Alex Shuck, LevelUp’s director of marketing and analytics. Investors in this round include earlier backers JPMorgan Chase and U.S. Boston, as well as new investors such as CentroCredit Bank, according to a news release.

Happy Reading,

J.W. Gant

Digital Bottleneck of Payments for Retailers

Demand.  Meet Supply.

Starbucks is having a problem with its mobile order ahead and pay system.  It is too popular.

Read on:

http://www.salon.com/2017/02/07/a-digital-bottleneck-mobile-payments-breed-new-challenges-for-to-go-retailers/

Here is a snippet from the piece:

Starbucks, which also has a successful mobile-payment operation, has learned that demand for mobile-based orders can overwhelm in-store operations during peak demand hours, causing employees to scramble. Currently, more than 1 in 4 U.S.-based Starbucks orders comes from a mobile device, one of the highest rates in the country’s retail sector and likely to continue to grow. This has led to a problem — a good problem, but a problem nonetheless — and one that’s likely to vex more retailers in the years to come: Mobile-ordering lines are becoming longer.

Happy Reading,

J.W. Gant

Chase Pay and Level-Up

I've been following Level-Up for years, as a Boston startup in payments having great success in the QSR (quick service restaurant) space.  This is interesting news.

http://www.digitaltransactions.net/news/story/6713

Here is a snippet from the piece:

When JPMorgan Chase & Co. decided to recruit order-ahead capability for its Chase Pay mobile wallet, it settled on a 6-year-old mobile payments startup whose technology could give Chase Pay a vital boost in a crucial merchant segment. Meanwhile, the alliance could also bring tens of millions of new customers to restaurants served by that startup, Boston-based LevelUp.

Happy Reading,

J.W. Gant

Apple Pay Declines

PYMTS.com has been working with a retail tracking company to follow the progress of Apple Pay and to garner some numbers the folks at Cupertino aren't interested in providing.  How is Apple Pay doing, in the store, among the addressable market, those who own an iPhone 6?

Here is the story:

http://www.pymnts.com/in-depth/2015/apple-pay-adoption-the-falling-side-of-the-bell-curve/#.VcNhfPNVhBc

Here is a snippet from the piece:

Disturbing Declines

In March, survey data indicated that 15.1 percent of eligible Apple Pay users had tried the service – when surveyed in June 2015 that had fallen to 13.1 percent.

Usage fell as well – when asked in March, “Did you use Apple Pay on this transaction,” 39.3 percent of consumers said yes. When asked the same question in June, only 23 percent replied in the affirmative.

“These are people who have tried it, who just had a chance to use it because they were at their phone and were at a merchant who accepted it – but they just didn’t choose to use Apple Pay,” Jared Schrieber, CEO of InfoScout, told the assembled at R2 while explaining the figures.

With quotes from representatives from Paydiant (PayPal), Samsung Pay (LoopPay), and LevelUp this is a good article to read on loyalty, mobile payments, the digital wallet, and more.

Happy Reading,

J.W. Gant

Apple Pay vs. CurrentC

The news the last week or so has been pretty heavy on Apple Pay vs. CurrentC.  The media loves a good fight but why can't they live together?  Maybe not in the short term, but over a long enough timeline won't we see a number of ways to pay with your mobile device?  Don't we already have many ways to pay with our mobile device between LevelUp, PayPal, Starbucks, Dunkin Donuts, Apple Pay, Google Wallet, and CurrentC?

Some are already declaring winners and losers.  Who are they and what are they saying?

Here is Time.com with winners and losers:

http://time.com/3532199/apple-pay-winners-losers/

Here is a snippet from that piece:

But there’s another reason credit card companies are enthusiastic about Apple Pay: the alternative, CurrentC, could be pretty scary.CurrentC is a payment system mega retailers like Walmart and Best Buy are working on that could cut out credit card companies altogether. While Apple Pay leaves the traditional credit card system intact by simply moving it to your phone, analysts speculate that the CurrentC program will link payments through a network connected directly to your savings account. Voila: no middleman.

“If a technology comes along that’s focused on getting you to not use Visa, then that’s a competitor to us,” says Dill. The threat of CurrentC makes Apple Pay look more like a rickety lifeboat for the credit card companies than the super-fast motorboat Apple has promised.

Here is Karen Webster declaring CurrentC dead before it has even fully launched:

http://www.pymnts.com/news/2014/current-c-and-the-big-merchant-mess/#.VFpQADTF_9Y

Here is a snippet from that piece:

So, how does CurrentC to get out of this mess?

Well, I don’t think they do.

I believe that this is the beginning of a huge reboot at CurrentC and quite possibly its complete unraveling.

Karen comes across as at least a little naive in that piece.  Really, the merchants should yield all control of their interactions with the consumer?  Sounds like a recipe to go out of business to me.

At least one person is picking Google Wallet to win over Apple Pay, yes Google:

http://www.pymnts.com/in-depth/2014/peter-thiel-picks-google-over-apple-pay/#.VFo4MzTF_9Z

That isn't unreasonable thinking.  We've already seen payments via Google Wallet bump following the NFC news of Apple Pay.

The big-box retailer Target is in the news as an early supporter of CurrentC, running transactions now in Minnesota according to this piece:

http://www.startribune.com/business/281395391.html

Why are some merchants saying "No" to Apple Pay?  Here is a story on that:

http://blogs.wsj.com/totalreturn/2014/11/04/why-some-merchants-say-no-to-apple-pay/

Here is a snippet from that piece:

Industry observers say the reluctance of some merchants to embrace Apple Pay all comes down to one thing: fees. And consumers are likely to remain caught in the midst of this tug-of-war between credit-card networks and merchants for some time.

Here is a piece on Re/Code that quotes the CEO of MCX a bit:

http://recode.net/2014/11/04/what-are-the-anti-apple-pay-merchants-afraid-of/

Burger King is going with PayPal for their mobile payment option:

http://www.mobilecommercedaily.com/burger-king-chooses-paypal-in-a-refutation-of-apple-pay

Want to understand a bit of the deal Apple Pay made?

http://www.pymnts.com/news/2014/inside-the-apple-pay-issuer-contracts/#.VFohWjTF_9Y

What about Starbucks?  Isn't this the most successful mobile payments mechanism in history, as opposed to Tim Cook's statement about Apple Pay?  Yes it is.

http://www.nbcnews.com/tech/gadgets/forget-apple-pay-master-mobile-payments-may-be-starbucks-n240091

Does this look like space likely to see some consolidation in the coming year or two?  Maybe.  However, it also looks like a space where more than one winner is going to come out on top.  Which ones will those be?

Happy Reading,

J.W. Gant

**UPDATE**  Just a bit more as this one lays out the story of the relationship Apple has forced on the banks and the issuers:
http://digitaltransactions.net/news/story/Issuers_-Apple-Pay-Pact-Assigns-Remarkable-Authority-to-Card-Networks-As-Well-As-Apple

**UPDATE #2** The CEO of MCX, Dekkers Davidson, is at Money2020 and had some comments:
http://www.digitaltransactions.net/news/story/MCX-Chief-Davidson-Strikes-Defiant-Tone-While-Touting-Benefits-of-CurrentC_s-Wallet

Here is a snippet from that piece:

...Davidson attributed much of the negative publicity about CurrentC to the efforts by the 80 merchants that control MCX to “challenge” a payments business that has largely left merchants on the sidelines. “Some have mocked us or laughed at us, some are attacking us,” he said. “That’s to be expected when you challenge the status quo.” Later in his remarks, he returned to this theme, saying, “If you’re going to change the status quo, you’ve got to challenge the status quo.”

The little engine that could?

LevelUp Reaches Break Even on Payments

If you live in an around Boston you definitely need to try out LevelUp.

https://www.thelevelup.com/

They are in the news a bit today:

http://www.pymnts.com/news/2014/levelups-march-to-free-payments/#.U06RoVVdU1I

Here is a portion of that article:

LevelUp stirred the pot in 2012 when it launched with its “Interchange Zero” campaign. Moving money, said LevelUp’s Chief Ninja, Seth Priebatsch at the time, was pretty much a commodity and of little value. (Well, he actually said no value, but I sort of disagree with that. Moving money is really valuable, it’s just that a lot of people are in the business of doing it and so it has become a commodity.) Seth felt strongly that the real value of any mobile payments provider was in their ability to track customers and capture data about their transactions; data that could be mashed up with other data, like the weather, to deliver targeted campaigns that helped merchants drive more foot traffic – and therefore, more dollars, into their stores. And, of course using the mobile device to enable all of that, including payment at the point of sale.

One more good link to read:

http://www.mobilepaymentstoday.com/article/231119/LevelUp-cuts-payment-processing-fee

I was on site visiting LevelUp during the 2012 time frame in question there.  It was shortly before the Interchange Zero campaign came in to being.  They are an energetic shop doing interesting things in the mobile payments and loyalty space.

Happy Reading,

J.W. Gant

Best Reading of the Day - Entry 0089 Mobile Wallets

Mobile Commerce Daily has written up a report made available by Yankee Group.

http://www.mobilecommercedaily.com/paypal-leads-the-way-for-mobile-wallets-but-adoption-flounders-yankee-group

I've not been able to get my hands on a copy of the full report.  Here is a snippet from that piece on MCD:

According to the “U.S. Mobile Wallet Roundup: Gauging the Future Potential of Today’s Solutions” report, two-thirds of consumers are interested in mobile wallets, but this has yet to translate to mass adoption. The report also points to PayPal as the leader in the space, with 15 percent of consumers having used its application in the past month to make an in-store purchase.

...

Yankee Group tracked seven current-generation third-party wallet initiatives with physical-world payment capabilities by conducting consumer surveys and speaking with wallet providers, retailers, card networks, payment processors, issuers, mobile network operators and point-of-sale vendors. The report assigns each mobile wallet solution with a high, medium or low potential.

The mobile wallets with high potential are PayPal and MCX. The ones with medium potential are LevelUp and Google Wallet, and the ones with low potential are Square, Isis and Loop.

Here is a snapshot of the first exhibit in the Yankee Group report:



Happy Reading,

J.W. Gant

**UPDATE**
Good article on Yahoo News.  Much better than the one listed above.
http://news.yahoo.com/mobile-payments-once-again-on-the-cusp-of-taking-off-154820454.html

This quote stands out to me:
MCX’s key advantage is the fact that it signed on with grocery chains and gas stations – two high-use areas. “That’s a great way to encourage use and change an entrenched behavior,” says McKee. “It’s going to be very disruptive.”

News on Mobile Wallets - LevelUp, Dash, and Chase

Can you say ABC?

The alphabet soup of mobile wallet options continues, though some are also branching out a bit.  Today I'll pop news up about 3 options.

First is Boston-based LevelUp that has specialized in the Quick Service Restaurant space around Boston.  They're introducing an option to pay online that continues the tie to marketing campaigns executed on through their mobile wallet.

http://www.pymnts.com/briefing-room/consumer-engagement/Loyalty/2014/levelup-goes-online

Next is a mobile wallet option for diners in New York City restaurants:

http://www.pymnts.com/briefing-room/mobile/mobile-payments/2013/dash-changing-payments-one-bar-tab-at-a-time/

Finally is an entry by Chase and this one is pretty significant.  I question whether one player has the chops to go solo in this space but perhaps this is a play to gain a seat at the table once consolidation begins and ends.

http://www.mobilecommercedaily.com/chase-takes-a-stab-at-mobile-wallets

Happy reading,

J.W. Gant

Best Reading of the Day - Entry 0048 Misc

I have three items to share today.  Completely unrelated but interesting nevertheless.

First up is a great view by Econsultancy in to how to use Twitter for competitive analysis:

http://econsultancy.com/us/blog/63651-a-six-step-guide-to-using-twitter-for-competitor-analysis

Next is a view of what Staples is doing in mobile to provide a seamless experience between platforms:

http://www.mobilecommercedaily.com/staples-redesigns-mobile-site-for-cross-channel-shopping

Finally, how the payment company LevelUp is seeing their SDK work for retail and QSR businesses interested in incorporating payment & mobile loyalty in to their apps:

http://www.mobilecommercedaily.com/dunn-bros-coffee-caffeinates-loyalty-with-mobile-payments-app

Happy reading,

J.W. Gant