Payment Industry Insights

It's Apple vs. Google vs. Everyone In The Mobile Payments War

2012-05-10T16:19:00.001-05:00

by Caribou Honig | Forbes | May 09, 2012

In a prior post on the topic of mobile payments, I made the case that the mobile wallet will become the foundation of a new, disruptive “payment Operating System.” The watershed moment will come when Apple includes Near Field Communication (NFC) hardware in its next iPhone and introduces the iWallet as part of iOS.

Now to the trillion dollar question: who will be the resulting winners and the losers in mobile payments? At stake are huge pots of gold accruing to the winners. These include:

Interchange. This is the toll charged by payment networks on every transaction, typically in the range of 2% of the transaction for credit cards, less for debit cards. Typically paid by merchants, interchange amounts to tens of billions of dollars across purchase volume of nearly $2 trillion worldwide.
Lending & Fees. Credit card issuers do much more than facilitate purchases. They are also big-time lenders, with nearly $600 billion in loans. A winning mobile payment platform could capture some of the interest and fees currently charged by the credit card banks.
Advertising & Loyalty. The mobile wallet can close the loop to connect specific marketing campaigns with in-store results, and at the same time be a channel for promotions to drive people into the store. Total ad spend in the U.S. alone exceeds $150 billion, presenting another huge opportunity.
Smartphone Sales. Let’s not ignore the obvious. Apple, Samsung, and even Research in Motion have demonstrated that enormous profits can be earned from the sale of smartphones. As the market matures, maintaining differentiation and ecosystem lock-in must be paramount concerns.

(more)

Apple: Sleeping Giant Within The Mobile Payment Industry

2012-05-03T15:00:00.000-05:00

by David Alton Clark | May 2, 2012 | Seeking Alpha

The mobile payment industry is still in its infancy. I believe the mobile payment industry is a multi-billion dollar, multi-year secular growth market which will have a huge impact to the bottom line of key mobile payment players. Aite Group states the volume of mobile payments will grow to over $200 billion by 2015. In 2010 mobile payment revenue was approximately $16 billion. That is an over 12-fold increase in just five years.

Apple (AAPL) is a dominant leader in the smart phone market with over 35 million in smart phone sales last quarter alone. They have not entered the mobile payment market yet, but I expect them to arrive on the scene very soon and disrupt the current mobile payment landscape. I speculate the iPhone5 will be mobile payment enabled. With 200 million existing customers and credit card numbers on file with Apple's iTunes service, this makes Apple the sleeping giant of mobile payments.

The use of smart phones as a mobile payment device is inevitable and underway. Please review the following discussion of the current mobile payments landscape followed by an in-depth review of Apple's current state and future prospects. (more)

Why are my credit and debit cards still embossed?

2012-05-02T14:38:00.000-05:00

By Douglas A. King | April 30, 2012 | Retail Payments Risk Forum

Having spent a number of years in the payments business focused on cards, I commonly receive questions from family and friends related to cards. I would be a wealthy individual if I received a dollar for every time someone asked me, "When am I going to get a card with a chip in it?" Although I am not able to offer any specifics on timing, I do feel confident in telling them that they are coming within a given time frame.

This past weekend, a neighbor out for a leisurely weekend stroll stopped me and asked, "Why do I still have an embossed credit card?" I must admit that I was a bit stumped by the question and couldn't offer him a reasonable explanation. I could not recall the last time that I had seen a "knuckle buster" machine used to make an imprint of a card. And who hasn't struggled trying to read your embossed card numbers and expiration date to make an Internet or phone transaction? Still pondering the question a few hours later, I did recall the food delivery driver who brought the old carbon paper slip, along with our food, to the door and used a writing pen to make an imprint of my card. I am quite certain that over the past five years, this was the only time an imprint of my card has been made—and this includes using my cards for purchases in taxis, from food truck vendors, and in developing countries such as Honduras, and remote Caribbean islands.

One answer to the need for embossed cards lies with network chargeback rules. Both MasterCard and Visa subject merchants to chargebacks on key-entered card-present transactions with no manual imprint. A key-entered transaction takes place when the terminal cannot read a card's magnetic stripe, so the vendor has to input the card number and expiration date. Even when this occurs, I am not so sure merchants follow the network's chargeback procedures. Do you remember a merchant making an imprint of your card in the rare instance your card information had to be manually keyed? Maybe it's time for the card networks to re-visit their chargeback procedures. (more)

Food Trucks: Where Mobile Payments Meet Mobile Food

2012-04-02T16:34:00.004-05:00

Mobility is not only transforming the way we communicate, it’s also changing the way we eat.

by Ricky Ribeiro | March 26, 2012 | BizTechMagazine.com

Gourmet food trucks have exploded in popularity in Washington, D.C., with customers flocking to the diverse army of restaurants on wheels for unorthodox and ethnic flavors not typically found in nearby brick-and-mortar restaurants.

$1 trillion
The dollar amount of mobile transactions forecasted for 2015
Source: The Yankee Group

In the past, food trucks were cash-only operations. But today, they wield tablets and smartphones capable of accepting credit card payments and e-mailing receipts to customers at the point of sale.

“We figured that given our price point, we were going to have to accept credit cards from the beginning,” Doug Povich, co-owner and operator of the Red Hook Lobster Pound Truck says. “People really get excited when they come to the truck and see us using the latest technology. It's not the typical POS that they see in a restaurant.”

All signs point to mobile point-of-sale as the transaction of the future. According to the Yankee Group, global mobile transactions grew to $241 billion in 2011, and are expected to reach $1 trillion by 2015. Povich estimates that roughly half of Red Hook’s patrons pay with credit cards.

“Just like we've seen this wave of smartphone and tablet adoption, I think now people are starting to ask, what more can I do with this device?” says Walt Rivenbark, AT&T vice president of mobile apps for SMB markets. “That's where I think people are really looking for applications and things that can help them run their businesses better.”

Growing Pains of a Restaurant on Wheels

Doug Povich says he got into the food truck business in 2010 after his cousin, Susan Povich, and her husband, Ralph Gorham, built a successful business in New York City selling lobster rolls at neighborhood flea markets and local fairs. Seeing the appetite for lobster rolls on the go, Susan approached her cousin about setting up shop in Washington, D.C.

He agreed to the venture, but brought on his friend Leland Morris, a formally trained culinary professional, to help him run the operation. (more)

2012-03-26T16:28:00.001-05:00

by Leena Rao | March 26, 2012 | TechCrunch.com

ViVOtech, the near field communication (NFC) software and systems company, has raised an additional amount of Series D funding, according to a news release issued today. The company said this is an internal round, but did not disclose the investors or the amount. To date, ViVOtech has raised $96 million from Singapore’s EDBI, SingTel Innov8, Motorola Solutions Venture Capital, Alloy Ventures, Citi Ventures (the venture arm of Citigroup), Draper Fisher Jurveston, DFJ Gotham, First Data Corporation, Miven Ventures, Motorola Mobility, Nokia Growth Partners and NCR.

Founded in 2001, ViVOtech develops payment software, NFC smart posters, contactless readers/writers, and over-the-air card provisioning, and transaction management infrastructure software. NFC allows devices to exchange data over short distances with a wave or a tap. The company’s readers are found in big-name retailers and stores such as McDonald’s, Home Depot and Whole Foods as well as in taxi cabs.

ViVOtech has shipped nearly one million NFC payment readers to 328 customers in the United States and 181 customers internationally. The company says that it has shipped over half of the NFC payment terminals installed by merchants globally.

ViVOTech’s technology is also licensed by other companies and merchants to enable mobile payments. In fact, Google used ViVOtech’s technology for last year’s Google Wallet NFC push. Isis, the NFC joint venture between carriers AT&T, T-Mobile, and Verizon; also teamed with ViVOtech recently. (more)

Balancing payments risk management and regulation with innovation

2012-03-20T14:36:00.002-05:00

By Cynthia Merritt | March 19, 2012 | Federal Reserve Bank of Atlanta

Government must be careful not to overreact to, or stifle, new innovations that can greatly benefit the consumer and the American economy. Government should take advantage of marketplace solutions to issues where appropriate. To do this, and at the same time to be in a position to act appropriately, it is important for government to maintain expertise in electronic money and payments development, and to consider carefully major questions presented by these developments. (Excerpt from 1996 paper prepared by the Department of Treasury on emerging electronic money and banking innovations.)
This quote appeared in a presentation given last week by John Carlson, executive vice president at BITS, a nonprofit group that fosters communication around technology issues that affect the financial services industry. John used this quote to demonstrate that, even in 1996, the Treasury Department recognized the need to not over-regulate at a time when financial institutions were beginning to experiment with Internet banking.

In the presentation "Hardening Payments for the Next Generation," which he gave at the BAI Payments Connect conference, John stressed that we still have to exercise care as financial institutions continue to innovate. The industry must still consider how it will balance the benefits of innovation in payments with the need to manage changing risks and ensure that regulators keep up with the changes. John warned that, despite the myriad of new threats, the temptation to overreact to these with regulation and legislation may stifle payment innovations. He emphasized that, instead, payment stakeholders must collaborate and share information.

Following are a few other noteworthy points from the presentation.

Rise in fraud and security issues in payments
John noted that as more nonbanks enter the marketplace and new innovative alternative products are introduced, payments fraud is evolving alongside. We need to keep looking at emerging payment issues involved with EMV-enabled payments, for example, as well as mobile payments, cloud computing, and payments conducted via social media. At the same time that these products are entering the marketplace, fraud is evolving in new and unexpected ways. And as global crime rings increasingly engage in cross-border activities, for example, a rise in cyber-security threats will likely continue. (more)

Sources: PayPal to launch Square competitor

2012-03-13T15:56:00.003-05:00

By Ryan Kim | Mar. 12, 2012 | GIGAOM.com

PayPal’s plans to announce a solution for small businesses at an event this Thursday includes a mobile payment dongle that would compete against Square, Intuit (intu), Verifone and others, according to sources we’ve talked to who are familiar with PayPal’s plans. The dongle, which might be shaped like a triangle, will allow small business owners to process credit card swipes from a smartphone, similar to Square, Intuit’s GoPayment and Verifone’s PAYware.

The potential move, part of a larger brand refresh, would fall in line with PayPal’s recent strategy to bring its payment services into physical stores. It’s working with a host of partners to bring its in-store system to bigger retailers including Home Depot, which is launching the service in more than 2,000 locations. That system relies on integrating PayPal software into existing point-of-sale terminals so users can pay either by swiping a PayPal pre-paid card or by entering in their phone number and PIN, which connects to their account.

The in-store system works ideally for retailers with existing hardware. But a mobile payment acceptance tool like Square would allow PayPal to target much smaller businesses with one or two locations and give them a simple way to process card transactions. Square has shot to success with its dongle and is now processing $4 billion annually. PayPal spokesman Anuj Nayar declined to confirm the news, saying: “We’re unveiling what we believe will be the future of commerce for small businesses.” (more)

AmEx testing prepaid cards in some Wal-Marts AmEx testing prepaid cards in some Wal-Marts

2012-03-06T16:13:00.000-06:00

By Andrew R. Johnson | March 5, 2012 | MarketWatch.com

NEW YORK -(MarketWatch)- American Express Co., which is trying to expand beyond the affluent customers it normally lends to, is testing the sale of prepaid cards in some Wal-Mart stores.

The New York-based lender is marketing the reloadable cards, which can be used wherever American Express is accepted, under the name "bluebird" in about 180 of the discount retailer's stores on the West Coast, Laura Kelly, an executive helping spearhead the company's push into prepaid cards, said in an interview Monday. Wal-Mart operates more than 4,400 stores in the U.S., including its Sam's Club warehouses.

Customers can also sign up for the card online.

Kelly declined to discuss specific details about the program or whether it will be expanded into additional stores, but said it is part of American Express's strategy to appeal to a broader swath of consumers.

A spokeswoman for Wal-Mart Stores Inc. confirmed the trial Monday and said "depending on our customers' reaction, we may roll out to additional stores this year."

Prepaid cards are like traditional debit cards but typically are not tied to a checking account. Until recently, they have been marketed mainly by non-bank companies to low-income consumers through check cashers, payday lenders, pharmacies and other retailers. (more)

Why Debit-Card Overdraft Fees Are Under Scrutiny Again

2012-02-27T15:07:00.000-06:00

Past reforms tried to rein in the fees, but consumers still pay $16 billion a year

by Karen Weise | February 22, 2012 | BusinessWeek.com

Today the new Consumer Financial Protection Bureau said it is going to take a look at debit-card overdraft fees. If it feels like deja vu, it kinda is. It’s been a year and a half since new rules changed how banks can charge for overdrafts, but the fees definitely haven’t gone away. Let us explain.

In November 2009, the Federal Reserve moved to rein in the high fees that banks charged consumers who overdrew their accounts when making debit-card purchases or withdrawing cash from an ATM. Overdraft fees, which could run as much as $35 for each overdrawn transaction, were the source of a lot of negative press at the time, as consumers discovered a slice of pizza could cost almost $40 after the fees. The new rules, which went into effect during the summer of 2010, said banks could no longer automatically enroll consumers into overdraft programs; instead, customers would now need to sign up for the service. (Banks could still have automatic fees on bounced checks and online bill pay.)

In theory, that should have dealt a major blow to the overdraft business—after all, who would opt in for a service that could result in a $40 slice of pizza? The changes, however, only made a dent. As we reported in October, overdraft fee revenue to banks from ATM and retail purchases was still on track to top $16 billion last year, just a 16 percent drop from its peak in 2009, according to Moebs Services, a banking consultancy. The rates are still so high in part because many banks launched aggressive marketing campaigns to get customers to sign up, with letters, calls, and e-mails that at times were alarmist warnings of what would happen if you didn’t opt in.

Bankers, for their part, say it wasn’t marketing that led consumers to sign up—it’s because consumers want the ability to overdraw their accounts in a pinch. “This can be a way of getting piece of mind,” says the American Bankers Association’s Richard Riese. He says even if a consumer didn’t fully understand the overdraft fees when he signed up, he’d get notice of the fee on a monthly statement and could opt out at any time. “The light bulb would have gone off real fast if it wasn’t what they wanted,” he says. (more)

Groupon On A Shopping Spree: Buys Mobile Payment Specialist Kima Labs

2012-02-20T16:19:00.000-06:00

by Ingrid Lunden | February 18, 2012 | TechCrunch.com

Another acquisition for Groupon, and a sign of how the e-commerce company is getting more focused on mobile as a route to future growth: it has picked up Kima Labs, which makes mobile barcode reading app Barcode Hero and mobile payment app TapBuy. The terms of the deal were not disclosed; we’re trying to find out.

The news comes just hours after news broke that Groupon had bought another mobile startup, Hyperpublic, which makes geolocation technology.

As a result of the acquisition, Barcode Hero — according to its site, which confirms that Groupon has purchased Kima Labs — will be closing down its service effective Monday, February 20. That means its iPhone app will no longer be available to download after that date. Those who already use the app will have until March 16 to download their data.

As for TapBuy, it’s not clear yet what will happen with the company’s service: the site still does not make any mention of the acquisition, so presumably users of its location-based deals will be able to continue using the service. [Update on this below.]

Like Groupon, TapBuy offers daily deals, in its case for some 100 brands. It also processes transactions using credit card information provided by users, providing some intelligence behind it by grouping purchases together and adding coupons to purchases.

Kima Labs was founded by Blake Scholl and Jason Crawford, who cut their e-commerce teeth at Amazon.com, among other places, and its main focus is mobile shopping. Scholl has confirmed the acquisition directly to me, too, for what it’s worth.(more)

Apple (Quietly) Ventures Into Mobile Payments

2012-02-09T09:28:00.001-06:00

By Jeremy Quittner | Tuesday, February 7, 2012 | PaymentsSource

Year after year, Apple fans have expected the company to make a splash with an iPhone-based mobile-payment system. And year after year, Apple has let them down, but but a lot has been going on under the surface.

Many mobile-payment systems, including Google Inc.'s, use Near Field Communication technology as the starting point. To use Google Wallet at the point of sale, a consumer must have one of the few NFC-equipped smartphones running its Android software. Similarly, a merchant must have a terminal with the proper hardware to read the chip.

For Apple, however, NFC is not the key ingredient. If it comes, NFC simply will be the icing on a cake that Apple Inc. has been baking–and will still be baking–for a very long time.

"Right now, Apple devices are not NFC-equipped, but they are a more flexible environment from a software perspective than traditional" point-of-sale terminals are, says Rick Oglesby, a senior analyst at Aite Group LLC.

Google's Android is the leader in smartphones, according to Gartner Inc., but the Android product line is too fragmented to sustain the sort of payment ecosystem Apple is building. Android devices come in hundreds of different shapes and sizes along with operating systems that carriers often tweak according to their whims.

Apple's i-devices, by contrast, are not customized for different carriers and have fewer hardware variations (Apple typically removes older iterations of its hardware from stores whenever a new version is launched). This allows for a uniform experience across the entire product line and a more practical foundation for a payment system, experts say.

Representatives from Apple did not respond to inquiries made by phone and email. (more)

To Sign Merchants Nationwide, Square Heads to Campus To Recruit a Sales Force

2012-02-06T16:50:00.003-06:00

Digital Transactions | January 31, 2012 |

Square Inc. is quietly assembling a part-time sales force of college students nationwide who will be entrusted with finding local merchants that would use Square as their payment processor. The development may mark a major change in the way that Square, which has benefited from a huge amount of free publicity, books merchants for its payment service that caters to very small businesses and individuals who sell goods and services part-time.

San Francisco-based Square posted a notice for a “Square U Representative” position last month on its Web site and has put out reminders about it this month through Twitter as well as a feature story about it on its Facebook page. The job posting indicates the position is in San Francisco, but adds that positions also are available “in cities and towns across the U.S.” The posting says reps would work nine to 15 hours per week. Jobs would last six months, but the terms of “high performers” could be extended.

In addition to developing a “keen understanding” of Square’s brand and long-term vision, major duties of the Square U reps are to “grow Square usage and activate new Square users in your community” and “engage with local businesses, casual retailers, and managers of business associations,” the notice says.

A spokesperson for Square declines to discuss the initiative, saying by e-mail that, “the Square U program is actually fairly new and hasn’t really kicked off yet.” (more)

Does Square Have A Doppelganger In The UK? Meet mPowa

2012-01-25T16:06:00.000-06:00

By Ingrid Lunden | January 24, 2012 | PaidContent.org

Square, the high-profile mobile payments company started by Twitter’s Jack Dorsey, has yet to launch outside the U.S. But in the meantime, another, similar-looking competitor has sprung up in the UK: mPowa.

The new service, due to launch in mid-February, this week opened its doors for pre-registration for “small businesses, traveling salespeople and other hard-working Brits”, to received free, square-shaped dongles that plug into a mobile device to let merchants scan people’s credit and debit cards.

Like Square, mPowa will make its money on a fee charged per transaction. Unlike Square, the fee will be lower: 0.25 percent per charge.

mPowa says when it goes live it will work on iPhone, iPad, Android and BlackBerry devices. A spokesperson for the company tells paidContent that the apps to make the dongle work on these platforms are still pending approval.

The spokesperson declined to say whether any companies have signed up to use the service yet. The start-up’s parent company, Powa, already has a relationship with Barclay’s, which has an exclusive deal to sell Powa’s web-based e-commerce platform to businesses in the UK. Some thought that might mean Barclay’s would also distribute the dongles on behalf of mPowa, too—although this has not been confirmed by either party.(more)

PayPal Will Be Expanding Mobile Payments Test To 51 Bay Area Home Depot Stores

2012-01-19T15:03:00.000-06:00

by Leena Rao | January 18, 2012 | TechCrunch.com

PayPal recently revealed that it was testing an in-store payments technology both via mobile and point of sale systems on a ‘friends and family’ basis at Home Depot. Initially, the pilot was only for 5 stores. Today, on eBay’s earnings call eBay President and CEO (and interim PayPal president) John Donahoe revealed that PayPal will be extending the pilot to 51 Home Depot stores in the San Francisco Bay Area.

Basically, via the pilot customers (for now, this only applies to PayPal employees) are able to pay for items via their PayPal account at Home Depot’s point of sale systems. They can either use a pin code via their mobile phone or a specialized PayPal credit card that can be swiped, the payment amount will be deducted from their PayPal account.

The bigger vision of brick and mortar partnerships are set to include location-based offers, making payments accessible from any device and offering more payments flexibility to customers after they’ve checked out. Users will also have the ability to access realtime store inventory, receive in-store offers, and real-time location-based advertising from stores. PayPal will also help retailers use location and transaction data to improve the experience for consumers.

As PayPal’s Anuj Nayar told us recently, the Home Depot test program was individually established between PayPal and the big-box retailer, but in the future, PayPal is partnering with point-of-sale software companies to help expand the in-store program to other brick and mortar retailers.

The assumption is that the results of the smaller test at Home Depot, which only launched a few weeks ago, must have been positive, so Home Depot is expanding the pilot program. We’re told that PayPal will be partnering with at least 20 other known top-tier retailers for the in-store payments test, which will be unveiled later this year. (more)

PayPal Partners With Point-Of-Sale Software Company AJB To Scale In-Store Payments Option To Big Box Retailers

2012-01-11T17:00:00.001-06:00

by Leena Rao | January 10, 2012 | TechCrunch.com

Exclusive: We’ve received more details on how PayPal will be scaling its in-store payments technology at major retailers. As we reported last week, PayPal is currently testing the mobile payments and point-of-sale integrations at Home Depot on a friends and family basis, in five stores. Today, we’ve learned that PayPal is partnering with AJB Software, a company that provides point-of-sale software to large brick and mortar retailers, to integrate the online payments giant’s technology into their offerings.

AJB basically provides a communications gateway that connects a retailer’s point-of-sale system with financial institutions. Over 140 large-scale retailers including Kohl’s and BestBuy use AJB’s software to manage payments. In a nutshell, the partnership allows an easy way for big box retailers to offer consumers a way to pay via PayPal in their stores.

AJB will build a native PayPal interface within its integrated payment solutions platform. The interface can then be made available to AJB’s retail customer base. AJB’s Retail Transaction Switch will provide the framework to allow the millions of PayPal account numbers to be processed as financial tender by existing and future customers of AJB. Similar to the Home Depot integration, PayPal members will have the option of paying for merchandise by swiping a PayPal Access Card or by entering the mobile telephone number and password associated with their accounts.

The integration with AJB’s offerings will roll out in the first quarter of this year, says the companies.

While it’s still unclear the exact nature of how PayPal’s in-store integrations will work, the bigger vision of brick and mortar partnerships are set to include location-based offers, making payments accessible from any device and offering more payments flexibility to customers after they’ve checked out.

Users will also have the ability to access realtime store inventory, receive in-store offers, and real-time location-based advertising from stores. PayPal will also help retailers use location and transaction data to improve the experience for consumers.

For PayPal, this is one way that the company can scale the reach of its in-store payment system without having to partner individually with each retailers. PayPal’s Anuj Nayar tells me that the Home Depot test program was individually established (not via AJB) but going forward, PayPal will be making a number of similar payments ecosystem deals in the coming months to expand the reach of the new payments option. (more)

Business Pioneers Inspire, Instruct Executive Students

2011-12-19T10:39:00.005-06:00

Inaugural C-Level Dinner at Naveen Jindal School of Management Provided One-on-One Networking

Nov. 30, 2011 | UTD News Center

UT Dallas student Kristie Veal likes new adventures. “I like to know what lies ahead versus what’s familiar,” she said.

But the Naveen Jindal School of Management (JSOM) executive graduate student had never envisioned herself as a business trailblazer until a recent networking event inspired her to consider the possibilities.

The inaugural C-Level Dinner, held Nov. 11 at the school, introduced her to more than a dozen entrepreneurial executives seasoned in the travails and triumphs of launching their own companies.

“Listening to their stories is just inspiring,” Veal said midway through the event, which was sponsored by the Institute for Innovation and Entrepreneurship (IIE) at UT Dallas and the JSOM-based student Entrepreneurship Club.

The various accounts of how the executives built their businesses helped Veal see the potential of some of her own ideas.

“I didn’t come in [to the Executive MBA program] to start my own business,” she said. “However, it sounds possible now.”

Madison Pedigo, E-Club adviser and assistant director of the school’s innovation and entrepreneurship programs, and E-Club vice president Amrita Choudhury helped organize the dinner to give students one-on-one access to business pioneers.

During the event, incoming E-Club president Frank Morrone, called on each executive to tell their story. The evening was full of anecdotes, pep talks, insights and unvarnished truths as the executives described their paths in business.

Craig Wax, CEO of Invodo, asked for a show of hands from those who had recently watched a video via a mobile device or computer. “Video is taking over the Internet,” he said as a sea of hands went up.

He explained that his Austin-based company creates product videos and captures data analytics after the videos have been posted on websites such as YouTube or retail sites.

Students were able to join executives for smaller dinner-table discussions.

Jeff Thorness, founder and CEO of ACH Direct in Allen, said he spoke to students at his table about motivation, management skills and how to grow a fledgling business into a fully realized operation. ACH Direct is a check and payment verification processor.

He said he was impressed by the students' questions. He said he viewed his invitation to the event as a compliment. “I just couldn’t turn it down,” he said.

Graduate student Harold Burman sat with Craig Moore, the retired CEO of Cici’s Pizza who now runs the bakery franchise Nothing Bundt Cakes. Burman said the businessman’s insights were helpful because Burman is interested in franchising.

Jim Lafferty, founder and president of medical device company Genesis Biosystems in Lewisville, drew some of the biggest laughs of the evening.

His first youthful entrepreneurial effort’s profit strategy was built on “zero cost of doing business.” He sold squirrel tails to neighborhood kids for bicycle handlebar streamers, “25 cents for gray tails and 50 cents for red ones.” His free supplier was his grandfather, a West Virginia coal miner who shot squirrels for food.

Pedigo watched as executive graduate student Keith V. Otto and John Jaggers, a partner in the Dallas-based venture capital firm Sevin Rosen Funds, had a discussion. Unable to pause the conversation, Pedigo was pleased. “This is really good. This is what we wanted – real networking.” (more)

Amazon Will Pay Shoppers $5 to Walk Out of Stores Empty-Handed

2011-12-06T13:08:00.001-06:00

by Tricia Duryee | December 6, 2011 | AllThingsD.com

Amazon is offering consumers up to $5 off on purchases if they compare prices using the online giant’s mobile phone application in a store.

The promotion goes live Saturday and will serve as a way for Amazon to increase usage of its bar-code-scanning application, while also collecting intelligence on prices in the stores.

This holiday season, mobile commerce is surging as more people become comfortable using applications on their phone to compare prices or simply shop when not at home or at work.

On the Monday after Thanksgiving, the biggest online shopping day of the year so far, mobile sales reached 6.6 percent, jumping from 2.3 percent in 2010, according to IBM’s online retail study.

Amazon is not the only company hoping for a strong mobile Christmas. (more)

Trouble brewing for Google Wallet

2011-12-01T15:58:00.001-06:00

Cherian Abraham | November 29, 2011 | MobilePaymentsToday.com

I believe in Google's capability to actually pull off mobile payments. I believe Google does get it. With all its initial failings, its misplaced loyalty towards NFC and the existing payment rails, I believe it truly have a shot at fixing payments and closing the loop in local commerce.

Let's look at what is going right for Google: Android is fast becoming the dominant ecosystem on mobile, with over 200 million devices so far and 550,000 activations happening every day. It has made Android a force of nature that is now slowly eating away at Apple's market share. It has a mobile wallet initiative out front at least more than a year before the closest competitor – Isis. It has had some notable successes with retailers (e.g., Gap) and has partnered with New Jersey Transit for payments. Formidable partnerships with Citi, FirstData and MasterCard should be all that is needed to prod more issuers in to joining Google Wallet.

Even with all this momentum, Google Wallet does not seem to be having a good day so far.

Despite Visa's significant call for EMV in the U.S. by way of threats to shift fraud liabilities to processors (and from there to merchants), balanced equally by the carrot of PCI audit compliance avoidance, NFC still faces considerable challenges to adoption. Apple chose not to include NFC in the iPhone 4S knowing fully that to do so without first creating a compelling offline commerce solution (the strains of which were heard in its recently revamped Retail App enabling easy payments in stores) would be advantageous to Google or others. Rumors abound that the Isis carriers are discouraging Google Wallet from being included on the Android phones provisioned on their networks, which has far reaching implications for both Google and Android. Meanwhile, Amazon has the clout to both build a payments presence and roll it out as part of its forked Android flavor Fire. But more importantly, Google Wallet is lacking what it needs most to make an impact: issuers. (more)

Apple, not carriers, will drive NFC growth

2011-11-29T16:00:00.001-06:00

Smartphones incorporating the payments technology will rise from 10% to 50% of the total, but cellcos' power will erode, say analysts

By CAROLINE GABRIEL | 24 November, 2011 | Rethink-Wireless.com

Mobile payments based on NFC have been talked up relentlessly this year by the operators, which believe this is a link in the mobile chain they can control because NFC is usually integrated with their SIM cards. But the actual installed base of NFC-enabled handsets remains fairly small, and though it will increase significantly next year, that will mainly be driven by Google Wallet and by other vendor launches.

According to research carried out by Taiwan's DigiTimes, which monitors the country's device supply chain, over half of smartphones will support NFC by the end of 2014, compared to less than 10% now. The big change will come with wider Android and Google Wallet support plus the entry of Apple and Microsoft. These will join the existing mobile NFC platforms, Symbian, BlackBerry and bada.

The main obstacles to growth, according to DigiTimes' sources, are standardized specifications plus the need for a wider ecosystem. The latter could be delivered by the iPhone 5, which will almost certainly include the m-payments systems, and by Microsoft, which has already promised it for WP7 next year. But the biggest brakes on growth in 2011 have really been a low level of consumer awareness, which has led to merchant apathy in adopting the necessary terminals. This was highlighted by the caution of eBay and its PayPal unit in embracing NFC - the firm is more focused on web-based solutions which do not require new infrastructure in stores. (more)

Facebook Credits updated, new payment methods added

2011-11-22T16:43:00.001-06:00

By Emil Protalinski | November 18, 2011 | ZDNet.com

Summary: Facebook has announced several updates to Facebook Credits, including a breaking change for the Credits callback, new payment methods, a new policy, and updated documentation.

Facebook has announced several updates to Facebook Credits. There are four major news items you should know about: a breaking change for the Credits callback, new payment methods, a new policy, and updated documentation.

The breaking change is the removal of the ’settled’ callback. The Pay Dialog currently generates three callbacks: the first is the item details with method=payments_get_items, the second is method=payments_status_update after the user completes the order (status is moved from the placed to settled state and sent back to Facebook), and the third sometimes happens to notify you that the order has been moved to the settled state (requires no action/response from the developer).

Previously, Facebook’s documentation asked developers to fulfill the order on status=settled. Now, this callback is no longer called deterministically and as a result, if you are fulfilling the order on this callback, then your users may not be getting the item in some cases. (more)

Square mobile payments surge to $11M a day

2011-11-14T16:33:00.001-06:00

By Jason Ankeny | November 14, 2011 | FierceMobileContent.com

Mobile payment solutions startup Square is now processing $11 million in transactions each day, almost triple the $4 million each day the company quoted in late July.

Square CEO Jack Dorsey revealed the latest milestone Sunday during an appearance at the Techonomy conference in Tuscon, Ariz. Dorsey credited Square's growth to the same dynamics that galvanized microblogging platform Twitter, which he co-founded in 2006: "We haven't defined a lot of how people are going to use them," he said, stating users can adapt each service to their respective demands. "We don't want to make Square all about taxi cabs. And we don't want to make Twitter all about celebrities and politicians."

Square enables users to accept credit and debit card purchases anywhere and anytime via iPhone, iPad or Android smartphone. Sellers input the transaction total, swipe the consumer's card through a reader dongle that plugs into the device's audio input jack, and Square handles the remainder of the transaction, claiming a flat 2.75 percent fee. Last month, Square announced it will begin selling the card reader unit in Walmart stores across the U.S., bringing the number of retail outlets offering the dongle to more than 9,000.

Earlier this month, Square introduced a revamped version of its Card Case application for Apple's (NASDAQ:AAPL) iOS platform, enabling consumers to make purchases and settle tabs without removing their mobile device from their pocket or purse. Card Case leverages location-based service enhancements in Apple's iOS 5 platform update to identify when a user's smartphone is within 100 meters of a participating merchant. Consumers who've opted in to the Card Case service and attached a credit or debit card to their Square account can automatically open a tab with the retailer and pay for the transaction simply by giving their name. (more)

The End of the Credit Card?

2011-11-03T16:21:00.001-05:00

By Farhad Manjoo | November 2, 2011 | Slate.com

Card Case is Square’s effort to close the circle—after tackling the cashier side of transactions, the company wants to fix the customer side. The first version of Card Case, released for iPhone and Android in August, also allowed you to pay with your name, but it didn’t allow for automatic payments. When you went into a store, you had to pull out your phone, open the Card Case app, and tap “Use Tab” to pay. That’s still how things work on the Android version of Card Case. (Square hasn’t said when it will release a new version for Android phones.) But in the iPhone app, Square has taken advantage of a new Apple technology called “geofencing,” which notifies an app when a phone has entered a specified geographical area. The key thing about this approach is that it happens in the background; the app doesn’t have to be on for it to work.

This might sound a bit scary. Isn’t an app that pays for stuff automatically going to lead to a lot of fraudulent purchases? Square has added several security provisions that will minimize unauthorized purchases. First, you need to turn on auto-payments for each individual store where you’d like to use it—it’s impossible to tell Card Case to turn on auto-payments for every store in San Francisco. Second, your name will only appear on a cashier’s screen when you’re within 100 feet of the store. But what if your nemesis sees you outside a coffee shop, and then goes inside and buys stuff using your name? That can’t happen because the cashier will notice that your face (which shows up on her screen) doesn’t match his face. (The photo also prevents a mishap if there are two Card Case users named John Smith in the same coffee shop at the same time.) Finally, your phone notifies you when a purchase goes through, so if someone does manage to buy something with your name, you’ll see it immediately.

The only downside with Card Case, at present, is the limited number of places where you can use it. Every business that has signed up to use Square payments can accept Card Case payments, but they have to opt in to do so. At the moment, there are only 20,000 businesses accepting Card Case, and they’re clustered in big cities, with San Francisco and New York being the most popular. But I suspect that the new version of the app will push many other stores to join in, for two reasons. First, the Card Case app features a beautiful directory of nearby, Card Case-enabled stores—I suspect that lots of businesses will want to turn on Card Case just to be part of that directory. Second, business owners will also went to get on the Card Case bandwagon for the same reason they accept credit cards: To a customer, buying through Card Case doesn’t feel like spending money. It doesn’t feel like a commercial transaction at all. And because it doesn’t feel bad, we’re likely to do it without thinking. Ka-ching! (more)

Why banks want to wean you off debit cards

2011-10-31T15:28:00.002-05:00

It's simple: Financial institutions can make more money if you use credit

By Herb Weisbaum | October 26, 2011

Debit cards are no longer the darling of the banking industry. That’s because new federal rules limit the “swipe fee” big banks are paid when you use their card. This could lower industrywide revenue from debit cards by billions of dollars a year.

One way some banks hope to get that money back is to charge their debit card customers a monthly fee. Another is to boost credit card use.

“We really think banks are hoping that the alternative people choose in place of the debit card is a credit card,” says Bill Hardekopf, CEO of lowcards.com. “Why? Because banks make a lot more money every time we use a credit card than when we use a debit card.”

Carol Kaplan, senior director of public relations with the American Bankers Association, disagrees. Kaplan tells me she has not seen any evidence that banks are trying to encourage their customers to switch from debit cards to credit cards.

“Banks believe that their customers should have choices — that’s why they offer both credit and debit cards,” Kaplan says. “If banks didn’t want customers to use debit cards, they wouldn’t offer them. Ultimately, customers will drive the market. If they prefer debit cards over credit cards, then banks will continue providing debit cards.” (more)

Why banks want to wean you off debit cards

2011-10-27T14:35:00.003-05:00

By Herb Weisbaum | October 26, 2011 | MSNBC.com

Debit cards are no longer the darling of the banking industry. That’s because new federal rules limit the “swipe fee” big banks are paid when you use their card. This could lower industrywide revenue from debit cards by billions of dollars a year.

One way some banks hope to get that money back is to charge their debit card customers a monthly fee. Another is to boost credit card use.

“We really think banks are hoping that the alternative people choose in place of the debit card is a credit card,” says Bill Hardekopf, CEO of lowcards.com. “Why? Because banks make a lot more money every time we use a credit card than when we use a debit card.”

Carol Kaplan, senior director of public relations with the American Bankers Association, disagrees. Kaplan tells me she has not seen any evidence that banks are trying to encourage their customers to switch from debit cards to credit cards.

“Banks believe that their customers should have choices — that’s why they offer both credit and debit cards,” Kaplan says. “If banks didn’t want customers to use debit cards, they wouldn’t offer them. Ultimately, customers will drive the market. If they prefer debit cards over credit cards, then banks will continue providing debit cards.”

Those who study the credit card market tell me they believe one reason banks are adding debit card fees is to shift some people back to credit cards.

“Banks are looking in every nook and cranny for revenue raisers,” says Adam Levin, chairman of credit.com. “There’s no question they do well when consumers use credit cards.” (more)

Google’s NFC Wallet Predicament

2011-10-26T14:35:00.000-05:00

by Dan Balaban | October 25, 2011 | NFC Times

Even as Google sends out its “brand ambassadors” to catch video images of consumers gushing as they tap to pay for the first time with the Google Wallet, doubts are growing that the Web giant will be able to make this a mass market service.

Google’s announcement last week in Hong Kong of its much-anticipated Galaxy Nexus smartphone came with extra promotion for NFC-based “Android Beam,” a feature that is essentially a tweaked version of the interface for enabling users to transfer Web links with NFC’s peer-to-peer mode.

But there wasn’t a word on how the phone could be used for the wallet.

A source tells me that U.S. mobile operator Verizon Wireless, which announced Friday it will sell the high-end Galaxy Nexus, is balking at supporting the wallet. Verizon, the largest member of the Isis joint venture, has its own plans for NFC wallets and they apparently don’t include Google.

A Google Wallet spokesman finally got back to me to say that, yes, the Galaxy Nexus “can” support the wallet. That was expected, because the phone almost certainly carries an embedded secure chip and the NFC middleware and application-programming interface to support the wallet. But the spokesman added that he could not “elaborate on details on the consumer release” of the phone, either in the U.S. or overseas. (more)