Payment Talk

NFC vs. Mag Stripe

2011-10-06T11:12:00.001-07:00

Who cares? Did you ever go to a Mag Stripe conference? Why are there so many conferences now focused on NFC? Stupid question! Because it is the latest bandwagon and therefore conference organizers jump on it. What really matters? It isn't the technology. It is the simple fact that the mobile phone is adding more and more value to our lives and regardless of the technical bridge used, it is obvious that using our phones as a proxy for our payment credentials has great promise. Freeing consumers from having to carry around a lot of cash or providing (hopefully) responsible consumers with a credit facility is what matters. This matters to both consumers and merchants. So, lets all stop worrying about which technology is going to win and give the consumers and merchants what they want. Bar codes, mag stripes, NFC, OTA are all going to co-exist for a very long time. Damn, I was at a resort recently and they still used an old knuckle buster to capture my credit card info. p.s. They had advanced to the carbonless version of the sales draft!

Micropayments?

2011-10-04T15:01:00.000-07:00

I am in the midst of reading a new (& well written) whitepaper on Mobile Payments from the Smart Card Alliance.

I came across this defition of transaction sizes; "2.4.1.2 Transaction Size
Transaction size affects the choice of mobile payment technology and approach. Mobile payments typically fit into one of two transaction size categories. Micropayments (less than $10-$25) are typical for paying for ring tones, music, parking, transit, coffee, and items in convenience stores. Macropayments (over $25) are typical for all other transactions, such as person-to-person domestic and international remittances, charitable donations, Web site purchases, bill payment and retail POS."

I see things here a little differently. I have always thought of micropayments as $1-$2 in size, minipayments as $3-$7 and normal or as they say macropayments as $8+.

What are your thoughts?

Try it, you'll like it (or maybe not)....

2011-07-15T08:17:00.000-07:00

I read press releases everyday about what are pitched as the latest and greatest innovations in payments. But, then, I go behind the "lines" and sign up (if necessary), and actually try the product or service. You need to do that too, before rendering an opinion.

I have (or had if they have gone four paws to the sky) the following accounts; Serve & the predecessor Revolution Money , Obopay, BlingNation, PayPal, Square, Mazooma, Kwedit, Rixty, Starbucks, PaybyTouch, Mobibucks, ClipperCard(BART NFC), Safeway echeck, Google Check-out, itunes, BillmeLater, Click n'Buy, Verified by Visa, Amazon PayPhrase, TwitPay, etc., way too many to name (but I tried).

There is one thing to keep in mind, though, when you do this. In a prior phase of my career, it was important for me to have a credit card from every brand and every major bank since I was calling on all of them and it was awkward to take someone from Visa out to lunch and pay with an Amex card. Once when applying for a mortgage, everything was excellent in my application but the one hit I took was having too many accounts. :-)

First NFC Payment Completed!!!

2011-06-17T14:57:00.000-07:00

Wow! I actually found a merchant to use my NFC enabled Discover Card to pay for a recent purchase. It was at Mickey D's. (BTW - I have been showing off my Discover NFC decal which I have applied to the back of my iPhone to everyone!)

NFC (or Mobile Payments depending on your preferred spin) - My real life story

2011-05-13T13:24:00.000-07:00

So, I was in NJ on business this week. I stopped in at a supermarket, picked up a few items and arrived at the check-out. There was a Verifone (still brings a smile to my face everytime I see one considering my tenure there during their formative years)terminal with the necessary NFC attachment so since my iPhone was already in my hand (playing Words with Friends while waiting to pay) and is equiped with my recently received NFC decal from Discover, I thought GREAT, I finally found a place to use NFC.

I started tapping my phone on the NFC reader. The clerk looked at me like I was from MARS. He had no idea what I was doing - "dah, have never seen that before". Well, it did not work, so out came my credit card and a simple swipe and I was done.

I contrast that with my experience (previously written about) at Starbucks using the iPhone 2D Bar Code app. Bravo!!!!

The point is, it isn't about the technology. It is all in the execution. And, the challenges of a successful execution at the very diverse and complex POS are staggering. Under the best of circumstances, this is a 5-10 year evolution. For God's sake, people are still writing checks at the supermarket register.

Ouch, another major breach! (Not an issue for Direct Carrier Billing!!!)

2011-05-04T08:14:00.000-07:00

One of the major benefits of DCB (Direct Carrier Billing) is that the merchant is not burdened by having to handle or store any sensitive information that could be used to create subsequent fraudulent transactions and therefore there is no PCI.

We talk often of the benefits to consumers;
- no username/passwords to remember
- everything they need to transact is in their heads and their hand
- no enrollment
- for someone to put a fraudulent charge on their bill, they would have to have their mobile phone in their hand at the exact moment of the tx and depending on the carrier, also have to know their billing Zip Code. (note - this add'l 2nd factor of auth will be available on two of the four major carriers within a month and three of the four by late summer).

But this is a major benefit to the merchant!

Alternative Payment Systems Innovations Conference, San Francisco, 3/29-3/30

2011-04-08T08:26:00.000-07:00

I attended and moderated a panel at this conference on Alternative Payments. The emphasis of the conference was Mobile, dah! Isn’t every conference these days? This was the 2nd annual version of this event and I would rate it a 7:10. It attracted a very high quality group of speakers (present company excluded!). It was missing a critical mass of attendees and especially prospective buyers in the form of merchants. That is a common problem with most payments conferences, other than the Direct Response Forum and Merchant Risk Council which are both primarily merchant grass roots driven.

The most profound thing that came out of this conference was a quote from a former colleague and now esteemed consultant, Richard Crone. Richard stated; “the one who enrolls, is the one who controls” and further that “the carriers have the consumer’s payment info and access to leverage their device for security” and "are therefore in the best position to win in mobile payments". I could not agree more with Richard and that is the why I came to BilltoMobile. We are an extension of the carrier’s platform and leverage that existing enrollment and the ability to validate not only the phone but a 2nd factor of authentication, the billing zip code as well.

Kindle Experience

2011-03-22T20:44:00.000-07:00

After 30 years having the Wall Street Journal delivered to my home and reading it every day, I switched to a Kindle subscription.
They offer a 14 day trial and I am on day two.
When I went to lunch today, I realized I did not have my Kindle with me but alas I had my iPhone which I had loaded the Kindle app on.
I thought, GREAT, I can sit and eat and read the Journal.
But, alas, it was not there. So, I emailed the customer inquiry link via the app and got a prompt answer back that newspaper and magazine subscriptions are only available on the Android Kindle app, not the iPhone Kindle app. If this sort of thing persists, it could make consumers switch to a more open platform where they can have uninhibited access to content that they have rightfully paid for.
This reminds me of a bygone era of closed systems (ie; Wang word processors and Sun servers that would only run Solaris, etc...) Well, we know what happened to Wang and Sun.
What does this have to with payments?
Well, this is a sensitive topic so I will leave it to your imagination.

Sprint Selects BilltoMobile to Enable Subscribers to Charge Online Purchases to Their Wireless Bill

2011-02-18T09:42:00.001-08:00

3 down, 1 to go!

Sprint Selects BilltoMobile to Enable Subscribers to Charge Online Purchases to Their Wireless Bill
— BilltoMobile, the leading provider of mobile payments for web purchases, today announced a Direct Mobile Billing Gateway Service Provider agreement with Sprint (NYSE: S), which will allow Sprint customers to charge online purchases directly to their Sprint bill. Once implementation is complete in the coming months, merchants and payment resellers using BilltoMobile's mobile payment service will be able to offer this payment option to Sprint customers.

Alt Payments Systems Innovations Conference

2011-02-13T13:39:00.000-08:00

http://paymentinnovations.net/
Hope to see you at this conference coming up in late March.
Last year was the first in this series and I went (hey it was 10 minutes from my house) with my normal skepticism.
Well, it was a very pleasant surprise.
And, since I am speaking this year, I am looking forward to contributing to its value.

meCommerce

2010-11-12T08:59:00.000-08:00

I thought, why not, it was almost Friday the 13th, how about coining a new phrase! So, here you go, meCommerce - the convergence of m and e commerce with a cute spin.

With all the spin about mobile and especially mobile payments, I thought I would have us think about what really matters and that is "me", the consumer side of me. After all, this is the "me" economy isn't it?

All that really matters to the consumer is that they have as seamless an experience as they can have across all the platforms and devices they utilize to maximize their time and money.

As ecommerce evolved, those merchants who figured out how to blend the benefits of bricks and clicks delivered the most value to their customers. Now, we have bricks, clicks and pockets (? - perhaps someone can contribute something better!!).

Mobile, with the proliferation of smartphones which are just computers in your pocket that happen to also sometimes work as phones, present enourmous possibilites for enhancing the overall experience for the consumer.

As it relates to payment, the only hang up is the explosion of "Walled Gardens 2.0" which serve to restrict the consumer from the freedom to pay how they wish and merchants the freedom to choose which payment methods they want to take and their ability to negotiate the best rates their volumes deserve. These perhaps serve a purpose during an initial formative phase but they will disintegrate as the power shifts from the few to the many.

Article on Direct Mobile Billing in Digital Transactions

2010-11-05T09:26:00.000-07:00

I am pleased to report that an article I authored is available in this month's issue.

If you click on this link and then choose the November issue, you can read it;

http://digitaltransactions.net/index.cfm?pageid=3

It is on page 22.

Would welcome your comments!

BilltoMobile Adds ATT (Only provider with both ATT & Verizon)

2010-10-29T10:03:00.000-07:00

This has been a big week for the advancement of carrier billing for ecommerce purchases! The company I work for BilltoMobile (powered by Danal Ltd, Korea) announced and launched support for ATT mobile users. This is in addition to our previously announced and launched support for VZ users. We now have 2/3rds of the US mobile user market covered and more to come! We are the only provider that can provide the superior capabilities (ie; dynamic pricing, real-time auth and verification, limit management, dramatically lower dispute rates) and lower costs of Direct Mobile Billing (carrier billing 2.0 versus the legacy PSMS approach used by others) on both Verizon and ATT!!!

Starbucks Extends Mobile Payments to Nearly 300 More Stores

2010-10-29T10:00:00.000-07:00

"(October 25, 2010) In the biggest expansion yet of mobile payments to its standalone stores, Starbucks Coffee Co. on Monday said it has equipped almost 300 company-owned stores in New York City and parts of Long Island to accept transactions using 2-D bar code technology. This expansion follows the Seattle-based coffee chain’s move this spring to install the technology in outlets located within more than 1,000 Target Corp. stores (Digital Transactions News, April 8). Starbucks started its mobile-payments pilot 13 months ago at 16 standalone stores, eight in Seattle and eight in California’s Silicon Valley."

This is great news! Only one problem! I do not live in NYC anymore! This approach overcomes a lot of issues that have plagued other approaches to connecting the physical world payment card to the mobile phone.

Hopefully they will get back around to expanding in the Bay Area!

NFC vs 2D Bar Code for Mobile Retail POS?

2010-08-14T17:55:00.000-07:00

I know that this is not ecommerce related (at least not for the moment), but since Mobile Payments is the topic du jour, I thought I would comment on it. So, what is it going to be? NFC has been struggling for meaningful deployment for more than a few years and I think the time has passed. Merchants (that matter) have already embraced bar code technology at the POS and if they are not already 2D capabable upgrading to it probably would not be as painful as installing single purpose (credit card network controlled) NFC readers. They can then be in control of their own destiny at their POS and leverage the enhanced bar code technology for other purposes.
Why did NFC fail? When you combine the fact that most large merchants (supermarkets and big boxers) had turned the terminals to the consumer so they could swipe the card themselves combined with the card brands new rules around no signature for under $25 transactions, a lot of the motivation for NFC which was checkout speed evaporated.
The virtual Starbuck's stored value card iPhone app is the best example I have seen of such a deployment. I only wish it was in more street locations. I know it is now in all the Target based Starbucks but Target is not someplace I stop into on my way to work in the morning. However, this is an interesting point as to why the Target locations were deployed so quickly as they already had the 2D bar code technology and a simple software upgrade accomplished the task.

Facebook Credits bought by Mobile Payments...Disclosure Needed or Not?

2010-08-06T21:43:00.000-07:00

I decided it was time to check out Facebook Credits. Last nite I navigated my way to buying some not because I need any but just to see what the payments experience is. I was curious if they were surcharging their "friends" when paying with a Mobile payment instead of credit card. They are to the tune of roughly 50%. The consumer gets 1/2 the number of Facebook Credits when they pay by charging to their mobile phone number.

I realize that their merchant cost is high due to the carrier's fee and therefore it is not completely unreasonable to do this.

What I do find unreasonable is that there is no clear disclosure of what the deal is.
You have to click back and forth between the choices when wanting to pay with credit card and wanting to pay by Mobile and have to do the math in your head.

When I shop at the supermarket, I expect to be able to look at the labels on the shelves and see that the Coke Zero in the 12 oz bottle costs me $.05/ounce and $.04/ounce in the 20 oz bottle.

It is one thing for some low life elixer company to pull this sort of deception, but another for a company like Facebook that should care about their reputation and credibility. And it should not require the government or some other body to monitor and enforce reasonable and ethical behaviour.

The Mobile Marketing Association guidelines prohibit surcharging the consumer. But, no one is enforcing those. Of course, this reminds me of an earlier post about Visa rules being ignored right under Visa's nose; http://paymenttalk.blogspot.com/2008/05/rules-are-made-to-be-broken.html

What do you think?

BTW, I am going to dispute this transaction. I tried cancelling it afterwards following the instructions in the text by texting back "STOP" and even got a text seemingly confirming that the transaction had been "discontinued", but since the 16 credits I bought did not get taken from my Facebook Credits balance, I am presuming either this is a delayed process or simply does not work. I will call the mobile payments company first and see how they handle it. Then I guess I get to call Facebook and then if all else fails, AT&T. Stay tuned!

Mobile Payments ... Uuh?

2010-07-10T14:31:00.000-07:00

There is a lot of buzz in the "mobile payments" space. But, of course, there is also a lot of BS. But, the issue for this post is simply the issue of the category name. Unfortunately this term has come to be used for such a wide variety of types of payments that it has totally lost its meaning. Just because a credit card processing app happens to sit on an iphone, does that really qualify as some kind of breakthrough? As they would say in S. CA - pleeeeeeeeeeeeeeeeeeeease!

Of course, if you are out looking for money or free PR, you want to be associated with a hot category. And the pundits just eat it up.

So, I have not written in awhile since I just switched to a Mobile Payments company. ha ha! www.billtomobile.com

Actually, we are doing REAL mobile payments where the charge is placed on the wireless carrier bill, not just using some mobile device as a proxy for a credit/debit card.

Facebook's Rich Valuation Based On E-Payments

2010-05-25T08:50:00.000-07:00

Facebook's Rich Valuation Based On E-Payments That May Never Come
http://industry.bnet.com/technology/10008222/is-facebooks-valuation-based-on-e-payments-that-will-never-come/

This is an entertaining article. Anyone who lists Obopay as a leader in this domain is only looking at it from the perspective of having raised a lot of money versus actually accomplishing anything in the market. And, while Amazon is an incredibly successful ecommerce merchant, as a payment platform provider to others, not so much. PayPal, no argument. And as compelling as Facebook is to some, the likelyhood that if neither Google or Amazon can make their payment initiatives meaningful after pouring hundreds of millions of dollars into them, take a guess at my prognosis. There is nothing wrong inherently with Facebook credits, but it is unlikely to rock the payments world. It is just another layer on top of an already complicated and competitive landscape. p.s. As others have found out, the devil is in the details and the devil is expensive in the form of customer service and managing fraud and disputes. Playing around in your social network is entertaining and sometimes productive, but when you touch the user's wallets the rules change.

Paying with Plastic - pymnts.com

2010-04-21T15:48:00.000-07:00

Paying with Plastic - pymnts.com

Just read this free first chapter and based on my knowledge of the payments industry it is one of the best I have read. Great job!

Visa paying $2B for payments processor CyberSource

2010-04-21T06:25:00.001-07:00

Congrats to CyberSource!!!
I take a great deal of pride from having developed, signed and managed the relationship with Visa 11 years ago in spite of much skepticism both internally and externally!!! Visa invested $1.5m in CyberSource pre-ipo and agreed to the joint product, CyberSource Advanced Fraud Screen Enhanced by Visa. :-) Oh, the stories I could tell you!

Data Portability in a PCI Crazy World!

2010-04-15T09:36:00.000-07:00

I have written previously about service providers such as gateways and payment processors holding their customers data hostage using PCI as the excuse.

There are two new efforts underway to raise the awareness of these inappropriate practices;

portabilitystandard.org

groups.google.com/group/credit-card-data-portability

Please check out these two web pages and join the Google group on the subject.

Welcome your feedback!!!

Note - that the story I wrote about last fall is still not resolved.

Do Not Assume Payment Methods Are Universal! Neither Demographically or Geographically!

2010-04-13T14:51:00.001-07:00

One of the challenges we all face is being able to step out of what works for us and understand what any one or group of our customers is going to have a preference for. This is especially true for payment choices. The closest thing we have to “universal” in ecommerce is Visa/MasterCard. But, if you are selling to Germans, you better support something called ELV which is a form of direct debit or move on to another country. And, as a person with a marketing degree I have a hard time saying this, but surveying your customers to ask them what payment methods they want or what is most important about those choices, may lead you down the wrong path. What people say they want and how they act in this regard can be significantly disconnected. ie; Is security important to you? Who is going to say “no”? But, many payment methods have fallen flat on their face if the hurdles to usability are significant due to security. What was one of the things that made PayPal grow incredibly fast? All you needed was an email address. Of course, their fraud rates were through the roof too but they had the luxury of taking in a whole bunch of VC money and being able to tolerate the cost and eventually they dug themselves out of the hole. Two of the most important questions you have to ask yourself are; 1) what is my target demographic and 2) what geographies do I want to serve? Then and only then can you seriously research the options and start making decisions about what to offer.

More on New Text Alert System...

2010-03-29T09:32:00.001-07:00

So, there it was this morning, the email from Wells about this transaction that took place last Thursday.

The only comment that I would make about this new mobile text alerting system from Visa that Wells has now deployed is that it should have been automatic that when I enrolled for that, the previous (and mostly useless) email alerting enrollment should have been cancelled or at least I should have been able to modify/cancel it.

My guess is that I was actually enrolling for the mobile alerts on a Visa hosted page, branded Wells Fargo. Even if it is not hosted by Visa on Well's behalf, it is clear that the two systems are not in synch. I had to go this morning and de-select the overlapping alerts. The site is; https://rapidalerts.wellsfargo.com/rapidalerts/ .

Referencing my background dealing with Phishing issues (ie; PassMark Security), the Catch-22 with all of these things is the possibility that something potentially good, like these real-time text alerts, can be just another oppty for phishing attacks. A url like the one above could (or should) make someone like me suspicious of if I am really at a legit Wells Fargo page or not. It is also interesting to note that Wells (or Visa) chose not to invest in a "secure" url for such a sensitive page as this. You know those green urls from Verisign and others called Extended Validation SSL Certificates. While I do not put much stock in these (or any of the "trust" seals), I doubt they cost considerably more and I guess they cannot hurt.

Fair is Fair....Hats off to Visa...Genuine progress in fraud prevention!

2010-03-25T14:13:00.000-07:00

Wells Fargo announced a few days ago that they were taking advantage of a new Visa feature. Of course, I had to immediately enroll. You then receive text message alerts when certain types and size of transactions occur. The idea is that if it isn't you, you can immediately respond and become part of the fraud prevention paradigm. I was somewhat skeptical, as usual, but as it turned out hours later I was picking up my wife's BMW from the shop (ouch $1200!!!) and while I was still standing at the check-out desk, my phone got a text reporting the transaction to me. It was very descriptive, telling me that my "Wells Fargo Card ending in xx was used at xxx Motors in xxx town for $xxxx.xx ....

This is real progress.

I had previously enrolled in their alerting offer but due to the number of different acquirers and issuers and the batch nature of credit card processing, these often did not arrive until days later.

Since, Visa's switch is involved in the authorization of all Visa transactions, these alerts can go out literally in real time.

Of course someone will try and call this a mobile payment! (see my article in Venture Beat!)
http://venturebeat.com/2010/03/10/what-will-it-take-to-make-mobile-payments-mainstream-in-the-us/

Progress...Finally!

2010-03-07T15:33:00.001-08:00

Interesting tidbit in the WSJ yesterday - The Fed is down to one site in Cleveland, Ohio from forty five sites 7 years ago that processed paper checks. I specifically recall sitting with the CEO of the company I worked for back in the early '80s as he proclaimed we would be completely checkless within that decade. And you wonder where I get my skepticism about the pace of change in payments!!!!