Forget Facebook vs Google+. There's another war being waged on the web right now that makes for far better viewing. It's the war to claim the mobile payment space. Yes… payments. It may not sound like the sexiest of battles, but there's some serious innovation at the moment from some of the digital industry's biggest players. From credit cards, to banks to Google, everyone wants a piece of the action. So sit back, take a seat (and maybe some popcorn), and let's take a look at what's happening!
So why the great land grab for the mobile payment gateway? Call it the Apple effect. Apple has redefined the music and entertainment industry by creating the channel through which entertainment content is purchased. In essence, Apple built the new default payment gateway for the music industry (iTunes). Each time a song is sold via iTunes, Apple takes a cut. Now… imagine the possibilities (and riches) if an organisation could create the payment gateway through which every digital purchase was made, not just music…
And imagine the scale of that opportunity when you consider the fact that the physical and digital worlds are rapidly converging to become one. Smartphones are increasingly bringing digital experiences (and commerce) into the real world. We're not too far away from supplementing (and maybe one day replacing) cash & card transactions in the real world with a digital equivalent. And that is where the war is being waged. To create the digital payment gateway for the physical world. Let's take a look at what each player is dishing up…
With so much at stake in the online payments industry, it's only natural that Google is making a major play. Google's initial foray into the payment space manifested into the launch of Google Wallet in August. The aim of Google Wallet is simple yet ambitious at the same time. It aims to replace a consumer's physical wallet with a virtual equivalent, powered by their smartphone. Rather than having to carry physical cards or cash, consumers simply need to integrate those card details into Google Wallet. Once the banking details have been entered, users simply swipe their phone, rather than their card, at associated payment terminals (limited to PayPass for now). NFC chips within the phone and the terminal allow the devices the speak and transfer the appropriate payment amount. For a demonstration of Google Wallet in action, check out the video below:
Personally, I'm excited about Google Wallet and hope it goes mainstream. Like many others, I check I've got three things before I leave the house – wallet, keys & phone. If I can reduce that to two, I'll be a happy man. In reality, that won't happen until Google Wallet integrates everything I carry in my wallet, not just my bank cards. But it's a good start.
Naturally, PayPal is making a strong play to attempt to maintain their status as the leading online payment specialist. In the last few weeks alone PayPal has launched two separate products to attempt to expand their foothold in the industry. The first, PayPal Access, aims to create a Facebook Connect style experience for online payments. I can't see it working however as it requires retailers to sacrifice their customer data, which very few will be willing to do.
More interesting to me is the PayPal Wallet concept, which was launched recently. There are clear similarities towards Google Wallet. Indeed, PayPal is suing Google over the matter. The core difference is that the PayPal version still requires a physical card. In fact, it necessitates that the user carry another PayPal specific card. Which is where the concept falls down for me. While Google is lessening the load in my pocket, PayPal wants me to add another card to my wallet. The biggest advantage of PayPal Wallet is that it isn't reliant on NFC technology. Thus it require far less infrastructural advancement. But my feeling is that the advantage needs to be with the consumer rather than the merchant…
Neither MasterCard nor Visa are content to sit on the sidelines while their industry evolves at lightning page. Both are also developing proprietary mobile payment concepts of their own. Visa Wallet tows the line of Google Wallet, and doesn't seem to add a lot of new thinking to the table. MasterCard however, seems to have a far more developed vision for the future of online payments, even more so than Google Wallet.
MasterCard's Qkr application is an impressive concept which introduces a number of innovative new payment options:
- Users will be able to use Qkr to scan QR codes displayed during home-shopping television programs. Once scanned they will be able to to buy products featured in the program (via credit card details stored by the app)
- In the same way Shazam can scan audio to identify a song title, Qkr will be able to identify frequencies emitted during a specific ad, and allow the user to buy the product in the ad. Check out the demo below and I challenge you not to be blown away
It's exciting to see a local player getting active on the mobile payments front, even if it is a bank (my least favourite of all corporations). Last week, Commonwealth Bank announced that they too will be launching a solution called Kaching. Interestingly, Kaching is targeted solely towards the iPhone. At face value that doesn't seem a particularly strange decision given the iPhone is by far the dominant handset in Australia. What does make it interesting is that Kaching will use NFC technology, yet the iPhone doesn't support NFC. And given the iPhone 4S has just been released, we're probably around a year from having an NFC compatible iPhone.
To resolve this issue, the Commonwealth Bank will sell NFC enabled iPhone covers to power Kaching. Which is where the plan falls down in my opinion. I will jump all over mobile wallets once they're on the market, but I'm not particularly keen to pay for the privilege when solutions such as Google Wallet are on the horizon, which certainly won't charge customers for usage. Nevertheless, check out the demo below:
So who will win the battle royale?
It's clearly too early to say. And in reality, there will probably be multiple winners, just like we have Android and iOs in the operating system space. But for what it's worth, I'm rooting for Google. Some fear Google already has too much power, but in my opinion they are still far more customer oriented than the banks or credit card providers combined. They know that customer experience always needs to come first to reach mainstream adoption. And they also know that the best price is free.
Now… if only they could get Apple to release an NFC enabled iPhone!