While information is power, money makes the world go around. Dominance in the Digital Payments industry is one logical objective for financial apps as it is believed that the company that controls the money flow is in the best position to control the transaction fees and the customer purchase data. Armed with the cash and the data, the winning payments company will be well funded and have unmatched information on how to best cater and price to customer needs.
This is even more critical when one considers Gartner’s estimates that 141MM consumers will use mobile payments globally in 2011. Beyond what is currently spent on credit and debit cards, the biggest prize is spend in cash and checks. Make a better payment process and there is a huge opportunity to capture the lion’s share of that space within one lifetime.
In the below comparison we can see how mobile apps of our ten financial companies stack up on six payments capabilities.
*Peer must be on network or have account w same company.
**Citibank bump to pay enabled by Google Wallet in test markets
*** Wells Fargo engaged in a pilot with Visa in San Francisco this summer
Mint.com doesn’t pay. While I love how mint.com makes it easy to see all my accounts in one place, it’s always going to play a second act to the companies that actually enable payments. As an account information aggregator, mint.com makes money on advertising and click-through fees related to offers and advice. Therefore, mint.com’s long term utility is based on the hope that no one financial payments company gains dominance and that the mobile interface for financial apps continues to leave room for an information aggregator. Such hopes may be short lived.
Banks lag in Social Payment functions. Banks are slower to offer advanced payment features. The banks and AmEx mobile apps have not yet embraced all of the possible payments functionality that currently differentiate the upstarts like PayPal, Google Wallet, Dwolla and Serve (Serve is owned by AmEx). This is changing, however, with several banks recently enabling peer to peer transfer among other customers with the same bank. More social payment options like split the bill and fundraising remain the domain of the payments companies for now. The banks may well consider adding these functions if they plan to attract younger and more socially active customer groups.
Why is Pay Later so late? One potent opportunity in the payments space remains out of reach for the ten mobile apps reviewed in this blog: delayed payments. Inherent in a credit card structure is the ability to purchase now and be billed upon the statement close. According to the 2010 US Census Bureau, the average American credit card holder owes $5,100 in credit card debt.
If that’s true, then it stands to reason that if customers are making mobile purchases, they should also be able to indicate what items they can/will pay for now and which purchases they want to defer. Depending on the structure, both the merchant and the payment company are in a position to offer payment terms with the potential for substantial profits from on-the-spot lending functionality.
A few companies like Bill Me Later (owned by Ebay who also owns PayPal) do offer this functionality. As such, it’s probably a matter of time until mainstream mobile apps also allow you the option to delay payment on that Superbowl TVpurchase until long after the game. Another great way to support consumer’s penchant for debt as outlined in this infographic of the customer debt lifecycle:
NFC not near enough. NFC or near field communications is still in early stages. While a recent decision by 45 different carriers to adopt NFC in the future is a great step forward, only a few of the devices or payment companies currently offer the ability to pay at the register with a wave of the phone. Worse, while it is more convenient than cash, NFC saves very little time from a traditional credit or debit card swipe. By the time you take out your phone, put in the device password, bring up your payment app and finally put in the payment app password, you could have swiped your card, bagged the item and walked out the door.
The case for NFC will change, however, as the merchant side gets more sophisticated in leveraging NFC to recognize and reward individual customers with customized offers based on the customer location. ABI Research believes that 85 per cent of all new point of sale terminals shipped in 2016 will be NFC-enabled. And Strategy Analytics forecasts there will be $50 billion in mobile transactions made and 1.5 billion handsets sold between 2010 and 2016 with SIM-based NFC capabilities worldwide.
In all, mobile app enabled Payments is expected to see a lot more action in the coming years. Look for traditional bank and credit card companies leverage their mobile apps to keep their market share while capturing more cash and check payments digitally. At the same time, newer mobile payment entrants look to revolutionize the payment process altogether. We will look at how these companies are using loyalty features in their apps to compete for customers and the ability to own the payments experience.
This is even more critical when one considers Gartner’s estimates that 141MM consumers will use mobile payments globally in 2011. Beyond what is currently spent on credit and debit cards, the biggest prize is spend in cash and checks. Make a better payment process and there is a huge opportunity to capture the lion’s share of that space within one lifetime.
In the below comparison we can see how mobile apps of our ten financial companies stack up on six payments capabilities.
**Citibank bump to pay enabled by Google Wallet in test markets
*** Wells Fargo engaged in a pilot with Visa in San Francisco this summer
Mint.com doesn’t pay. While I love how mint.com makes it easy to see all my accounts in one place, it’s always going to play a second act to the companies that actually enable payments. As an account information aggregator, mint.com makes money on advertising and click-through fees related to offers and advice. Therefore, mint.com’s long term utility is based on the hope that no one financial payments company gains dominance and that the mobile interface for financial apps continues to leave room for an information aggregator. Such hopes may be short lived.
Banks lag in Social Payment functions. Banks are slower to offer advanced payment features. The banks and AmEx mobile apps have not yet embraced all of the possible payments functionality that currently differentiate the upstarts like PayPal, Google Wallet, Dwolla and Serve (Serve is owned by AmEx). This is changing, however, with several banks recently enabling peer to peer transfer among other customers with the same bank. More social payment options like split the bill and fundraising remain the domain of the payments companies for now. The banks may well consider adding these functions if they plan to attract younger and more socially active customer groups.
Why is Pay Later so late? One potent opportunity in the payments space remains out of reach for the ten mobile apps reviewed in this blog: delayed payments. Inherent in a credit card structure is the ability to purchase now and be billed upon the statement close. According to the 2010 US Census Bureau, the average American credit card holder owes $5,100 in credit card debt.
If that’s true, then it stands to reason that if customers are making mobile purchases, they should also be able to indicate what items they can/will pay for now and which purchases they want to defer. Depending on the structure, both the merchant and the payment company are in a position to offer payment terms with the potential for substantial profits from on-the-spot lending functionality.
A few companies like Bill Me Later (owned by Ebay who also owns PayPal) do offer this functionality. As such, it’s probably a matter of time until mainstream mobile apps also allow you the option to delay payment on that Superbowl TVpurchase until long after the game. Another great way to support consumer’s penchant for debt as outlined in this infographic of the customer debt lifecycle:
NFC not near enough. NFC or near field communications is still in early stages. While a recent decision by 45 different carriers to adopt NFC in the future is a great step forward, only a few of the devices or payment companies currently offer the ability to pay at the register with a wave of the phone. Worse, while it is more convenient than cash, NFC saves very little time from a traditional credit or debit card swipe. By the time you take out your phone, put in the device password, bring up your payment app and finally put in the payment app password, you could have swiped your card, bagged the item and walked out the door.
The case for NFC will change, however, as the merchant side gets more sophisticated in leveraging NFC to recognize and reward individual customers with customized offers based on the customer location. ABI Research believes that 85 per cent of all new point of sale terminals shipped in 2016 will be NFC-enabled. And Strategy Analytics forecasts there will be $50 billion in mobile transactions made and 1.5 billion handsets sold between 2010 and 2016 with SIM-based NFC capabilities worldwide.
In all, mobile app enabled Payments is expected to see a lot more action in the coming years. Look for traditional bank and credit card companies leverage their mobile apps to keep their market share while capturing more cash and check payments digitally. At the same time, newer mobile payment entrants look to revolutionize the payment process altogether. We will look at how these companies are using loyalty features in their apps to compete for customers and the ability to own the payments experience.
Comments
Post a Comment