Dave Birch gave an opening keynote presentation and talked about what the mobile wallets will “really” look like. He argued that for digital and mobile wallets to succeed they will have to deliver something that a physical wallet can’t do, and that the “triple A play” – authentication, apps and APIs – will drive the next phase of the technology evolution.[From Celent Banking Blog » MobeyDay Shines Again]
In case you think the “triple A play” is a little futuristic, I should point out that (with the inevitable passing hat tip to William Gibson), it is already here. On the way to a train station a couple of days ago, I noticed a PayPal logo in the window of The Farmery frozen yoghurt shop. There was nothing I could do to stop myself from going in to try it out. The very friendly and helpful assistant (she probably appreciated a well-deserved break from serving paying customers to help me with my payment experiments) told me that if I paid with a card using their “conventional” POS terminal then there would be a 20p surcharge but that if I paid with a card using their PayPal reader then there wouldn’t be. (This surcharge apparently didn’t distinguish between credit and debit, which I wanted to talk to her about but I thought I’d leave that for another day.)
She broke out her iPhone and I broke out my splendid Barcalycard OnePulse Visa credit card and away we went.
She ran the “PayPal Here” POS application on her iPhone, at which point I decided to try a different experiment. I expect the customers in the queue behind me were really pleased to see the British spirit of discovery alive and well in West London. I ran PayPal on my iPhone and clicked on “local”. Hhhmm. Nothing. Probably due to the imprecision of GPS around the West London anomaly and the general uselessness of 3G in most of the country, I couldn’t see the shop. So I searched instead. I quickly found The Farmery but then I couldn’t “check in”. At first I couldn’t figure out why, but then @jollytall suggested that it was because I hadn’t loaded a photo. That made sense – without a photo, how would the assistant know that it was me standing in front of her? So I quickly loaded a photo and tried again. Remember, I do this so you don’t have to.
This time it worked perfectly and I made my first UK in-store retail payment using my PayPal account (I’d made in-store payments using PayPal before, but not here).
It worked rather well. Obviously, I was the only person in the shop using it, so only one picture came up on her phone and it was me, but I was able to grab my coffee and go. The receipt was e-mailed. I asked the shop assistant whether she preferred using cards or PayPay Here and said (I’m paraphrasing slightly) that when it worked, PayPal Here was better.
I thought so too. It worked so well that it made me wonder – as was the case using Square in the US – what the point of having the physical card and the card reader was. PayPal have made a real effort to produce a slick customer experience, and it makes you wish that other more conventional players in the retail payment world would do the same. There seems to be an attention to detail in what guys like this do, to be honest. And the race continues. While PayPal is adding Square-like features, Square is adding PayPal-like features.
The page adds that users can send cash by sending an e-mail with the recipient’s name in the “To” field, and by CC’ing email@example.com. The dollar amount goes in the subject line. It costs 50 cents a transaction to send money, but nothing to receive money[From Square adds PayPal-like cash by e-mail feature | Internet & Media – CNET News]
So on to the $64,000 question. Is it better than NFC?
Well, yes and no. Yes it is better than NFC is, but it’s not better than NFC could be.
I’ll explain what I mean. Contrast my Farmery experience with my experience in MacDonalds: it’s hot, I want a McFlurry, so I nip in and order one. The chap rings up a quid or whatever on the terminal and wanders off to mix up a delicious ice cream and Smarties(™) confection for me. While this is going on, I’m staring at a not-yet-activated card reader. When the chap comes back, I ask to pay by contactless and he presses a button to light up the reader. I tap my splendid Orange QuickTap phone with Barclaycard on board, wait for the receipt to print and then go. But why didn’t the terminal light up automatically when he rang up the quid? Why didn’t the receipt get sent to phone electronically instead of being printed? This kind of thing drives me mad. A couple of lines of software somewhere and the whole payment experience would have been different.
Imagine how it could have been! If the terminal had lit up automatically, then I could have paid by tapping my phone and got the receipt back automatically before the guy got back with my frozen treat and this would have been even easier than him looking down a list of faces to try and find mine. A bit of parallel processing. Even the PayPal Here experience at the Farmery would have been easier with NFC. Instead of opening my PayPal application, finding the shop and checking in, I could have just tapped the phone on the PayPal Here logo and had all three steps done for me. I’m sure that despite PayPal’s public pronouncements on the general uselessness of the NFC industry to date, somewhere in the bowels of their development team someone is adding the NFC “tap in” to the PayPal Here code even as we speak.
My state of the mobile wallet address for tomorrow’s conference then? Well, we all understand why NFC is where it is. Some decisions have been made that with hindsight were not optimal. I am not criticising anyone. I was in some of those meetings and I understand why those decisions were made. But we ended up with a strategy to minimise the impact on POS (by making the contactless payments in phones the same as contactless payments with cards) at a time when the POS is undergoing a revolution and as a consequence we may end up with NFC implementations of “conventional” payment cards that lag the convenience, ease of use and functionality of PayPal, Square, LevelUp and goodness knows what else to come.
Given that on the day of this conference you cannot walk into a phone shop in London and buy a single handset that will allow you to pay for your bus fare contactlessly — after years of work and hundreds of millions in investment — I’d say we need a bit of a rethink. Hence, I say again, the “triple A play” is closer than you think. Right now I’m going in to the Farmery and manually running the PayPal application, entering a PIN, checking in and all that jazz. Maybe only a year from now I will go into the Farmery and the Farmery’s own app (using the PayPal API) will open in Passbook, check me in automatically and authenticate me using the iPhone’s built-in fingerprint sensor. Or maybe it will use the API to my Barclays mobile banking application (which is what the retailers want) or maybe it will use the API to my V.Me wallet. But it will be an app, with authentication, using a payment API. It’s not that far away.
These are personal opinions and should not be misunderstood as representing the opinions of
Consult Hyperion or any of its clients or suppliers