Lots of Moving Parts in Mobile Payment Ecosystem

The mobile payments ecosystem is quite complex. Even if you look only at the matter of security, people have a fairly good idea that there are "lots of moving parts."

Then there are the various segments, including retail payments, online payments, money transfers, mobile wallet services and integration of payment, wallet and location to create localized and personalized marketing services.

There are all sorts of opportunities for third-party or clearinghouse services as well, such as Neustar's "Intelligent Cloud" service, which exposes mobile customer location, or messaging services to application providers who might want to create "geo-fencing" and other features for personalized mobile marketing.

Offline Payments is the Big PayPal Opportunity

Offline, real-world payments are a much bigger opportunity than online payments, representing more than 90 percent of current transactions. That’s where PayPal is looking to shift.

PayPal’s mobile payments currently come in two varieties. PayPal offers person-to-person mobile payments, in which it doesn’t make money if users tap a PayPal balance or bank account or charges a percentage fee on transfers from a credit or debit account. It also makes money on mobile commerce payments, where it takes a percentage fee for goods purchased online on a mobile phone via PayPal.

$3B in mobile payments for PayPal this year but bigger prize at stake

Mobile Payments an Enabler

It is possible there are some potential entities that really see an opportunity to create a new transaction processing (settlements) system to challenge today's settlement networks. That's an ambitious and risky sort of thought, but a thought we suspect most innovators do not harbor. Instead, there are lots of other businesses that can build on mobile payments, without trying to displace existing networks.

Square already has succeeded in adding value on the terminal end of the ecosystem, essentially extending point of sale terminal capabilities to retailers that could not afford it before.

Google is aiming at the other obvious big target: advertising. The coming Google Wallet would allow Google to offer retailers more data about their customers and help them target ads and discount offers at mobile-device users near their stores.

Appending real-world purchase information to its treasure trove of online behavioral data would allow Google to drive significant transactional and advertising revenues.

Mobile Payments Enter A Disruptive Phase

Mobile money coming to Ethiopia

Irish firm M-Birr, in partnership with Mukuru.com and M-Birr parent firm NCL Technologies, will roll out mobile money services in Ethiopia soon, through M-Birr’s subsidiary in Ethiopia, M-Birr ICT Services Plc.

Mobile money coming to Ethiopia

Different Paths to Mobile Payments

There are many different angles to take in the mobile payments, mobile wallet and mobile money transfer segments of the mobile banking market. They are, in fact, often functionally distinct businesses.

All of them share one thing: the use of mobile devices to exchange money. But that’s just about where the similarities end. Here are a couple different services seeking roles in distinct parts of the larger ecosystem. Square already has found a viable niche as a mobile terminal for retailers who want to take card payments, but either cannot afford, or cannot use, a traditional point of sale terminal. That's one of the "device-driven service businesses" we already have seen emerge.

Then there are the peer-to-peer money transfer services, which are quite distinct. Think a mobile version of Western Union's funds transfer system. M-Pesa is a good example of that.

Google is chasing the mobile credentials or mobile wallet segment of the market. But lots of other segments and roles will emerge over time. Think of what was thought possible when Netscape first launched around 1995. Then think of all the things people can do using browsers today. Something similar will happens with the mobile payments, banking, wallet platforms as well.

4 very different mobile payment services

CBO Analysis Shows a Spending Problem

The Congressional Budget Office, recently released a review [here] of the budget estimate they issued in January 2001 and the factors that turned their $5.6 trillion surplus projection into $6.2 trillion in cummulative deficits by 2011.

The pie chart below breaks down the major components of the $11.8 trillion swing from surpluses to deficits over the ten year period 2002 to 2011. Higher spending turns out to be the largest factor erasing those surplus projections, comprising 44 percent of the ten-year swing.

The Tax Foundation - CBO Figures Dispel Myth that Bush Tax Cuts Caused Today's Deficit

Social Shopping Aggregates Buyers

Social couponing, or social shopping, sometimes called "deal of the day," is becoming a serious business, but it also is easy to dismiss. It's just coupons, right? Maybe not. The coupon is the tactic used to aggregate buyers. It is a rival channel to alternative coupon channels and other forms of local advertising and promotion.

The group-buying industry is expected to grow 138 percent to $2.66 billion in 2011. The business is highly fragmented at the moment, with some estimating there are about 439 daily deal email programs serving the U.S. market in the first quarter of 2011.

Nor is social shopping just a nice or interesting stand-alone business. Many believe it will increasingly be integrated with mobile payments, mobile loyalty mechanisms and other targeted forms of advertising and promotion.

Beyond Groupon: 5 market-moving trends in social couponing (single page view) - iMediaConnection.com