We Don't Have a Mobile Payment Problem; We Have a Mobile Shopping Problem

“Consumers don’t really have a mobile payment problem,” says Jack Stephenson, director of mobile, e-commerce and payments at JP Morgan Chase. “Ninety-five percent of the time, paying with cash and credit cards actually works pretty well. Consumers have a mobile shopping problem. There’s a difference. ” Mobile Shopping Problem

You might say roughly the same for retailers. They don't have a mobile payment problem, either. Retailers only have a mobile sales problem. And though it is a legitimate argument that no mobile payment scheme really succeeds without consumer adoption, neither does mobile payments succeed without retail merchant adoption. 


On the other hand, all existing stakeholders in the payments revenue stream are trying to figure out how to make themselves indispensable in a new mobile payments value chain, so that the risk of being relegated to a smaller role, or no role, is minimized.

That's one reason JPMorgan Chase & Co. might have invested in GoPago, a provider of a free smart phone application that allows consumers to browse, order, and pay for local goods and services. 

Businesses benefit by being able to easily set up mobile storefronts and the rich data and analytics GoPago provides helps them better target special offers to drive sales. The problem Chase is trying to solve, in other words, is brick and mortar retailer need to increase online sales.

Later in 2012, Chase’s customers will have the opportunity to create a free mobile storefront through GoPago, extending their reach to a broader audience and providing business tools once only afforded by large companies. In addition to the standard benefits of GoPago, Chase cardholders that use GoPago will receive exclusive offers and discounts from Chase merchants.

“Online commerce offers a number of opportunities to local business,” said Leo Rocco, CEO and founder, GoPago. 


The point here is that Chase is not trying to solve a "how do I pay by mobile phone in the store" problem. It is trying to solve a "how do I extend my retail sales into the online realm" problem. 

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HTC Jewel for Sprint?

HTC's new line of "One" devices coming to Verizon Wireless and AT&T networks obviously raises the question of what might be coming for Sprint, which has been selling HTC Evo devices for a couple of years.

Some speculate the device is codenamed the "HTC Jewel."

Presumably the Sprint version will feature the  large screen Evos have sported, with the same high-definition display.

Sprint has tended to release a new Evo model every year, about March, so it might not be unusual if any new "One" device appeared about that time.  HTC Jewel

Facebook, 30 Companies Want to Create Web Platform for Mobile Apps

A coalition of 30 technology companies hopes to turn the Web into a competitive platform for building mobile applications. They have launched a Core Mobile Web Platform (coremob) community group through the W3C to provide a venue for collaborating on next-generation mobile Web standards.


Facebook and Mozilla are among the leading members of the group. The effort to make the mobile Web a competitive app platform represents one more challenge to service provider and app store "control" or influence over mobile applications.

Facebook also announced the release of Ringmark, a test suite for evaluating the capabilities of mobile Web browsers. 


The tests will help developers make informed decisions about what features they can safely use in various mobile Web environments. Facebook hopes such information will help developers create browser-based apps that run as fast, and as well, as native apps. 


The business implications are clear enough. Mobile apps need app stores to succeed. App stores are run by "somebody else." By creating fast-executing mobile apps, application developers gain freedom from app stores, service providers or device manufacturers. 

Will IMS Fail? In Other Words, Does OTT Win?

If you have been in the telecom business long enough, you have seen a few different "next generation networks" come and go with somewhat mixed market success. 


ISDN was, for some, the first such network. Then there was B-ISDN, known better as "asynchronous transfer mode." 


Then there is IP Multimedia Subsystem, whose ultimate success seems yet uncertain, if its fundamental architecture and goals certainly will be a foundation of future networks. 


And now there is Rich Communications Suite, which builds on IMS. Observers might further note that picture messaging, essentially a broadband version of text messaging, likewise has failed to garner much success.


Pessimists might point out that, so far, none of the would-be "next generation networks" has been a raging success.

To be sure, the functions often are accomplished, but sometimes in other ways. Who would have guessed that a "legacy" protocol such as IP would become, as much as anything else, the "next generation network," in large part.

Optimists keep trying, as standards, whether created by the market, or by standards bodies, are crucial for the global telecom business.

Tyntec is the company Thorsten Trapp formed to provide products based on the mobile industry’s Signalling Connection Control Part protocol used by GSM networks.

Apparently, Tyntec's software is what allows Pinger to provide over the top text messaging services. And Trapp apparently doesn't have much confidence that some of the newer proposed architectures are going to succeed.

Specifically, he is doubtful that IMS or RCS will succeed. The issue is why he believes that. Without widespread handset support it’s not going to become ubiquitous, and even if it does, users will be hit by roaming costs and interoperability issues.

But OTT players merely need an IP connection for their apps.Will RCS Fail? It's a challenging notion, but not historically unprecedented.

There will be standards. The only issue is which standards, and how they eventually take hold. In recent decades it has been "the market" more than the standards bodies that have succeeded.

Vodafone, Visa Form Mobile Payment Partnership

Vodafone Group is launching a mobile payments venture with Visa, using near field communications and Visa prepaid accounts to let customers pay for goods and services with their mobile phones.


Vodafone, the world's largest telecom company by revenue, said the companies will work together to develop Vodafone-branded services to the U.K. company's base of 398 million customers in more than 30 countries. 


These services will be launched later this year in Germany, the Netherlands, Spain, Turkey and the U.K., with rollouts elsewhere in Vodafone's global portfolio to follow.



NFC-enabled phones currently on the market include Samsung Electronics Co. Ltd.'s (005930.SE) Galaxy S II and Nokia Corp.'s (NOK) 700 model. Vodafone, Visa Form Mobile Payment Partnership

Mobile Banking Grows, Fiserv Finds

As other studies also have shown, consumer use of mobile banking, and willingness to use mobile banking services, continue to grow, a new study sponsored by Fiserv has found.

When asked if they had used a mobile banking service in the past month, one out of four online households stated they had, and those that use other digital services such as online banking, bill pay or e-bills, were even more likely to have used a mobile banking service.

Some 30 percent of both online banking and bill pay users had used mobile banking while 44 percent of e-bill recipients had used the service.

The majority (60 percent) of mobile bankers used the mobile browser on their phone to access their mobile banking service; 41 percent used a downloadable application (app); and 32 percent accessed the service through text messaging.

According to the survey, 40 percent of mobile banking users have paid a bill using their mobile phone as compared to 28 percent in 2010. Some 32 percent used their mobile phone to transfer money versus 25 percent in 2010.

As some other surveys have found, many users trust their financial institutions more than other entities. Some 40 percent of mobile phone users said they would trust their bank or credit union to handle mobile payments, followed by PayPal at 35 percent and Visa at 33 percent.

Nearly one in five consumers currently owns a tablet and this figure is expected to increase rapidly, which means tablets soon will be a bigger factor in mobile banking and transactions,  the study found.

According to the survey, 19 percent of online households currently own a tablet and another 20 percent expect to purchase a tablet, which means almost 40 percent of online households could own a tablet by mid 2012. In addition, multiple tablet households are emerging, with 37 percent of households that already own a tablet stating that they plan to buy another.

According to the survey, both current and future tablet owners are interested in using their tablet to access financial services. About 44  percent of existing tablet owners have used their tablet to access online banking, already.

In addition, 45 percent of existing tablet owners and future owners are interested in using their tablet for banking.

When Will Mobile Service Providers Get into Mobile Advertising?

By the end of 2011, eMarketer estimated late in 2011, 38 percent of US mobile users would have a smart phone and 41 percent  will use the mobile Internet at least once each month. Both of those trends are a necessary, but not sufficient foundation for mobile advertising, which is a fast-growing but highly fragmented and still small portion of overall ad spending and even of online ad spending.

That fragmentation explains why, even though many tier-one mobile service providers have undertaken internal reviews of growth opportunities, and have identified mobile advertising as among the handful of new businesses that could generate a significant new revenue stream for a tier one carrier, few have made significant moves yet.

The issue is simply that it is hard to "move the revenue needle" for any business already booking annual revenues in the scores of billions. When that is the case, a “small revenue opportunity” of scores of millions does not materially change business results. That necessarily means large tier-one service providers must look for new revenue opportunities that have the ability to produce $1 billion or more each year, for every major contestant.

Mobile advertising, though a logical “line extension” strategy for mobile service providers, does not yet make sense for a tier-one service provider. Even as mobile advertising hits the billion dollar mark, it remains below that threshold, at least for a tier-one mobile service provider.

That will change someday, but not really soon. A potential acquirer will want to see $100 million in current revenue, with a growth pattern suggesting $1 billion can be reached within five years, ideally.

eMarketer, for example, estimates that advertisers will spend nearly $1.23 billion on mobile advertising this year in the United States, up from $743 million last year and set to reach almost $4.4 billion by 2015.

This includes mobile display ad spending  (such as banners, rich media and video), search and messaging-based advertising, and covers ads viewed on both mobile phones and tablets.

This year, messaging-based formats still take the largest piece of the pie, accounting for $442.6 million in spending. But in 2012, banners and rich media will be even with search, each getting 33% of spending, or $594.8 million. That will put them ahead of messaging, which will fall to just 28.2% of all mobile ad spending next year. By 2015, banners and rich media and search will dominate further, and messaging will have shrunk to 14.4 percent of the total—though still growing in terms of dollars.

Video is the fastest-growing mobile ad format, but from the smallest base. Mobile video ad spending, at $57.6 million this year, will grow at a compound annual rate of 69% between 2010 and 2015 to reach $395.6 million.

Mobile advertising is growing really fast, at a 75-percent rate between 2009 and 2010, followed by socal media with a 32-percent growth rate over the same period, but from a very-low base. But television advertising continues to claim the greatest share of advertising spending, and had 11-percent growth between 2009 and 2010.