Couple reflection and a blog post I wanted to write for a long time.
All payment companies are trying to differentiate their product offering and of course a big and nice way to do this amongst consumer is through Marketing and Offers.
Now the game has intensified significantly as everyone thinks of the future potential geo-targeted, demographic , some even say tailored offers that retailers would want to push to their consumers. Some companies are going their own ways and a lot of startup companies have been created in the past couple months to try to fulfil that holy grail. Payment companies are also trying to get in the game and it’s pretty obvious that those 2 types of services will get closer together over time:
Player number 1 (no special order here): Groupon and Square– Yes you weren’t expected this one but as Groupon may (or may not) do its IPO and get a LOT of cash, some rumors are that the company is in discussions with Square. In effect you could foresee that the “daily deals” that Groupon offers could transform the ecosystem with some clever geo-targeting and use of consumer data they do not have. Imagine utilising the Sales Force of Groupon (around 2000 people worldwide now) to source any kind of deal that would be highly targeted to users to be pushed through notifications and coupons given at Point of Checkout or Point of Sale through Square apps. Cool? It would be an interesting development for sure.
Visa just announced that they partnered, JointVentured and acquired a piece (?!) of Monetise. Monetise is a cool service that offers…well offers as well as an enhanced experience through their apps and APIs – they also offer, mobile services for online banking and a mobile wallet. I am not sure how the 2 latter would be used by Visa as they are building their own solutions but we ll see. Article here.
PayPal is talking a lot of offers and of course at this stage, they haven’t got that much traction as they are missing the big and powerful merchant that can have good offers
and the fact that their traditional base of merchants is usually small and don’t have bandwidth to put together the same. That doesn’t stop them from talking about it and I d be surprised if they wouldn’t announce couple exciting developments either as new products imbedded in their Proximity payment products or through partnerships. After all they are part of eBay inc who is the biggest eCommerce site in the world, owns Milo (local based offering only in the US) and RedLaser. Again here, the appetite is here and we know for sure that they ll play in that space but we haven’t seen any product yet. As for the proximity payment announcements, is PayPal getting good at “just producing videos?”
And last but not least, American Express. Now I personally like what I am seeing there. through their wallet launched earlier this year, Serve, they now have the potentially play in many use cases, proximity based payments as well as remote based ones (announced through the new API they are launching)which is not their traditional way of doing business. But more importantly, AMEX is getting close to so many great players in the eCommerce and mCommerce and those strategic alignments will certainly pay back in time. Facebook. Video Games and Digital Goods. What’s next?
Quick post to introduce this. I hope that everyone sees it:
Facebook inventing their own Currency. Maybe.
Based on what we ve seen before from the strategic alignment with eBay and PayPal, I suspect that it’s probably something in the pipe. Spend your Facebook Credit to buy real items on eBay or with PayPal would give Facebook Credits such an edge and a credibility it doesn’t have.
Long time away from the blogging keyboard. I guess I needed the time to diggest the past couple weeks.
Let me call out what I thought about all of this.
First what is this?
eBay, Magento and PayPal had APIs and separate developper focus in each companies. eBay Inc called out Matthew Mengerick to put all those Business Units together to 1) find synergies between them 2) try to find a way to montetize another group of customers that a shopping aggregator like eBay, a payment platform like PayPal and a SMB full solution suite like Magento should be interesting in serving: the 3rd party developpers.
Some of them were interesting:
– Facebook being part of the announcement gave some grounds to the platform and although I watched the video (like another 97 unfortunate other viewers – anti-climax as an impact if you were eBay – 1:11:00 if you want to be the 98th), I can’t really say I understood what the deal was about. I am guessing some kind of social commerce products. Those 2 giants getting together to crack the holy grail gives me good hopes that they would do it and do it well but the evil will be in the details. Knowing how Facebook has that much data about users and how eBay and PayPal has that much shopping data. You do the math but I definitely see huge potential.
– The rest is to re-announce that basically they brought all companies strengths and synergies together. APIs did exist but putting them altogether under the same stack will unleash some new potential usage or so it seems. Of course that is downplaying it a lot as I think the products look pretty cool. My personal favourite would be Magento as I knew it less well, and as they will use this platform APIs and current product to be even a more complete SMB solution as before. Publish your ads to Marketing., Facebook and eBay would give any kind of significant traffic to any SMBs that would go online. I would hope that they can get the fulfilment ramp up as easily as they are helping with
The Bad side of things
To be evil I d say it is sad for a company their stage to insist so much on powering 3rd party developers. Does that mean that anyone inside the company can’t innovate anymore? Certainly not but if I was one of the bright one inside and had the idea, I d probably want to go out and build it for me now that I have all the tools at my fingertips.
eBay Inc is still a hugely innovative company, don’t get me wrong. The question is, would you use their tools and integrations? Probably to find some scale before you can build some of it yourself.
Cracking SMBs? Definitely. Cracking the next big thing. Probably not.
Blogging through more competitive analysis may be required at this stage as, as always, an important week has happened and an important week will take place next week.
My scope today is to look at Google and eBay Inc. positioning with regards to payments.
Google as the innovative, disruptive player (refreshing to see them as this position!) has managed to produce a working wallet in less than 10 months. Now for people who are not in the industry this would be rather slow so let me try to describe the achievement: Google managed to get around a table and in a common agreement, a Telco (Sprint), a Bank (Citi), a Payment provider (MasterCard), an acquirer (FirstData) and a bunch of hardware partners (veriFone and others). Not that impressive? OK how about the fact that any prediction around a working NFC prototype that anyone could venture in the industry was around 2014 at the fastest. The reasons? “the consumers don’t have the hardware”, “the telcos are not ready”, “the banks don’t understand” and “it’s very unlikely that all those people would work together to make something possible”. Well Google did it. And as not being a traditional payment provider, it s a pretty great achievement.
Now of course this is limited, how many people have an Android phone on Spring, a Citi/MasterCard card and lives in the cities where this is available…probably not that many but the point at this stage is certainly not volume.
The positioning of this product is also interesting. It s an NFC based wallet. Meaning that it would be used in a cloud for eCommerce as well as for Point Of Sale usage. The first kind that gather the two experiences in a same application and with a similar user experience.
If we also consider that Google as two other payment based assets in Google Checkout and of course their Android Market for apps, we could certainly see an evolving and growing ecosystem of payments through Google products that can certainly be ground breaking.
Google’s position is also to never ignore or compete when they can partner. They ve been pretty scary trying to bring their innovation in a lot of areas and payments being one that get traction internally would probably be a good thing but Google will always go with other existing players and that is probably a smart move at the moment.
Now beyond the US and the mature markets, Google is very prevalent into the development of SMBs and is usually the first technology partner of SMBs in Asia for their development online. Consumers know Google through Search and Gmail but nothing remotely close to anything payment related. Will they care? Will they adopt? I would argue that it will be down to the experience that Google will be able (or not) to provide as a value differentiator to both consumers and merchants and they are usually pretty good at that.
PayPal as the player already in the field for a while. The ecosystem that PayPal created for the past 10 years is impressive; moving from P2P payments on Palm pilots, to eBay payments, to off eBay and eCommerce payments, to Mobile use cases and mCommerce. The natural digital payment industry moved through those transitions at the same time as PayPal did, or is it that PayPal facilitated it? What is next? The industry sees the convergence between all devices usage and use cases, people browsing the web on their mobile will use their existing methods of payments offline and at POS. Some others will browse and shop at stores, will go compare prices online by scanning a barcode and then buy and pay through their mobile phone. And PayPal has to find a way to make all these work. The mCommerce scenario and remote payment is something that they understand and almost entirely own today but would they be able to bridge to other technologies so that they can cover all new and emerging use cases? At this stage, we do have a clear indication of their strategy through their video. It is true it is no live product yet but I suspect their first prototypes will probably be out in the announcements during the Innovate conference next week.
Mobile is also seen as a key component of their valuation by Wall Street.
PayPal also realises that they can’t necessarily win by themselves and will seek strategic partners all across their developments, with banks (e.g. DBS in Singapore), other payment providers (e.g. CUP in China), Facebook to come next week. This will probably push their adoption, no matter what the announce next week and is a good and natural fit for the two companies; PayPal usually having issues on consumer adoption and retention and the main strategic problem for Facebook being monetisation of their huge existing base.
At the end of the day, the winner will get to define a new payment standardthat will be the new way to pay online, offline and that is something that all players are excited about.
I ll come back next week and give you my impression on the events.