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.
A quick post to introduce two important articles and one video that resumes well the slow or conservative point of view to this “revolution”.
Today the market is not ready for the revolution both from a consumer and a merchant side:
The second one is to discuss what is usually forgotten into that revolution – payments is not really painful as it is but this revolution will need to bring a whole set of value added services (Offers, Coupons, what else?) to the ecosystem to make a real dent into the current modus operandi:
Again, I like the approach here. You ll here it more and more, consumers and merchants are not ready for this. Even the professionals are saying it. What they are also saying is that they are all working to make this happen and make happen this faster in their own way using their own strengths.
List of questions and random thoughts from me:
– Will PayPal be right at assuming that NFC will be too slow to deploy and that merchants will try to embrace added value services experiences through players like themselves?
– Will the giants that are Visa, MasterCard and others be able to digitalise fast enough their offline offering?
– Will hardware deployment be the determinant limiting factor?
– Can we look at Google, Facebook, Apple and other non traditional payment players to be completely disruptive into their approach and leverage their data at payments to provide the best added value services both for merchants and consumers?
All I can say is it does look like a race and a pretty bloody one too.
Another thought is that I think that people still try to ameliorate a system that in the US and other mature markets works pretty well already. But what about emerging markets? What about the billions of people who are still un-banked/un-carded and don’t have access to that vast world of choice, depth and breath of products that mature markets do. Maybe the future winner will be the one(s) that will bring those two worlds together.
Happy to talk about it, let me know,