Small Merchants Embrace Mobile Payments - & Vice Versa

When it comes to mobile payments, the U.S. is still well behind the curve, and this extends to all areas of mobile payments.  But what is happening here, and now, are small merchants.

This week, Intuit unveiled GoPayment for Android 3.0 in NYC - more than a month after its preview in Barcelona last month at Mobile World Congress.   

Intuit is venturing into the space for low cost, small merchant payments that Square has established on the iPhone and iPad platform and extended to Android.  Square will send you the little square card reader for free, and swipes will cost you just 2.75%.  Quite a bit less expensive and far more efficient than other methods of accepting cards, and far, far better than (shudder) PayPal.

As we can and will reach the unbanked through mobile phones on the retail side, on the merchant side Intuit would like to compete for small businesses without merchant accounts, using banks that can't, or won't, help them.  Intuit has targeted tablets, rather than phones, and loaded GoPayment for Honeycomb (Android 3.0) with features, so you can:

• Swipe cards within seconds – Save time and money by swiping a card instead of entering numbers manually. GoPayment features support for a variety of credit card readers. All compatible card readers also encrypt the credit card data for added protection.
• Authorize transactions with touch screen signature – For added security and professionalism, customers can quickly sign a tablet’s touch screen to authorize their transactions.
• Drag and drop frequently sold items from a product list – Quickly complete a sale by dragging and dropping items into the shopping cart and easily add or delete items as needed.
• Take photos of frequently sold items – Using a device’s camera, save time by photographing products and storing details to create a visual product list to quickly take customer orders.
• Find data quickly – Find items in a product list or locate past transactions using new search capabilities.
• Work within an easy-to-view, large-screen environment – Easily view transactions and work faster when processing payments on a tablet. GoPayment is optimized for tablet form factors building on Honeycomb’s “fragment” technology.

Given the tablet orientation of GoPayment for Honeycomb, Intuit is likely reaching for larger, more sophisticated businesses than Square - businesses that already use QuickBooks, for example.  Whether they can come up with a value proposition as strong as Square's 2.75% merchant discount remains to be seen.

Opportunities are Available in All Walks of Life in Australia

Australia is the California of the UK.  I first heard this from Ray Davies of the Kinks, talking about the song.  Everything happens first here, and this has never been more true than today, and never more true than for payment systems (and GIS adoption in finance).


Yesterday, MasterCard revealed the "5 Year Roadmap" for Australia and New Zealand.  At the heart of this is PayPass, MasterCard’s contactless payment service, with 88 million cards used at more than 276,000 merchant locations. By October 2012, all new MasterCards Down Under will be PayPass enabled.

MasterCard is requiring that all new merchants in relevant merchant categories have at least one PayPass enabled terminal. These include: taxis, news stands, bookstores, supermarkets, convenience stores, supermarkets, pharmacies, service stations, parking lots, fast food restaurants, cafes, bars and movie theaters.

(MasterCard is also requiring that all POS terminals and all new/reissued MasterCard cards in Australia and New Zealand be EMV compliant by July 1, 2011.  EMV is the Europay-MasterCard-VISA tech standard for inter-operation of integrated circuit cards (IC cards or "chip cards") and IC card capable point of sale (POS) terminals and automated teller machines (ATMs), for authenticating transactions - securely, 21st century-style.)


In the U.S. there has not been a lot of activity with near field communications like PayPass,  Longtime RPM client and innovator Kinecta FCU is out front, branded as “Tap N Go". Kinecta members simply tap their PayPass enabled credit card on a specially equipped merchant terminal and payment is completed quickly, securely and easily (say, at a gas pump) without the hassle of swiping a card or fumbling for cash and coins. Gary Harman, First Vice President of Consumer Lending Operations at Kinecta, notes that “MasterCard PayPass is simpler and faster than cash, allowing our cardholders a more streamlined payment option."


It's coming.  And in financial services, it always comes first in Australia.

Mobile Banking for the Unbanked

A few posts back, we suggested that mobile phones might be able to reach older consumers who never tried banking online with a PC, and don't care to, either.  But international data suggests that it is the unbanked - the poor, lowest income consumers - who might be the real beneficiaries of mobile payments.

CGAP (the Consultative Group to Assist the Poor) reports that the mobile phone is the first communications device in history to have more users in poor countries than rich. In 2010, mobile phone owners in poor countries accounted for two-thirds of the world’s 4.77 billion phones. 

But as people in poor countries become increasingly well-connected via mobile, they remain far less well-connected financially. An emerging market consumer is more than twice as likely to own a mobile phone as to have a bank account in their name.

So, doesn't it seem like mobile phones hold a lot of promise for reaching the unbanked? 

Let's also consider that banks can reap substantial cost savings from channels that replace branches with “branchless banking” (technology paired with agents, typically merchants who handle deposits and withdrawals and are connected via mobile or card-swipe POS terminals). The figure at left shows the cost reduction for 4 Mexican and Colombian banks from moving deposit transactions from teller to agent. CGAP estimates most banks will see 50% cost savings or greater. This enables them to reach low-income clients who were previously uneconomical to serve.

Now hear this - other providers — mobile operators, tech firms — which want to enter financial services for the first time can also employ agents to cost-effectively roll out.  That means that those who create the software for phones (Google), those who make the software and the phone (Apple), those who have the networks (AT&T and Verizon) and those who have competing payment networks already in place (Discover) all stand to benefit from the inability of banks and merchants to get on the same page - which they have not been able to do.  This was the case when I first developed the business case for EFTPOS at First Interstate in the early 1980's with KMPG, and since then, merchant-bank relations have decidely not improved.

No wonder this is developing outside the U.S. so much faster, where there are far fewer, far less powerful entities battling for control.

Emergency Preparedness Lessons from Japan

I am eating only yogurt today, thinking about the boy and his grandma who survived on nothing but, while for 9 days they were trapped in the kitchen of a house swept away by the tsunami.

Next to be seen floating by might be the 3rd largest bank in Japan, Mizuho Bank.  The lesson to be learned here is that people rush to cash in an emergency, and Mizuho's systems - and they have had trouble like this before - apparently were not able to scale to meet the demand.  ATMs malfunctioned and bank deposits could not be processed, so salaries for workers of employers who use Mizuho couldn't be paid. Foreign exchange transactions also stopped.

Can you imagine how much this is adding to the stress people feel?  When you are already trying to cope with the aftermath of an earthquake, tsunami, and radiation from damaged nuclear power facilities?  And rolling blackouts are taking out everything, including all the other banks' machines?

Mizuho suspects the problems were tied to a flood of transactions, but they are not sure, and that is perhaps most disconcerting.

All of its 38,000 ATMs at its branches and convenience stores were shut down over the weekend and through Monday, as Mizuho extended operating hours at its 440 branches, so that customers who did not get their paychecks can withdraw up to Y100,000.  Now, it looks like while branch ATMs may soon re-open, other ATMs will not. 

The situation regarding settlement of payments has become so dire that the Bank has asked in its primary competitors to help out - which could threaten to bring down the entire house of (debit) cards.  Mizuho will also end up disciplined, at least, by Japan's Financial Services Agency, the nation's primary regulator.

Add to this the fact that the Japanese fiscal year ends March 31 with another torrent of transactions, and one realizes that it indeed may not end just with Mizuho's 1 million or so customers.

Do I even have to say it?  It could happen here, and I hope you are all paying rapt attention.  Some lessons:

• Make sure your IT is up to the scaling up that is required in an emergency, and don't wait for one to find out.
• Use GIS to figure out how to get your employees to work in your branches, and which branches are most important to have open and ready, by understanding the geographic relationship between customers and branches; and how disaster impacts the ability to get from place to place.
• Be prepared in-branch to manage an onslaught of customers well beyond what a branch is designed for, so that customers can be comforted as they wait to be served, both physically and emotionally.
• Train customer service staff to better cope themselves, so they can better cope with emergency-stressed customers - and realize they have, albeit briefly, the chance of a lifetime to lend an ear and a heart as well as a few dollars.
• Make sure your key managers have alternative places besides the Bank to meet.
• Encourage customers to always have enough cash - and supplies - on hand to ride out an emergency of a week or more.

ESRI Tsunami Map Portrays Social Media

Here's some really cool technology I just saw at the ESRI Developer's Summit.  Unfortunately, its first major application came rather quickly - an earthquake, tsunami and nuclear disaster has struck Japan.  And we all feel it. 

There don't appear to be any Twitter feeds yet, but there are YouTube and a few Flickr feeds integrated in the map, which also features the quake events and magnitude, a shake map (which shows this was a strong, strong shake throughout most of Japan) and other interactive features.

Here's how the social media feeds are integrated - yes folks, let your imaginations run wild here, it gets a little technical, but this technology is for You, for you to make social media maps about your bank, your customers, your word of mouth, and emergencies of a lesser though doubtlessly significant nature.

• News Feeds: ESRI gathers the headline news from various online news agencies and pass each link through the RSStoGeoRSS web service that geocodes RSS content from any RSS Web link and returns the content as GeoRSS and serves it through ArcGIS Server as a map service.
• Ushahidi: This public content from Ushahidi is added to the site by directly accessing the Earthquake Tohoku service through the Ushahidi API . The Ushahidi platform allows anyone to gather distributed data via SMS, e-mail or the web and visualize it on a map or timeline. The feed aggregates information from the public for use in crisis response. ESRI requests the incidents from Ushahidi in JSON format and adds to the map based on the ArcGIS API for JavaScript.
• YouTube Videos: The videos are added to the application using the YouTube API which allows you to request videos given a latitude and longitude position along with a search radius and keywords.
• Tweets: The Twitter API is used to identify tweets that match a specified query and area. In this case, only the tweets that return a coordinate value within the current visible map extent are added to the map. The Twitter API also sends the results of the query back to the application as JSON.
• Flickr: The Flickr API is used to identify Flickr photos that match search terms and a collection of other parameters identified in the Flickr API help pages, and the API sends the results of the query back to the application as JSON.

So sad that we need to find and catalog these victims.  So glad we have the technology which will help, be furthered, and extended.

Real Stuff for Real People II From ESRI 2011 Dev Summit

Just about to head off to the Developer's party, where I will attempt to continue the tradition of Dodgeball Tourney Tweets.  But there is going to be some mighty good microbrew, and the usual crossroads of the world good time shared by all.

Coolest Stuff So Far At Dev Summit

1 - Tim O'Reilly telling us that most of our web apps suck.  They do.  They are too biased towards GIS pros and not easy enough for business and regular folks to use.

 2- ArcGIS Runtime.  Here's a thumb drive with just what you need from ArcGIS on it to run your site or marketing or community analytics.  No complexity, no licensing, no installation at all.  Just stick it in a USB slot and run it.  Me likey.

3.  Dynamic Drive Time Polygons.  The software has gotten SO fast, you can create and drag a drive time polygon around, shrink it, enlarge it, and watch it morph instantly.  There was not a dry eye in the house.

4. Pervasive GIS from APOS.  APOS was a gold sponsor this year and that's great because more people should know about these guys and what they are doing to make easier-to-deploy-and-use GIS and make it useful, or pervasive, throughout an enterprise or organization.  We work with them and highly recommend them to all U.S. users who have not discovered this yet, particularly if you're interested in tapping into business intelligence networks, and especially those based on SAP Business Objects ("Crystal Reports"). 


5. Microsoft.  What makes more sense than to try to reach a broad business and academic and government audience but to partner with Microsoft and tap into Office and Share Point?  And now, Azure and Azure Data Market.  Duh!


6.  Dr. Jane Mashup.  The ESRI Proto Lab team showed a ton of stuff they are working on that is absolutely real stuff for real folks.  My favorite is the Dr. Jane Goodall mashup assisting the tracking and location of chimps.  Jane will tell you she learned it all from her dog.  She made me cry at the UC a couple of years back and was nice enough to come out and speak at Redlands recently for her Roots and Shoots program for kids.



More later.  For one thing, ArcGIS runtime is so compelling, there will be after conference sessions on it tomorrow afternoon.  For now, dodgeball calls.

ESRI Developers Build Great Stuff for Real People

Over 1,400 attendees from all over the world have converged in Palm Springs this week for this year's ESRI Developer Summit. 

And from every corner comes one idea - building great stuff that comes to life for real people, not just for GIS pros.  Finally, there is the recognition on the part of all concerned that we must do much better to make our technology more transparent and useful to solve real problems for real, everyday people and present them with a much more engaging experience. 

Perhaps Tim O'Reilly said it best - "Most of the web design we do sucks." 

We must do much more to reach non-GIS audiences, particularly in business and local government.

More than half of the developers here (54%) are here for the first time, and 32% come from countries other than the U.S.  So far, the greatest Wow factor is probably the experimental Kinect interface that allows the user to make gestures (like with a Nintendo Wii or the amazing Microsoft Kinect) to pan and zoom the map, and do pop-ups.  That, and all of the technologies intended to make GIS more transparent, are the stars of this show.

Electric Orange Squeezes Big Banks - And Itself

ING, seeing an opportunity you could drive a fleet of armored cars through, has been even more aggressive in going after customers dumping their big bank.  This comes in the wake of a tsunami of checking account fees, that have gone from 0 to $120 or more a year in about 5.1 seconds. 

Among many other placements in an extraordinary integrated marketing campaign, ING has embedded Electric Orange ads into the banner of the online New York Times.  

No, not an ING banner - this is integrated into the Times' own banner.

No, it is not just on the masthead, it is... a button ad featuring No Fee Checking or Electric Orange and it's on every page.

So.  We have a number of big banks, all raising their Checking fees, often calculated off the ultra agressive minimum daily balance method, and requiring hefty minimums and/or additional account relationships.  And we have online banks like ING, giving it away to everybody.  Does it really take that much thought to realize the real answer lies somewhere in-between, recognizing and rewarding customer relationships and loyalty, rather than simply repricing accounts? 

One more thing.  It's not just the NY Times, not by a long shot.  On Amazon, for example, ING is looking for value-oriented, convenience-oriented Savers with Orange Savings.

Women In America

One of the most important emerging market segments with unmet needs is one of the most obvious, yet one of the most overlooked, by banks, CUs and financial services companies.  No, it is not the Latino population; nor the Asian population.  It is not Gen X, it is not Gen Y, not even Alphaboomers.  It is not Sun Belt; it is not Gentrification in urban cores.

It is Women.

Yesterday, WhiteHouse.gov released Women In America, the first major collected study of women in nearly 50 years, since the days of Eleanor Roosevelt and JFK.  Among the key findings:

• Younger women are now more educated - more likely to graduate from college than are men, more likely to hold a graduate school degree, more likely to have at least a high school education, and to participate in adult education.  Men, however, still dominate math and science.
• However, women continue to earn perhaps only 80% what men earn.  This reflects other priorities such as care-giving and child rearing, volunteer work, and part-time work (but it also continues to reflect lesser pay for equal work).  
• Though, the participation of women in the workforce rose dramatically through the mid-1990s, it has been relatively constant since then. 
• Women have, and will have, more health issues, though women continue to live longer than men.  These include mobility impairments, and chronic health conditions such as obesity, asthma, arthritis, and depression.
• However, women continue to have a lower incidence of heart disease and diabetes then men, and generally use the health care system and preventive care more than men.  Yet, fully one of seven women have no usual source of health care.
• Women are marrying later, and having fewer kids and having them later. Of the 8 of 10 adult women with kids, an ever-growing number of women are raising children without a spouse.
• Women will dominate older age cohorts.
• More women will live in poverty than men.

The ramifications, and the unmet financial needs, are many.  Among products and services to address these, specific financial education - especially regarding investments - is very important.  Helping women establish their own small businesses is very important.  Establishing relationship with women when they are still in college and grad school is very important.  Addressing the needs of single, working moms is very important.  Addressing and preparing for health needs is very important.

Above all, what is very important is understanding how the lives of women are changing over time, in order to build social and economic well-being.

Fiserv Makes Bold Mobile Banking Move, Buys M-Com

How strategic and important is mobile banking to Fiserv?  Yesterday, they outright acquired their partner in this space since 2008, mobile provider M-Com (Mobile Commerce Ltd.).

M-Com lets Fiserv expand mobile-banking and bill payments now, and enter location-based and near-field payments and communications (NFC) later.  NFC allows mobile phones to act like contact-less cards to make payments at (or near) a point of sale, from e-wallets stored in the phones that hold coupons and tickets as well as payment media. 

As is the case with many emerging banking and payment technologies, M-Com is originally from Down Under (New Zealand).  Perhaps this deal is most significant because it involves a major provider of traditional tech to banks and credit unions going well outside to acquire the mobile technology it needs.  It is likely to be only the first of many, and we'll continue to look to Australia, New Zealand and the Far East for payment system innovations.