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Mobile World Congress: PayPal One of Many M-commerce Players
321 Pacific Ave., San Francisco, CA 94111 | www.blueshiftideas.com
INITIAL REPORT
March 8, 2012 Companies: AAPL, AMZN, AXP, EBAY, EPA:ING, ETR:SAP, GOOG, HBC, LON:BARC/BCS, LON:BGO,
LON:MONI, LON:TDE/TEF, LON:VOD/VOD, MA, PAY, STD, V, WFC, WU
1
David Franklin, [email protected], 415.364.3780
Summary of Findings
eBay Inc.‘s (EBAY) PayPal is a mobile commerce, or m-commerce,
leader with many competitive strengths. However, mobile payment
adoption is in its infancy, and the market is too fragmented to
determine if a PayPal mobile payment app will be widely accepted.
Near-field communication, or NFC, mobile payment platforms are
expected to become a major part of the landscape within the next
three years. Ease of use, strong data-capture capabilities, and
instant communication options will propel the technology‘s use. In
addition, 120 million NFC-enabled smartphones are expected to be
launched worldwide by the end of 2012.
The lack of legacy financial systems in underdeveloped countries
will hasten the adoption of mobile payment systems outside of the
United States. PayPal is expected to meet with resistance in these
regions unless it partners with local service providers.
Competition in the mobile payment industry is plentiful. Small
companies and start-ups dominated the Feb. 27–March 1 Mobile
World Congress. No clear frontrunner yet exists, and all legacy
financial companies including banks, payment processors, mobile
carriers, and credit card providers are trying to sort out where they
fit in the emerging mobile payment world.
Companies expected to benefit from mobile payment adoption
include but are not limited to PayPal, Google Inc.‘s (GOOG) Google
Wallet, Apple Inc. (AAPL) and possibly Facebook Inc.
White-label mobile payment solutions were discussed by three
primary sources and in secondary sources. Retailers and banks are
interested in branding their own mobile payment solutions.
PayPal to Become
M-commerce
Standard
NFC to Be
Extensively Used in
3 Years
Mobile Payment/
Money Exhibitors
Mobile Payment/
Money Presenters
Attendees Interested in
Mobile Payments
Research Question:
Is a PayPal account a standard option in mobile payment applications, and what are
the chances for widespread adoption of PayPal’s mobile payment solutions?
Silo Summaries
1) MOBILE PAYMENT/MONEY EXHIBITORS Seven of 12 sources said PayPal is in a strong position
to compete in the m-commerce market, which is still in
its infancy. However, PayPal is unlikely to become a
standard option in competitors‘ payment programs.
Non-U.S. markets with limited banking or financial
infrastructure likely will develop first and will be difficult
for companies like PayPal and Google to penetrate. No
one platform is expected to become a standard in any
market, but the NFC platform will be adopted during the
next three years as credit card companies push
merchants to use the technology for better security. An
emerging trend is for white-label mobile payment
solutions. Retailers do not want to lose control of their
customers or customer data and are interested in their
own branded solution.
2) MOBILE PAYMENT/MONEY PRESENTERS These two sources said PayPal is part of the mobile
payment landscape but only as one of many
technologies. Both sources expect large retailers to
develop their own mobile payment systems so they can
own the customer data. One source also expects PayPal
to become a button on payment apps produced by
banks and big retailers. The other source is platform-
agnostic and expects multiple technologies to coexist in
the mobile payment industry. NFC is a convenient
solution for consumers, who will drive its adoption by
using NFC-enabled phones once available at the end of
this year. Adoption of mobile payment apps also is on
the verge of ramping up.
3) ATTENDEES WITH INTEREST IN MOBILE PAYMENT These two sources said PayPal is a strong contender in
the mobile payment industry. However, one source said
his company chose to work with Paythru because it is a
small, responsive company. The other source said
PayPal is no longer innovative and is advancing its
technology through acquisitions. Both sources said
mobile payments‘ main value for retailers will be in
added services, such as data capture, real-time
promotions and special pricing for consumers. NFC
adoption will widen in the next two to three years as
more NFC-enabled smartphones are sold.
Mobile World Congress: eBay Inc.’s PayPal
321 Pacific Ave., San Francisco, CA 94111 | www.blueshiftideas.com
2
Background
The use of mobile financial transaction apps on smartphones and tablets for banking, shopping and point-of-sale (POS)
checkout continues to grow. Meanwhile, the competition for consumers, merchants, banking partners and credit card
companies is starting to heat up between PayPal (currently leading in e-commerce and piloting its mobile wallet solutions at
two national retailers), Google Wallet (which was introduced in late 2010), and Isis (the mobile payment joint venture
launched in 2011 by AT&T Inc./T, Verizon Communications Inc./VZ, and T-Mobile, owned by Deutsche Telekom AG/ETR:DTE).
CURRENT RESEARCH While attending the Mobile World Congress (MWC) in Barcelona, Blueshift assessed PayPal‘s mobile wallet opportunities and
the adoption rate of its m-commerce solutions. Additionally, we set out to determine if PayPal would be automatically included
as a payment option in competitors‘ m-commerce products and if PayPal‘s leadership position in online financial transactions
would provide a competitive edge among consumers and merchants. We employed our pattern mining approach to establish
sources in four independent silos:
1) Mobile payment/money exhibitors at MWC (12)
2) Mobile payment/money presenters at MWC (2)
3) MWC attendees interested in mobile payment/money/banking (2)
4) Secondary sources (5)
We interviewed 16 primary sources and included five of the most relevant secondary sources focused on the mobile payment
industry and the mobile payment exhibitors and announcement made at the Mobile World Congress.
Silos
1) MOBILE PAYMENT/MONEY EXHIBITORS AT MWC Seven of 12 sources said PayPal is in a strong position to compete in the m-commerce market, which is still in its infancy.
However, PayPal is unlikely to become a standard option in competitors‘ payment programs. Non-U.S. markets with limited
banking or financial infrastructure likely will develop first and will be difficult for companies like PayPal and Google to
penetrate. No one platform is expected to become a standard in any market, but the NFC platform will be adopted during the
next three years as credit card companies push merchants to use the technology for better security. An emerging trend is for
white-label mobile payment solutions. Retailers do not want to lose control of their customers or customer data and are
interested in their own branded solution.
Russell Sheffield, Director of Innovation and Development for Paythru
PayPal‘s leading e-commerce solutions will make it a strong mobile payment competitor. However, its payment holds
policy will slow merchant adoption and open the doors to competitors like Paythru that pay merchants immediately.
Paythru signed up 13 Turkish banks that previously had been approached by
PayPal. Paythru will not include PayPal in any part of its platform. The massive
infrastructure investment for NFC is an impediment to its adoption. Mr.
Sheffield said Paythru offers everything NFC does but without the infrastructure
investment. Retailers prefer brand-agnostic, white-label platforms that allow
them to keep their consumers. PayPal also faces regulatory risks in emerging
markets. South Africa now prohibits the use of debit cards online because of
increased fraud, which removed 95% of the population from e-commerce.
―The leader now is PayPal. Their moat is hard to leap. Google Wallet
has a serious challenge on their hands. But they‘re going at mobile
payments differently, building apps and using NFC.‖
―PayPal is a competitor, so we won‘t put their APIs on our platform.
Sometimes clients ask us about putting PayPal on our platform. Yes,
PayPal is a competitor, so we
won‘t put their APIs on our
platform. Sometimes clients
ask us about putting PayPal on
our platform. Yes, we‘d do it
with the right deal. But we offer
everything they do but cheaper.
Director of Innovation & Development
Paythru
Mobile World Congress: eBay Inc.’s PayPal
321 Pacific Ave., San Francisco, CA 94111 | www.blueshiftideas.com
3
we‘d do it with the right deal. But we offer everything they do but cheaper.‖
―Mobile payments are not a solution looking for a problem. It‘s the reverse. NFC is a solution looking for a
problem. There is a use for it, but you need massive infrastructure investment and you have to reengineer the
tills. South African mobile pop-up banks, which go to a township for a day and a guy with a mobile phone is the
bank manager, for example, will never have NFC terminals. We offer everything NFC does without the
investment. We offer everything with 2D bar codes that NFC can do. … ViVOtech [Inc.]‘s Google Wallet
technology, which got hacked last week, is still a year away from being usable. … We offer a complete end-to-
end business proposition.‖
―Paythru is not an acquirer [of payments]; the merchant gets the money in real time. Funds are posted to his
bank immediately. We don‘t have to launch a brand but leave that to the retailer, who‘s trusted by the
consumer.‖
―We‘re in South America, Turkey, Australia. Malaysia, Thailand. In Turkey we signed up the 13 banks that got
together to keep PayPal out. PayPal was trying to launch in Turkey for years and was frozen out by the banks.
Because of our agnostic approach, the Turkish banks bought it. We were accepted into Turkey immediately. It
took two months to build the integration platform. We allied with the banks instead of competing with them, and
we don‘t hold the cash. Global Payments [Inc./GPN] resells our technology to its clients.‖
―The South African government outlawed debit cards online due to fraud and removed 95% of the population
from e-commerce. Five percent of the people have credit cards. MTN Bank and Standard Bank came to Paythru
about how to solve this problem by treating the transaction as a customer-present transaction. Other banks
have joined the scheme. Now mobile authorized transactions in South Africa are recognized as OK. We‘ve
launched six clients in the last six months.‖
Strategic marketing manager for a bank security company offering a white-label mobile payment platform
This company has more than 1,000 banks as clients and views the m-commerce market as fragmented and in its
infancy. Different mobile solutions and market leaders will dominate in different regions and countries. The Facebook-
carrier alliance will be a major threat to PayPal, but Facebook must bridge the virtual and physical worlds. PayPal has an
already large user base. In Germany, carriers have closed ranks to keep PayPal out. The country is about two to three
years behind in mobile payments, but carriers will struggle to get a piece of its market once it takes off. First Data Corp.
and other interbank payment processors are not losing out in light of m-commerce‘s ramp up. Security should be a big
concern. The source‘s company acts as a Trusted Service Manager (TSM) for banks and carriers.
―We have a lot of carriers in Germany joining forces to keep out PayPal. Google Wallet [will] have to move fast to
get evidence of major milestones in the market. … PayPal has a strong position in the U.S. It‘s good that they
have an e-commerce brand, a known consumer brand.
―It‘s not one or the other that‘ll win. There will be a few different
solutions. There will be a wide range of brands and service providers.
The banks can see mobile as a new customer relationship channel, not
just for payments but for banking and other marketing and cross-
selling. At the moment it‘s very fragmented from country to country.
Different country and regional markets will go for different solutions.‖
―It‘ll be a big hurdle for Facebook to make the bridge between the
virtual and physical worlds, but they‘re already experienced with
enterprise solutions. You have to be there to be someone for the
consumer. But the real money doesn‘t come from Facebook for big
banks and retailers. It‘s more marketing and brand awareness. I don‘t
see Facebook becoming a payment scheme. They‘ll work together with
carriers as a platform.‖
―If you want to put the payment in [carriers‘ bills], the carriers are
afraid that suddenly the bill will be huge. They‘re worried about consumer claims and credit problems. There will
have to be a separate bill for nonphone charges. There‘s the chance for PayPal and Paythru to get into this
business. … They‘ll struggle to get their piece. The carriers are starting MPass [a joint venture between Vodafone
Group PLC/LON:VOD/VOD and Telefonica S.A./LON:TDE/TEF].‖
―In Germany, the mobile market is still a little baby. Ingenico [S.A./EPA:ING] and VeriFone [Inc./PAY] need to
invest in their infrastructure. In two to three years the market will really fly in Germany.‖
We have a lot of carriers in
Germany joining forces to keep
out PayPal. … PayPal has a
strong position in the U.S. It‘s
good that they have an e-
commerce brand, a known
consumer brand.
Strategic Marketing Manager
Bank Security Company
Mobile World Congress: eBay Inc.’s PayPal
321 Pacific Ave., San Francisco, CA 94111 | www.blueshiftideas.com
4
―First Data‘s main job is the interbank transaction. But with Google Wallet doing interbank with First Data, I don‘t
think they‘ll lose. They‘ll find their way. When it comes to TSMs it‘s who you trust, and it‘s important that you
have independent companies. … It‘s all about liability and trusted security.‖
―We‘re a TSM. Some customers want the whole value chain supported by us. It‘s a white label. The customer‘s
brand goes on it. It‘s in a pilot.‖
Managing director for a POS software and device company
PayPal is positioned to benefit from tremendous growth in mobile payments and NFC, but this growth will not occur until
the technology reaches the consumer stage, likely three years from now. The real value of mobile and NFC is the
interactivity that increases retailers‘ promotion redemption rates from the single digits to up to 70%, enabling more
precisely targeted advertising.
―PayPal is in very strong position having a large number of registered users. The credit card will end up in the
cloud and not in the phone. The identifier is in the phone, but the ID is in the cloud. Long term that‘s not the way
it‘ll go [ID in the phone]. … Google [has] underestimated the task at hand. PayPal is the leader at the moment.
Their strong for now. Google Wallet will overtake PayPal over time.
Google Wallet is limited to the U.S. at the moment. Anything Google
does, they do it big. But no retailer will go for higher-commission mobile
wallets.‖
―NFC will happen, but we don‘t care if it does. We‘re about ID in the
phone. The infrastructure is now getting NFC as a standard. All the new
terminals have NFC. … WAP [wireless application protocol] was vendor
push; NFC is vendor push. But when the retail acceptance comes, it‘ll
be consumer pull. Pushing NFC without retailer acceptance is a waste
of time, like giving someone a credit card without a terminal that takes
it. NFC will reach the consumer pull stage [in] three years. There will be
services around next year and the year after. It took four years before
every phone had a camera. It‘ll take two more years before the average
nontech guy on the street will be aware of NFC.‖
―The value of mobile is in being interactive. As a merchant, I can better
target my customers. It‘s all about marketing and offers. Mobile is not
about the payment; it‘s about how I get to that point: location-based
marketing, highly targeted. Rather than sending out huge amounts of
spam, send out very targeted offers with up to 70% redemption rates.
The customer may or may not pay through the phone, but the value for
the merchant is everything that happens up to the payment.‖
―If NFC doesn‘t make big progress in the next 18 months, there are
alternatives that will move in and pass it by. A short-range cell technology might pass it by.‖
―I could go to Isis if I‘m a large retailer. Can you send this coupon to everybody within a certain radius? We‘d be
integrated into the retailer‘s till software. … We‘ll take the coupons and see what the customer bought and the
retailer will know all the data and report back to Isis or the carrier and the card issuer. Isis won‘t do it for free.‖
Business development professional for a white-label mobile wallet platform
This source, whose mobile payments solution is used by 120 operators in 60 countries, has seen too many governments
and companies getting mobile wrong. PayPal and Google Wallet are not major share holders in the mobile payment
environment. Adoption will be slow in the developed markets because of legacy payment and telecom systems. Fewer
barriers exist in emerging markets. He forecasts an NFC fiasco for the London Olympics starting in three months. He also
expects the rise of an alternative payment industry spawned by the costs of installing an NFC infrastructure. NFC is ideal
for transport ticketing and will take off there. Visa Inc. (V), MasterCard Inc. (MA) and banks will be under considerable
pressure from alternative payment sources, especially in large, emerging markets with numerous ―unbanked‖ people.
―PayPal and Google Wallet are both way down the scale in market share. In Italy and Spain, 80% of transactions
are in cash. It‘s cultural. Arab countries are cash markets.‖
―The payment infrastructure is key for big retailers in understanding consumer behavior. I‘ve spent a whole day
in France watching a pilot. You have to find the guy with the device, and he has to input the amount and he
PayPal is in very strong position
having a large number of
registered users. … Google
[has] underestimated the task
at hand. PayPal is the leader at
the moment. Their strong for
now. Google Wallet will
overtake PayPal over time.
Google Wallet is limited to the
U.S. at the moment. Anything
Google does, they do it big. But
no retailer will go for higher-
commission mobile wallets.
Managing Director
POS Software & Device Company
Mobile World Congress: eBay Inc.’s PayPal
321 Pacific Ave., San Francisco, CA 94111 | www.blueshiftideas.com
5
doesn‘t know how to do it. It‘s easy to say, ‗Tap and go,‘ but to get that
into the consumer‘s mind is not so simple.‖
―At a certain point consumers will be overloaded, overwhelmed [with
location-based promotions]. There will be a backlash; it‘s very invasive.
One example is Groupon [Inc.‘s/GRPN difficulty in] getting volume in
Europe. Real growth beyond initial acquisition is hard.‖
―Visa and MC have the clout to tell the merchants they will have to take
on NFC or take on the payment‘s liability. But Visa and MC also are
under lots of pressure.‖
―Kuapay [LLC] is one of the alternative payments companies spawned
by the cost of adopting NFC and is much cheaper than PayPal, MC and
Visa. Kuapay relies on the bank‘s ID and security infrastructure, which
makes it cheaper. Visa acquired Fundamo for their expertise in running a mobile payment platform.‖
―The uptake of mobile payments in less developed markets is a no-brainer because there are no legacy systems.
Safaricom [Ltd.‘s] M-Pesa cell phone payment system flopped in South Africa because of the existing banking
infrastructure. Brazil, India and China will have their own virtual currencies. … Western-driven processors … will
have their place. They can be broader and swifter in adopting multiple payment channels versus a bank, which
is vested in a particular distribution model. If I‘m a bank and work with one provider, I can get only 30% to 40%
of the market, but with interoperability I can work with the whole market. Multibank and multioperator will win.
The platform can be jointly owned by the carriers and the banks. But if I‘m a bank, I don‘t want the security
running over a mobile phone network.‖
―There‘s lots of hype about NFC. … The London Olympics will be a huge experience but not a successful
showcase. … NFC is very convenient, but the barriers to accelerated adoption are costly. … Adoption will be
slow.‖
Eduardo Beracha, product manager for Movilway
PayPal has what it takes to succeed in m-commerce, but is unlikely to replicate its e-commerce success in less-developed
markets. The same holds true for Google. Both companies will need to partner with local mobile payment service
providers, which will benefit from the lack of legacy electronic payment systems. Any POS can be a bank branch with
mobile. The unbanked represent a significant opportunity. Using m-commerce ID and authentication will allow the
unbanked to become e-commerce consumers and ―semi-banked.‖ The traffic between e- and m-commerce in emerging
markets will be two-way and lucrative, but local providers will charge 1% commission compared with PayPal‘s 2.9%.
―I know PayPal better than Google Wallet. I haven‘t tried Google Wallet yet because you need a specific NFC-
enabled phone. They‘ll both take off. But the focus can‘t be on solving a problem just because it‘s cool to pay
with a phone. Credit cards are a great way to pay. Mobile payments will be used when they add value, when you
can link it with loyalty programs. I want some value added that I didn‘t have with the credit card. The retailer‘s
value add is where you start. We had the same problem. We had to add value for them because if they don‘t sell
it, we can‘t sell it. PayPal‘s advantage is that it isn‘t in the data-capture
business.
―PayPal‘s advantage is that it entails no investment in hardware. The
retailer has to amortize legacy hardware investments, so PayPal can
grow faster. And who hits first hits harder. The infrastructure cost will
be high, and someone has to pay for it. PayPal has what it takes to be
successful in m-commerce.‖
―PayPal‘s 21-day hold is a very risky move. They will be exposed to
losing some clients. eBay has such strength in the market, so they have
the luxury of doing the 21-day hold. If they do that just to get a yield, it
will be a reputation crash. They will crash their brand.‖
―Latin America is 70% unbanked, so we believe mobile wallet solutions
have to provide a solution to a problem. This is why we have our own
mobile wallet in development and have launched it in Venezuela. We
don‘t work with NFC. There‘s no infrastructure yet. We don‘t want to
wait for it. The lack of financial services allows the launch of a mobile
wallet right now.‖
PayPal and Google Wallet are
both way down the scale in
market share. In Italy and
Spain, 80% of transactions are
in cash. It‘s cultural. Arab
countries are cash markets.
Business Development Professional
Mobile Wallet Platform
PayPal‘s advantage is that it
entails no investment in
hardware. The retailer has to
amortize legacy hardware
investments, so PayPal can
grow faster. And who hits first
hits harder. The infrastructure
cost will be high, and someone
has to pay for it. PayPal has
what it takes to be successful
in m-commerce.
Product Manager, Movilway
Mobile World Congress: eBay Inc.’s PayPal
321 Pacific Ave., San Francisco, CA 94111 | www.blueshiftideas.com
6
―Remesas dirigidas [direct remittances] are the big market, but you need licenses. It‘s a cheaper way to send
money. We‘ve developed a portal that you can top up with a credit card for the banked population. MoviPIN
helps unbanked consumers to buy online. They get a PIN and use it in the website. We‘re a new payment
method for the unbanked to buy on line. Maybe we can help PayPal by integrating their button into MoviPIN.‖
―We‘re running a pilot with no charge to the user. For the merchant we charge about 1% commission—less than
plastic. We don‘t want to kill PayPal; they target another user. You have to be banked. We would love to work
with PayPal.‖
―PayPal is not very strong yet in Latin America. We‘re more than willing to work with PayPal but not their APIs yet.
They‘re not a competitor. PayPal needs a local solution to work with our market.‖
President/founder of an NFC-based phone reader designer and manufacturer
PayPal has no reason to ask its customers to wait for NFC. With existing POS terminals and minor software changes,
customers could enter their phone number and a PIN or swipe their PayPal card and engage in mobile payments today.
However, retailers will have no choice but to adopt NFC; otherwise, in October 2015, card issuers will dump the liability
for fraudulent purchases onto them. PayPal‘s core business is payments while Google‘s is data capture and advertising.
Cost will not be an obstacle to an NFC ramp up within three years since a cost decrease is likely. The cost of an NFC
contactless reader has dropped from $200 or more to $60 to $70.
―If there‘s one single brand that‘ll be added, it‘ll be PayPal because
payment is their core business. Google Wallet is a vehicle for ads,
marketing and data. PayPal will became a mainstream payment
vehicle. Five years from now you‘ll see me as a consumer with PayPal
in my wallet as a payment app and Google offers in my wallet but not
as Google Wallet. Today they won‘t work together. … They‘ll be a similar
concept for m-commerce; they will coexist. … PayPal also wants to
incentivize you as a consumer to shop before you decide to buy.‖
―PayPal‘s database tracks you only in PayPal transactions. What‘s
better, a database that tracks 10% or 90% of your transactions? One
day PayPal will recognize that it‘s better to use Google‘s engine than
their own. Google Wallet is not a payment system. It‘s a browser on a
phone for you to do a search to get offers. If they limit Google Wallet to
offers available on Google Wallet only, they‘ll limit their engine. Their
core business is to make their offers available to as many browsers
and wallets as possible.‖
―If I were PayPal, why would I ask my customers to wait for NFC? I‘m going to make sure you get mobile
payments now. You can do things now. Don‘t wait for NFC. But when NFC becomes real … PayPal will have to
understand NFC because it hired Don Kingsborough.‖
―PayPal will roll out in the physical store, where I will enter my phone number and my PIN. They will allow me to
swipe my PayPal card. These two things can easily be done at the POS by changing just the software. … In the
next few years all the merchants will get an NFC reader. … They‘re going to say, ‗I‘m not going to accept a
magstripe [magnetic stripe] card.‘ The point is that as these POS terminals get replaced, they‘re also getting
NFC.
―When you‘re doing the payment in the physical presence environment, NFC will be the mainstream payment
method in the U.S. in three years. … Dubai and Hong Kong have used Octopus cards for the last 10 years. In
every trial we‘ve run, 98% of the consumers have used touch-and-go. … Anything … you make easier for me to
do, I‘ll gravitate toward that.‖
―Merchants and manufacturers will incentivize the consumer to use PayPal. I already have this sweater in my
basket and it‘s too late to back out. I‘m going to use PayPal. This is a game changer, an interactive shopping
environment for consumers. This channel that we‘ve created is the most efficient personalized marketing
channel ever developed. It‘s based on who you are, where you are and your interests. It‘s the most powerful
search engine ever developed. That‘s what will allow the merchant, the manufacturer, and the card issuer or any
of the service providers to be able to send me the real-time offer, which I‘m going to respond to.
―Today with PayPal I have no other choice but to enter a 10-digit number even though the PayPal card data is
sitting in the cloud. PayPal or anybody else would be insane not to offer NFC. I strongly believe that all the
If I were PayPal, why would I
ask my customers to wait for
NFC? I‘m going to make sure
you get mobile payments now.
You can do things now. Don‘t
wait for NFC. But when NFC
becomes real … PayPal will
have to understand NFC
because it hired Don
Kingsborough.
President/Founder, PlusEngine
Mobile World Congress: eBay Inc.’s PayPal
321 Pacific Ave., San Francisco, CA 94111 | www.blueshiftideas.com
7
payment players in the physical store will have no choice but to use NFC. Visa and MasterCard have already
gone it that direction and AMEX [American Express Co./AXP] too.‖
―I knew NFC would go mainstream when I saw it used in Shinjuku station in Tokyo. I saw a wide spectrum of
consumers using tap-and-go. But I couldn‘t convince Visa, just MasterCard and AMEX. When MasterCard
announced its McDonald‘s partnership, I got a call from Visa. In four months I got Visa on board.‖
―Wells Fargo [& Co./WFC] is now going to issue a chip card. All banks are moving to chip cards. The deadline is
2015. Every merchant will have to have the chip card. Visa said new terminals will have to have NFC capability
by October 2015 or the liability [of fraud] will be taken on by the merchant.‖
―Seventy percent to 80% of POS terminals will be replaced with chip- and NFC-enabled terminals. NFC reduces
consumer effort. With physical presence, NFC will dominate. … It‘ll take longer elsewhere. Ninety-eight percent
of consumers in Hong Kong have been using touch-and-go technology for the last 10 years. They were first. The
BART [Bay Area Rapid Transit] trial with Sprint, ViVOtech is another indicator of ramp up. Transport present the
highest use of NFC.‖
―NFC‘s infrastructure costs a lot [at first], but then it gets integrated. In three years NFC add-on to phones will
drop from $2.50 to 30¢. Add-on readers now cost $100.‖
―The First Datas whose core business model is processing for the point-of-sale networks are in trouble in the
long run; in the short run it‘s a volume game and they will be OK. However, as the consumer migrates away from
purchases through the POS networks, the processors are going to have to change their business model. They
can grow if they play effectively and … give NFC to small merchants. They can make much bigger money
servicing the small merchants. First Data supported 5.8 million merchants, now 2.8 million.‖
―[SAP AG‘s/ETR:SAP] Sybase 365 is in a very good position. These are the people I work with. My job is to enable
them. Instant provisioning of the card, instant recognition. That‘s our technology.‖
Chief marketing executive for a mobile application development company
PayPal and Google Wallet both are in strong positions. PayPal‘s position stems from its strong brand and user base, not
from any valued-added mobile services that its developer base would provide to retailers. Mobile payment companies in
general will not be able to supply numerous value-added services in order to lure retailers to their mobile wallets. NFC
adoption will be driven by whether Apple decides to make the iPhone 5 NCF-enabled. Apple users tend to be tech-savvy.
Android (Google) users tend to use less of the phones‘ features.
―The incumbents like PayPal and Google have a huge advantage. The
smaller companies coming into the space bring a new eye, but it‘s
tough not to see the leaders everywhere. … For the smaller companies
to make a dent, they have to differentiate. … But the differentiator is
hard to see when you‘re rushing a product to market with a limited
budget.‖
―PayPal will be successful in transitioning from e-commerce to m-
commerce. … They have brand recognition. They … make it easy to
integrate into mobile apps, into these devices. … Everybody is looking
at this as a different revenue model than what they‘re doing on the
Web. I‘m not sure it‘s there. We see it with our customers that you‘re
leveraging those same systems. Your app is familiar to your users, so
they just use it on a smartphone.‖
―This last month hasn‘t been great for Google on privacy issues. … It
doesn‘t help that they‘ve changed their privacy policy.‖
―NFC will matter tomorrow but not today. Is PayPal completely
indifferent to NFC? They‘re probably saying that. But if you‘re betting
on a device manufacturer, it‘s probably Apple. It‘ll probably happen in
late spring and probably have NFC built into it.‘
―If you look at numbers, Android has the biggest market share. The
phones that‘ll come out NFC-enabled are probably going to be Android
devices.‖
―The real users of functions are with Apple. It has lower overall
adoption, but its users are savvier and are using the features built into
it. NFC will get traction when it‘s built into the iPhone. People that pay
PayPal will be successful in
transitioning from e-commerce
to m-commerce. … They have
brand recognition. They …
make it easy to integrate into
mobile apps, into these
devices. … Everybody is looking
at this as a different revenue
model than what they‘re doing
on the Web. I‘m not sure it‘s
there. We see it with our
customers that you‘re
leveraging those same
systems. Your app is familiar to
your users, so they just use it
on a smartphone.
Chief Marketing Executive
Mobile App Development Company
Mobile World Congress: eBay Inc.’s PayPal
321 Pacific Ave., San Francisco, CA 94111 | www.blueshiftideas.com
8
$600 for a phone will drive adoption of features. … If Apple ignores a feature, it won‘t take off.‖
―Our platform has a plug-in layer extricated from the core product, so it doesn‘t matter which payment app is
used. … That‘s one of our big strengths. We go into a retailer who has the system built 15 years ago, and we can
connect to it.‖
―I used mobile PayPal yesterday. I haven‘t used Google Wallet. I‘m a fairly pervasive Internet buyer, and I use
PayPal more than anything else. I have multiple PayPal accounts on multiple continents. It‘s hard to bet against
eBay, but it‘s also hard to bet against Google.‖
Joaquin Ayuso de Paul, CEO and founder of Kuapay
PayPal has no clear strategy or idea of where it wants to go. Other mobile wallets are not focusing on the user experience
or on a merchant‘s needs. In general, companies are working consumers too hard and have merely grafted a 30-year-old
card processing technology onto a mobile phone. Also, Facebook and Google are going outside of their core business and
likely will not succeed. The biggest losers in mobile payment‘s ramp up will be the smaller processors. First Data might be
an exception. Card issuers, but not the banks, are vulnerable to disintermediation. NFC‘s drawback is its unsuitability for
large payments.
―The experience with PayPal is very different. They‘re making the
consumer work by putting in a PIN number and phone number. They‘re
taking a risky step. The PayPal card still uses a debit card processing
platform, which is a 30-year-old system. We offer real-time payment to
the merchant.‖
―PayPal has a lot of power, great teams, great technology. But their
leadership position is not durable enough, and there‘s not enough time
for them to learn.‖
―PayPal will get hit really hard. They don‘t have a clear strategy. … They
started with e-commerce, then the card came, and now it‘s mobile. …
You must have a clear point of where you want to go. If not, you‘re in
lots of places where you can‘t give 100% attention, and will get eaten
up by competitors who are only in that business and know it better.‖
―Google Wallet is comfortable only for small payments. NFC is comfortable for small payments up to $50. People
don‘t put lots of money onto new technology right away.‖
―PayPal and Google Wallet both have a [bad] user experience, and neither will succeed. Now they‘re still using a
30-year-old credit card experience and plugging into a mobile phone. Neither is thinking of the consumer
experience.‖
―Google Wallet [is] thinking of the data they can mine. They only need 5 million users, so why invest to get more
users? Google Wallet won‘t have a lot of traction, especially with the ecosystem they‘ve created.‖
―PayPal can respond fast and integrate with the carriers or Facebook. The problem is, what are they going to
give to the users? Facebook doesn‘t control any financial info. It knows its users, which PayPal doesn‘t. If you go
outside of your core business, you crash. What will Facebook bring to users for payments? You can use iTunes
for online goods but not for physical goods.‖
―The big ramp up will come in three to four years. All of the big-box
stores get it. They‘re creating in-house groups to deal with this market.‖
―The only winners will be the banks; they have and will transfer the
money. They already have the international transfer networks.
Technology doesn‘t remove liability. What if you could charge back a
fraudulent transaction even if it were paid directly from your bank
account? If you want to charge back the merchant, the bank can do it.
The technology is there.‖
―Technology enables the merchant to pay not a 2% fee but a flat fee,
unlike PayPal. The retailers understand what we do.‖
―For a bank you have to attach your cards to the NFC Trusted Service
Manager platform, and not all banks can do that. Some of their
technology is too old.‖
PayPal has a lot of power, great
teams, great technology. But
their leadership position is not
durable enough, and there‘s
not enough time for them to
learn.
CEO & Founder, Kuapay
PayPal and Google Wallet both
have a [bad] user experience,
and neither will succeed. Now
they‘re still using a 30-year-old
credit card experience and
plugging into a mobile phone.
Neither is thinking of the
consumer experience.
CEO & Founder, Kuapay
Mobile World Congress: eBay Inc.’s PayPal
321 Pacific Ave., San Francisco, CA 94111 | www.blueshiftideas.com
9
Yoel Bar-Gil and Gil Etzion, CTO and corporate senior VP of Mer Telecom, a mobile solution company focused on the
unbanked
Banks‘ KYC (know your customer) regulations are stricter than the minimal regulations applied to mobile wallets. Aside
from being a money launderer‘s dream, mobile wallets in emerging markets will limit the expansion of PayPal and Google.
Investors who extrapolate growth figures for PayPal, Google or Isis based on the number of mobile phone users ignore
these facts at their risk. Mobile payments will be ubiquitous in five years, but the market will be regionalized. NFC will be
driven by card issuers pushing merchants to replace their POS terminals.
―Everybody will win. When we started the app, it was geared to an
unbanked population—the CIS countries, Africa and Latin America.
You‘re talking about more than 60% of the population with mobile
phones and Internet access. The potential is huge. These are monies
that are running in the world, and nobody monitors them. Most of them
are cash-based. We‘re happy PayPal is ignoring these unbanked
people. Our system is built to serve the unbanked. For PayPal, you
need a credit card or a bank.‖
―Every one of the players will have his niche to play, some on credit
cards, some on cash, and then the unbanked. And the world will be
divided between providers of different solutions. We pool all the
payments into one big account.‖
―Google Wallet and PayPal are not in this game. The winners will
obviously be the banks, as partners in the system. The monies that are
floating around as cash will be hosted in one account, so the banks will
gain a lot of money to play with.‖
―In five years, everyone will have some type of mobile payment on their phone.‖
―The adoption of NFC will depend on the availability of NFC-enabled phones. In a conference about NFC in
London I heard that, in 2015, 35% of the handsets will be NFC-enabled. Penetration will be less than 10% by
next year; 20% penetration by next year is an exaggeration. If you remember 3G, the technology was ready but
there were no handsets. It took 3G about five years before it reached critical mass of handsets in the market.‖
Manager of a South Korea based loyalty program for retailers
This company controls South Korea‘s mobile payment market by running loyalty programs for retailers and giving
discounts to consumers. Merchants pay $300 to $500 a year per terminal to work with this firm.
―We have a strong advantage over PayPal and Google Wallet, with centralized management of loyalty and
discounts.‖
―It‘s based on a Korean payment standard. These affiliates make this point system, and we make the platform,
this application. Then you can store your credit cards and it‘s all integrated, one-stop tap and go. The merchant
pays 360,000 to 600,000 won a year per device for the service subscription for a two-year contract and a little
less than 1% of each payment.‖
―What we provide the customer is end-to-end service: coupons, discounts. Google tried to expand their affiliate
network in Korea and didn‘t succeed. … We have the loyalty program, not the retailer. When I go to Starbucks, I
as a customer pay only 70% of the full price in our loyalty program. Starbucks hands us the consumer, but we
pay Starbucks as well. Google Wallet doesn‘t have that affiliate network. You go to the bakery and pay 100 won
without the loyalty program but 90 won with the program. That‘s our strength.‖
Product vice president and a product manager for a location-sharing tech provider
These two sources cited several pilots by PayPal and Google Wallet, but said consumers have not yet widely accepted
mobile payments for everyday purchases. The market is still fluid and lacks a clear winner. However, sources named The
Western Union Co. (WU) as a clear loser. Many brands have tried to convince the sources‘ company to monetize its
location-sharing service, but it is in no hurry. The service is applicable to both mobile shopping and mobile health. One
source was part of Amazon.com Inc.‘s (AMZN) founding team.
―We‘re at the early adopter phase of mobile payments. But it‘s so simple to use, we‘ll get beyond the early
adopter phase really quickly. … If you don‘t think it‘s already here, you‘ve missed it. eBay did over $1 billion in
mobile revenue last year and is on track for $2 billion this year. M-commerce going mainstream depends on how
you define mainstream.‖
Google Wallet and PayPal are
not in this game. The winners
will obviously be the banks, as
partners in the system. The
monies that are floating around
as cash will be hosted in one
account, so the banks will gain
a lot of money to play with.
CTO & Corporate Senior VP
Mer Telecom
Mobile World Congress: eBay Inc.’s PayPal
321 Pacific Ave., San Francisco, CA 94111 | www.blueshiftideas.com
10
―We can integrate mobile shopping, deals, a huge spectrum of things. Yes, temporary location sharing could be
applied to price comparison. … But we‘re focused for now on making location sharing simple, safe and efficient.
The monetization aspects—whether we‘ll incorporate advertising, shopping, premiums, custom versions for
consumer brands—all exist, and we‘ll pursue them in time. Right now we‘re focused on the consumer
experience.‖
―PayPal actually had an NFC initiative at one point in the Bay Area. It
wasn‘t built into the device, but built a sticker onto the phone and an
NFC would deduct from your PayPal account. The advantage Google
has is that it‘s built it into the hardware. But I don‘t think there‘s much
difference between the two, certainly not in terms of privacy. … PayPal
would probably be in favor of any technology that a customer would
want to conduct a transaction with them.‖
―A lot of the things we‘re showcasing here are based on an NFC unique
identifier transfer. I‘m surprised that PayPal wouldn‘t have an app that
used NFC to transfer. Eventually they‘ll get this. But I wouldn‘t pick
winners and losers in that world. That is a very complex value chain
with a lot of different players. You could see Google leveraging Google Plus. But PayPal has a lot of established
connections with financial institutions. There used to be a big debate about carriers. There was a big dustup
about the carriers going head to head against the banks and the card issuers. But that doesn‘t make sense. The
card gets the transaction when I pay my phone bill with my credit card. … With NFC, there‘s lots of ink spilled
about who‘s competing with whom and who‘s got a competitive advantage. The verdict is still out.‖
―A store could accept Google Wallet and PayPal just like accepting Visa and MasterCard. Consumers don‘t care
what happens in the background.‖
―Now that‘s a company that‘s being disrupted—Western Union. Safaricom‘s M-Pesa is hurting them. All the
customer cares about is how the unique identifier, which says you have access to that account, is transferred.‖
―If I buy a phone and the app is already baked in, great. But if no merchant takes it, what good is it? If I can only
use my Google Wallet and PayPal in some places, I‘ll carry my credit cards. Critical mass with every day or every
week retailers is absolutely needed.‖
Elie Barakat, business development professional with MobiPay, a white-label wallet
This source works with carriers and banks in emerging markets. Legacy services will have to adjust in light of cheaper
mobile payment services. The winner will be the one with the biggest user base and momentum—in this case, Facebook—
and not necessarily the best platform or service. Mobile payments‘ ramp up will
take about three years.
―Betamax and VHS tell you the best don‘t necessarily win. Momentum
favors Facebook. Everybody is part of whatever Facebook does. Young
people are on it constantly. … PayPal is more linked to merchants. It‘s
not a primary service in people‘s lives. … People are followers, and you
need to set a trend.‖
―MobiPay is a white-label platform. … We‘re a subscription service, or
you buy the service and we give just support. … You can have it without
touching the bank. We‘re deploying in Africa and the Middle East.‖
―The transition from credit cards to mobile will be shorter because the
transition from cash to credit cards from cash has already happened.‖
―There will be a good acceptance for touch-and-go. Instead of looking
for your credit card … you‘ll touch your mobile.‖
―The cost of deployment won‘t be important because it‘ll come down a
lot. The cost to integrate it with the mobile phone is very low. Eventually
within two to three years it‘ll all be in place. POS was painful due to the
cost, and it was deployed. … And the acceptance will grow bigger.‖
―PayPal will find an alternative to NFC.‖
A store could accept Google
Wallet and PayPal just like
accepting Visa and MasterCard.
Consumers don‘t care what
happens in the background.
Product VP & Product Manager
Location-sharing Tech Provider
Betamax and VHS tell you the
best don‘t necessarily win.
Momentum favors Facebook.
Everybody is part of whatever
Facebook does. Young people
are on it constantly. … PayPal is
more linked to merchants. It‘s
not a primary service in
people‘s lives. … People are
followers, and you need to set a
trend.
Business Development Professional
MobiPay,
Mobile World Congress: eBay Inc.’s PayPal
321 Pacific Ave., San Francisco, CA 94111 | www.blueshiftideas.com
11
2) MOBILE PAYMENT/MONEY PRESENTERS AT MWC These two sources said PayPal is part of the mobile payment landscape but only as one of many technologies. Both sources
expect large retailers to develop their own mobile payment systems so they can own the customer data. One source also
expects PayPal to become a button on payment apps produced by banks and big retailers. The other source is platform-
agnostic and expects multiple technologies to coexist in the mobile payment industry. NFC is a convenient solution for
consumers, who will drive its adoption by using NFC-enabled phones once available at the end of this year. Adoption of mobile
payment apps also is on the verge of ramping up.
Chief operating officer for a mobile valued-added service/CRM platform designer and provider
A mobile wallet such as PayPal will become part of a retailer‘s own platform, which it will create to harness the customer
data. This source does not favor NFC over QR (quick-response) coding or PayPal over Google Wallet. He expects a near-
term usage increase in mobile payments.
―We‘re ‗agnostic‘ on PayPal and Google Wallet. We want to ensure a holistic capability with the consumer. The
brand will be predominant—the wallet‘s platform with a [brand‘s] wrapper. … The big retailers will develop their
own high-quality interactive platforms. If the brand is strong enough,
I‘m quite happy to interact with it as long as the experience is smooth
for me. We‘ve seen a surge in the growth of couponing capabilities
under one umbrella. That‘ll be integrated into loyalty schemes. The
retailer will take over the relationship and the redemption in store after
the acquisition transaction, not PayPal or Google Wallet.‖
―Retailers‘ marketing groups are rapidly waking up to mobile‘s
potential. We‘re on the cusp of mobile going mainstream, a tipping
point. Person-to-person payments fit very well with the felt moral
obligation to pay friends quickly—settling up a restaurant bill, for
example.‖ ―Multiple technologies will coexist. … Consumers and retailers aren‘t
fussy about technology. The device manufacturers are already
combining multiple technologies, and prices of devices are
plummeting.‖
―The more progressive retailers know they have to open up their POS
terminals to other capabilities. … Otherwise, they‘d be dead if they used 10-year-old software. There are plug-
and-play phone and imaging scanners, so the upgrade to NFC could be plug-and-play.‖
―NFC … can help channel the consumer to the brick-and-mortar merchant‘s website. Retailers come at it from
different angles. Some come at it from ‗I‘ve got a loyalty program and want to mobilize it.‘ There‘s no standard
proposition.‖ ―For loyalty schemes to succeed, they require an alignment between marketing, IT, operations and finance.‖
Neil Garner, CEO of innovation and development for Proxama
Neither PayPal nor Google Wallet will own the mobile payment market, which itself will be stymied by carriers‘ and
handset manufacturers‘ omission of the user experience. Companies that best understand mobile commerce include
Boku Inc. (now in alliance with MasterCard), Paythru and Barclays PLC‘s (LON:BARC/BCS) Barclaycard. Poorly situated
mobile payment providers include Banco Santander S.A. (STD), HSBC Holdings PLC (HBC), regional banks, and savings
and loans. Processors like First Data and Total System Services Inc. (TSS) stand to lose the most in this market. PayPal is
avoiding NFC because of the infrastructure investment and because NFC would turn PayPal into just another button
among many. PayPal is from the digital world, and successful m-commerce requires an easy-to-use bridge between the
digital and physical worlds. Convenience for the consumer will drive NFC adoption and will be set in motion by the global
launch of 120 million NFC-enabled phones by the end of 2012.
―PayPal is not going to own this new ecosystem. Google Wallet will do some elements of the ecosystem.
Ultimately, the consumer is who everybody is forgetting about. Everybody is worried about the brand on top of
the wallet instead of giving the benefit to the consumer and letting the consumer drive the choice. That is
equally true of PayPal, Google Wallet and Isis. The key thing that NFC enables is not having to choose an app on
the phone.‖
Multiple technologies will
coexist. … Consumers and
retailers aren‘t fussy about
technology. The device
manufacturers are already
combining multiple
technologies, and prices of
devices are plummeting.
Chief Operating Officer
CRM Platform Designer & Provider
Mobile World Congress: eBay Inc.’s PayPal
321 Pacific Ave., San Francisco, CA 94111 | www.blueshiftideas.com
12
―I think PayPal is saying they don‘t believe in NFC because they have to
do a lot of physical world investment and it would be an enormous shift
since they‘re in the digital world. I still think the existing mobile
technology is very cumbersome for consumers to use. In the physical
world, speed is of the essence. With NFC-enabled checkout anywhere,
PayPal would be just another button on the checkout page. The other
key to NFC is that you‘ll have your cards in your phone, so why use
PayPal?‖
―What frustrates me most about technology is how hard it is to use. QR
is too complex and hard to use. NFC is clear and simple; touch it and it
works.‖
―In 2015–2016 NFC will be standard on smartphones. Big industry
takes a long time.‖
―Paythru gets it; they understand consumer choice. The companies
spending the time connecting the dots are who will win. Monitise
[PLC/LON:MONI] gets it. Boku is good. Bango [PLC/LON:BGO] in the UK does content billing; they did a deal with
Facebook. They … focus on the consumer need and pull together the platform capability and simplify it.‖
―The people who don‘t get it are the network operators and the handset manufacturers. That‘s the big part of
the problem.‖
―The card issuers have the liability system in place, and it‘s exactly replicable for mobile wallets. There are new
rules about what you can do, but ultimately you need the [liability] backstop. Barclaycard really knows what
they‘re doing. HSBC is incompetent at this and slow. Santander Bank is slow.‖
―The building societies don‘t get it. Regional banks will be slow. The processors like First Data are very slow.
They see it as just one more thing they can outsource. The banks won‘t get the benefit with the very limited
offering from processors, and their offering is closed and proprietary. … The card businesses understand cards
but not mobile. … The opportunity lies with who knows how to bridge the gap.‖
―The most essential thing is whom consumers trust and whom do you call when things go wrong. You can‘t
underestimate the card issuers and the banks. PayPal, Google Wallet and Amazon are trying to drive this from
the cloud, and the physical world is different. In Europe it‘s different from the States because the chip cards are
more secure than the magstripe cards.‖
3) MWC ATTENDEES INTERESTED IN MOBILE PAYMENTS/MONEY/BANKING These two sources said PayPal is a strong contender in the mobile payment industry. However, one source said his company
chose to work with Paythru because it is a small, responsive company. The other source said PayPal is no longer innovative
and is advancing its technology through acquisitions. Both sources said mobile payments‘ main value for retailers will be in
added services, such as data capture, real-time promotions and special pricing for consumers. NFC adoption will widen in the
next two to three years as more NFC-enabled smartphones are sold.
Nigel Poad, director of PlusEngine a real-time marketing, loyalty and transaction
platform
This source said PayPal would be the best mobile wallet for his service if Paythru
did not exist, but he opted for Paythru because of its size and adaptability.
PayPal‘s leading e-commerce position will not necessarily translate into the m-
commerce environment. Also, PayPal‘s 21-day hold on eBay sellers‘ funds is
―absolute nonsense.‖ Mobile wallets will ramp up quickly in the next two to three
years, and will show its actual value in creating real-time promotions for
consumers and data capture for retailers. However, consumers are beginning to
question data collection. Also, many people do not want to frequently log into a
phone with a PIN, which could slow NFC adoption.
―We don‘t believe there‘s anybody in this space that understands the
real opportunities. PayPal must be technology-agnostic. PayPal would
In the physical world, speed is
of the essence. With NFC-
enabled checkout anywhere,
PayPal would be just another
button on the checkout page.
The other key to NFC is that
you‘ll have your cards in your
phone, so why use PayPal?
CEO of Innovation & Development
Proxama
This [mobile payment industry]
still will move quickly in two to
three years. There will be a
tipping point once the
smartphone penetration
reaches high enough. Some
barriers to penetration are
legacy payment technology,
which you don‘t have in
emerging markets.
Director of a Real-time Marketing,
Loyalty & Transaction Platform
Mobile World Congress: eBay Inc.’s PayPal
321 Pacific Ave., San Francisco, CA 94111 | www.blueshiftideas.com
13
be the most workable mobile wallet for us if Paythru didn‘t exist. But we want to work with Paythru because
they‘re small and are adaptable.‖
―Google Wallet being wrong about NFC means that if they‘re wrong about NFC, they‘re wrong about everything.
NFC is the only way they can run all the value-added services for retailers and collecting that data.‖
―For retailers to survive, they must understand their customers as well as Amazon does. Amazon knows
everything about you because you have to log in and they track everything you do. How can you take the virtual
world and into the physical world? That‘s how we got together with Paythru: to integrate a shopping center
loyalty program into a mobile payment platform. We‘re permission-based, and the member is getting a fulfilling
experience. … From the retailer‘s point of view, you get a much better conversion rate.‖
―We won‘t use other mobile wallets except Paythru. Retailers constantly talk about mobile commerce, but
nobody is really doing it. Lack of understanding impedes adoption. NFC has too much infrastructure investment.
We work on chip and PIN. Paythru is great because it ‗future-proofs‘ m-commerce. It doesn‘t rely on adoption
now. … Paythru is the facilitator that enables the whole platform to work.
―This [mobile payment industry] still will move quickly in two to three years. There will be a tipping point once the
smartphone penetration reaches high enough. Some barriers to penetration are legacy payment technology,
which you don‘t have in emerging markets.‖
―How is it protected from a PIN point of view? I don‘t have a PIN on my phone. If the PIN is the only protection,
what if you don‘t want to log in with a PIN? Who‘ll pay for the infrastructure?
Associate principal of a private equity investment company
PayPal is far from being a tired company but is no longer innovative. Applying e-commerce to a mobile device is not
innovation. How it manages its acquisitions will determine its fate in mobile payments. Small companies have the talent
and innovative culture to better shape the mobile payment industry. Rather than the payment method, data capture and
real-time promotion and payment are the real sources of value for retailers and consumers. Google has realized this.
Legacy providers are having difficulty navigating the market because of all the quickly growing start-ups. NFC adoption
will take three to five years, though its trial at the London Olympics may speed up the process.
―PayPal is on their way. They‘ve made a series of acquisitions the last 18 months. Red Laser was key. So they‘re
a powerful enough company to acquire who they need to get the assets. … They‘re not a tired company,
obviously, but they‘ve gotten to a stage where they‘re not as innovative as they used to be. The cutting-edge
stuff has to come in through acquisitions. … The new stuff and the passion is with the small companies. They
just need to be careful with their acquisitions. … It won‘t necessarily be one winner or another. It‘ll be driven by
convenience. People won‘t be tied into to one particular payment platform.‖
―PayPal is going to get better at capturing data. They‘re going to get
there, and it‘s going to work. It‘s not a difficult process. All they need is
to bring in the right people and the right software. It‘s not a cultural
issue. Cultural issues are hard to break. But it‘s true that they could
acquire small companies and mess them up. Why don‘t you ask me in
nine months when we‘ll know better how Red Laser is doing? The
acquisition of Red Laser has given PayPal its ‗NFC-esque‘ way to
secure and make mobile payments. That‘s making the bridge between
online and m-commerce at the POS.‖
―NFC is inevitable. It‘s going to be around, but it will serve a different
purpose. It‘s great for small, noncomplex transactions. … It‘s very
limiting in terms of payments. You have to be there, and there has to
be a device. … With PayPal it‘s just e-commerce on the mobile phone.
… The technology isn‘t new, and the uptake has been really slow. I
don‘t know when the step change will be. I see it in another three to
five years.‖
―It‘s really interesting to see who‘s going to dominate the new social
media in mobile. There‘s a new social media site that‘s been the fastest growing and enables users to post
photographs from other websites. Facebook took two years to get to 1 million users, LinkedIn took a year,
Groupon took six months. This photo site took three months to get to 10 million users. It‘s just the way the
momentum is carrying it along.‖
PayPal is on their way. They‘ve
made a series of acquisitions
the last 18 months. … They‘re
not a tired company, obviously,
but they‘ve gotten to a stage
where they‘re not as innovative
as they used to be. The cutting-
edge stuff has to come in
through acquisitions.
Associate Principal
Private Equity Investment Company
Mobile World Congress: eBay Inc.’s PayPal
321 Pacific Ave., San Francisco, CA 94111 | www.blueshiftideas.com
14
Secondary Sources
A review of secondaries sources covering the mobile payment industry and the Mobile World Congress revealed that retailers
like Target Corp. (TGT) and Wal-Mart Stores Inc. (WMT) are planning to create their own m-commerce solution. Apple has been
awarded a patent for the iWallet. Meanwhile, PayPal believes the mobile payment market will be beyond the POS transaction
by the time NFC-enabled devices are available. Finally, white-label mobile payment provider Paydiant Inc. scored a big win by
partnering with FIS.
March 2 Mobiledia article
About two dozen retailers, including Target and Wal-Mart, announced that they are working on their own mobile payment
solutions. The first-generation payment systems are not being widely adopted, according to consultants on the project,
and competition in the mobile payment space has lead to a chaotic market. The retailers‘ use of NFC technology could be
a challenge to the likes of PayPal, which now offers a non-NFC mobile payment solution.
―Wal-Mart and Target are two known retailers out of about two dozen developing a mobile payments system
based on near-field communications, or NFC, technology.‖
―Consultants on the project say while platforms already exist, these ‗first generation‘ technologies have a long
way to go towards widespread adoption.‖
―The right platform to deliver the service faces obstacles in developing a payment system that can move from
theory into practical application. With many taking up the charge, there is no uniform method, which leads to a
chaotic market.‖
―Retailer focus on developing NFC is a challenge to smartphone pay systems without NFC, including platforms
from PayPal, already a familiar name for Internet transactions, and the start-up Square, which is an affordable
option for small businesses, but hasn‘t cracked mainstream retailers.‖
―If retailers come together to weigh in on a uniform system, keeping in mind best practices of their businesses,
they could generate the momentum to pull ahead.‖
March 6 Patently Apple post
Apple has won a patent for its iWallet, which ―may one day rule the world.‖
―Today, Apple has been granted a major iWallet patent and it‘s one that has never been reported on before.
Apple‘s patent reviews credit card transaction rules and shows us that the credit card companies will be sending
statements directly to your iTunes account.‖
―The iWallet project just became a little more real today, and for many, it can‘t come soon enough. Who knows,
perhaps one day Apple‘s iWallet will rule the world: the financial world that is.‖
Feb. 29 Into Mobile news story
This posting provides a tour and photos of the PayPal booth at the Mobile World Congress. Displays and demonstrations
included the PayPal mobile apps and the eBay Fashion app.
―We know that eBay is betting big on mobile so it‘s not surprising to see it put on a good show at its booth during
Mobile World Congress 2012.‖
―The company was pushing its mobile apps for shopping and for live events. With the eBay Fashion app, you can
quickly take a picture of a shirt you see and it will give you options of where to buy it online or even in retail
shops around you. With a few taps of a button, you can pay for it (using PayPal or other things) and the store will
put it on hold for you.‖
Feb. 28 article from The Guardian
PayPal doubts that NFC technology will power mobile payments. It predicts the mobile payment environment will have
moved away from the POS terminal by the time consumers and retailers acquire NFC-enabled phones and readers.
―Google and others are promoting Near Field Communication technology, which involves replacing credit cards
with phones which can be tapped on a reader at the till—but PayPal is skeptical.‖
―The mobile wallet payment systems being developed by Google, Vodafone, Orange, Visa and Mastercard could
be out of date before they come to market, according to internet bank PayPal.
Mobile World Congress: eBay Inc.’s PayPal
321 Pacific Ave., San Francisco, CA 94111 | www.blueshiftideas.com
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―PayPal‘s head of mobile, David Marcus, is [skeptical]: ‗For NFC to succeed you need consumers to have the
handsets, and merchants to install the terminals. It will take time for NFC to get mass adoption. By the time NFC
catches up, we‘ll be in a world that will move away from the point-of-sales terminal.‘‖
―NFC payments have been slow to come to mass adoption because mobile operators would like to take a
commission on payments and banks have been reluctant to allow this. In the US, Google Wallet has been
frustrated by a rival service being developed by AT&T, T-Mobile and Verizon Wireless.‖
Jan. 27 Mobile Payments Today article
Paydiant, a white-label mobile payment start-up, scored a major win by partnering with FIS to provide mobile payment
solutions to banks and retailers. FIS contends that banks and retailers will want to maintain control of their brand,
customer relationships and data, rather than to contract with outside mobile payment providers.
http://www.mobilepaymentstoday.com/article/189697/FIS-Paydiant-team-on-white-label-mobile-wallet
―Financial technology provider FIS launched its new mobile wallet this week. The cloud-based solution not only
gives consumers the ability to use their smartphones to make POS purchases and shop online, but the white
label solution can also be built directly into retailers‘ and financial institutions‘ existing mobile applications,
according to the announcement.‖
―FIS is partnering with mobile payment company Paydiant on the solution.‖
―‗We strongly believe that many financial institutions and retailers are not comfortable ceding their brand equity,
customer relationships and transaction data to new entrants in the payments ecosystem,‘ [Paydiant co-founder
Chris] Gardner said in the announcement. ‗We are thrilled to team with industry leader FIS, who shares our
customer-centric viewpoint.‘‖
Next Steps
Blueshift will continue to monitor PayPal‘s mobile payment deployments. In particular, we will assess any competitive
strengths or weaknesses that emerge as PayPal rolls out payment platforms in 2,000 Home Depot stores this March. We also
will research the inclusion of NFC chips in smartphones and the related effects on the mobile payment marketplace. Finally,
we will monitor major retailers‘ efforts to creating their own mobile payment applications or their decisions to use a white-
label offering from one of the many start-ups in the mobile payment industry.
Additional research by Lester Golden
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