7 Steps that will make you a mobile wallet rainmaker

A couple of days ago eBay bought Braintree to enhance on their mobile offering, making eBay and specifically Paypal a sleeping bear just waiting to wake up. Its mind boggling and quite exciting to see how Paypal has been ramping up their position in payments over the last couple of years - these guys are serious and are not sitting back to wait for the guarantee that the market will/is happening, rather they are jumping in head first and making a run at the mill - they have a serious strategy and they are investing in it.

This made me think about my product and business career - I have often been asked to describe the "mobile wallet" concept and often stakeholders ask me to tell them, and most frequently build them, what they need to do to become a viable player in the mobile wallet space.

So today I will be sharing that with everybody online :)

Step 1. Google mobile payments (I took the liberty to insert the first non-sponsored link that popped up)

Step 2. Pick a provider model (MNO-centric, bank-centric etc.)

Step 3. Extract from "Step 1" all relevant product requirements and look at services referenced

Step 4. Quantify (think "up and to the right" and "$Bn")

Step 5. Put into 10 slides

Step 6. Get funding

Step 7. Brace and hope for the best (If you loose your job and hopefully get a new one, revert back to "Step 1")

ok ok ok ok ok, so there is more to it! I will write more details around how to turn "Step 7" into more of an academic exercise soon. 

For now you can start with #1

Chatter on mobile payments

I really have not been overwhelmingly good at updating this blog for the past year and some change, its been hectic since we launched suretap in November with CIBC, and we have been spending most of our time enabling bank issuers to be ready for this year and certifying mobile devices with all their kinks and quirks.

Other than all the hard work we have been doing, way to many things have been happening in the world of mobile payments, Google has done an about face on their NFC wallet (again), new players have emerged, Bitcoin came, saw and conquered (at least some headlines) and analysts have downgraded the mobile payments expectations in North America.

Many of the articles I read, and I read quite a few, almost always makes the adoption of mobile payments a black/white proposition "mobile payments is not taking off as quick as we thought, therefore it must be a fluke", I dont think its as straight forward as that. Mobile payments is not just about launching a services and then market it, mobile payments is for most people a matter of putting in the right platforms and operational processes, and then building payments services on top - turns out, putting in platforms for the incumbent players, platforms they have never looked at before, is hard - very hard.

Take a bank for example, how hard can it be to do mobile payments? Well depending on what types of payments they will have different challenges. Proximity payments require brand new card distribution and data preparation infrastructure, which in return requires new business, care and technology processes. Money transfers (local or international), depending on partner vs. buy/build, requires a bank to create whole departments who focuses on compliance, risk, reconciliation and settlement - news flash, many banks dont do that transaction type today, to the extend it is required - banks essentially use core processors like (TSYS, FIS etc.) to handle all their debits and credits and at the end of each day, they look at files and make sure that the balances match up (I know I am simplifying and generalizing - but hopefully you get the point). So mobile payments are hard in 1st world markets, whereas in developing markets its a heck of a lot easier, because its greenfield and everything goes when you are trying to build a market. Great examples are m-pesa who is known to have outages and reliability issues, but thats "ok" because they are enabling a brand new economy and educating the consumer about digital payments in the process, eventually they will be having the same restrictions and expectations as a bank in Europe or the US, but for now they work and while its a nuisance for customers to not have access to their service during the weekend its better to have some unplanned downtime versus the alternative of not having m-pesa (I know they are making significant upgrades and changes to fix the historical issues they had, so not bashing them at all).

So assuming that the incumbents have the stamina and can put in the right platforms, read the article about the $300MM Google wallet money pit - which is a lot of money but invested for all the right reasons - you can argue about the execution, but the motivation behind Osama's direction was sincere and all to help position Google as a payments company. Many of us who have been doing this for very long, often find ourselves in a similar situation, we are not just offering up a "new, cool service" we are fundamentally trying to change the way the organization operates and behaves.

Now the issue of adoption.

How do you teach consumers why and how they should use and feel comfortable with a new payment form factor - quite frankly I am not impressed with any of the numbers I am hearing from the new entrants into the payment space, I can appreciate that they are trying to raise funds and create hype/awareness, but they are not moving the needle. When Paypal says they have 20.000 retail locations accepting Paypal, I am thinking "good effort, but its not really moving the needle", when Square is saying that they process $12Bn annually, of which they generate ~1% revenue, I am thinking "good effort, but you are easily displaceable".

In Africa and South Asia its been easier to justify a change in behaviour to the consumer because there was a demand which inherently needed supply, and Safaricom jumped in, and they had "A USE CASE" not many use cases - Send money home. whats the killer use case in North America or Europe? Store your cards? create new terminologies for old services? potentially make it quicker to check out? give you a coupon?

I am not sure that we have a single killer use case in these 1st world economies, there are plenty of economic unquantifiable reasons why, but no consumer use case that I in the past have felt compelled to use.

I think that what ex. Paypal and Square has shown is that there are room for new entrants to enhance on existing services - the Square model is not fundamentally innovative, they operate as an overlay network to a processor who is already in the business of processing merchant payments - essentially they do exactly what Obopay did, except they have C2B rather than C2C identifiers and a dongle! what Square did brilliantly was to put a UI on top of the traditional merchant account application form and make it a 1-click-ish experience for the consumer rather than a "fax the form in" experience - in my opinion that was the real innovation that Square brought.

I am actually much more impressed with the start ups who look at creating new payment rails like Dwolla is trying to do - if you are to innovate, do it fundamentally, and you will be able to sustainably solve pain points, not just temporarily as Square is doing it - although they are leaning into the same general direction.

to go back to my starting comment, I think that mobile payments have a ways to go, but I think that over the next couple of years the current trajectory will change and conversion will be complete, users will get services and offers that they care about and banks, operators and alternative networks will find a niche for them that fits their foundational structure... Just wait and see.

I will follow this "welcome home" post with more chatter

Mobile Payments - Rogers & CIBC inks deal

May 15th was a pretty big day for me.

I started this journey in 2004 when I built, launched and eventually sold my first mobile money startup - now 8 years later, I am almost fatigued by all the stuff I have witnessed, the misconceptions of payments, the speculations and the politics of this space. Its amazing to think that when I first had the conversations with ISO's and Merchant Acquirers in 2004 around wanting to roll out a mobile money transfer system, they flinched and most of them denied the opportunity flat out (wont mention names) turns out those executives had absolutely no vision and no appetite for new risks that where undefinable. Today most people can set up a mobile money transfer system in 12 months with no hassle.
On May 15th all my learnings and experience finally came together as Rob Bruce and David Williamson spoke about how what I, and obviously 100's of other folks, have been working on will change the way we all pay.

The path to that announcement was long and paved with traps and heated discussions which mostly revolved around definitions of technology understanding, roles/responsibilities and the business model.

The 15th all the perspectives that I gathered over the years where finally realized and its an almost overwhelming feeling to be amongst the first to roll this out on a commercial basis. From here on we scale, and we scale quickly....

Taking a look at my "top 5 predictions"

Wasnt the greatest of years for my predictions, however some showed movement in my direction but the jury is still largely out... hold tight.. 5 New predictions coming any day :)

1. NFC goes mainstream in 2011
Well - obviously it didnt go "mainstream" in a big way, but we saw the google wallet, more MNO JV's (we also saw a few fall apart, or almost fall apart), more banks go RFID (including one in a 3rd world country :o) and we saw even PayPal play around with NFC in Europe. So while these initiatives are hardly the same thing as a mainstreaming of NFC, I think that most of the baseline is now in place, the battles between stakeholders are more or less settled and hopefully the spur of new NFC devices and NFC UICC's (Smart SIMs) will propagate early to mid next year.
(Call to action to all those MNOs that are not ready - get ready, and get ready quick)

2. The year m-pesa is no longer the poster child
Hmm, not sure, the reports on m-pesa has become fewer and further apart but I still believe that m-pesa holds the title. Especially Fundamo is a company that can really tell a good story around how to actually roll these things out, with a large footprint and growing market share they may be the ones taking over the throne from m-pesa

3. Acquisition spree
Not as many as I would have liked, but we did see Fundamo get acquired by VISA, Zong acquired by Ebay, Punchd by Google, MMV by Intuit, Point by Verifone (kindda mobile focused), Zetawire by Google and the list goes on. However, I didnt see the slew of "WOW" as I expected, still a good year for m-payments startups, next year will be better.

4. Demystifying Mobile Banking
Demystified - its a channel, if your IVR can support a function, so can your mobile channel, next....

5. Emerging Payments & Disintermediation in Direct biller infrastructure
Nope - surprisingly no-one is trying to grab this open territory, Citi GTS or somebody significant like that should be running to the hills to win this new frontier - perhaps next year? or perhaps its not sexy enough to get media attention, and the same 'ol folks may end up owning that space after all. Lets see


I would give myself 7/10 for this one, but I think that these predictions would give me 9/10 by the end of 2012 :)

Was gone for awhile

its been busy folks, I am definitely earning my keep! I will try and be around more.

J

NFC demystified(?)

NFC is such a wonderful thing. It involves "it all", drama, politics, sex, drugs and rock'n'roll but for me more importantly real product development.

I think everybody has heard about NFC being standards driven, well turns out its not - surprise, and my guess is that its the single reason we are not seeing deployed NFC in large commercial scale already.
I could take a quick jab at all the renowned vendors in the space whom are all trying to tie down the marketplace to their specific solution creating a technology based monopoly, but I will try not to - this time.

The issue is fundamentally that wireless operators and banks buy 'stuff', very rarely build it, and when things are not standard, its really hard to buy, since decision making becomes hard to do.

I love mobile payments, but I wish that all this nonsense would stop and banks and MNO's just get to work driving the solutions forward, lets break some windows - industry!

New Role, New Perspective

So some of you may know by now that I have taken on a role as Head of Transaction Services with Rogers Communications in Canada. Its a great role in a great company and I am happy to have joined the team(s).

As I begin my new role in a product space, where innovation meets BAU more so than in probably any other segment, I am realizing a couple of things - very few people in the world understands the inherent value of a UAstring or an HLR!

Obviously I am not writing this to state the obvious, nor does any really care - except for the folks working with these concepts daily - but it may be a symptom of a bigger disease.

I have worked as an entrepreneur in a small startup, intrapreneur in a larger organization, I have worked with banks, for banks, with carriers and now for carriers, and despite the fact that there are folks in these organizations that knows everything about the infrastructure deployed, these folks are few and far between, and they are never exposed to daylight, even though these guys are the gurus of their business.

This means that in products/services where KYC meets Sigtran these larger than life organizations have a hard time getting their heads around the implications, mostly because they cant get their heads around how their own infrastructure looks like, and lets face it, if that is the barrier then we wont move the needle. Worse yet, its actually quite complicated to explain all these delicate technical nuances which can determine success vs. failure

Innovation is a mindset and a risk profile - and mobile payments is exactly that - a mindset and a risk profile.

Billions of dollars in core business is at stake and billions of dollars in net new business from both customer acquisition as well as disintermediation opportunities - and if you cannot innovate of adjust your risk profile to accommodate this change, it will be hard to keep track, let alone play a part.

I am sure that 2011 will be a great year in mobile financial services in Canada and I look forward to #winning with the team