The Battle to Become Your Digital Wallet

Mobile Commerce Requires a Mobile Wallet

PayPal is launching an aggressive campaign to become your digital wallet. In an article we picked up over on TNW, PayPal is reportedly on track to process $700 million in mobile payments this year alone. On the company website, PayPal boasts over 87 million users and claims to process close to 15% of all US based eCommerce. With the business model heavily geared towards online transactions, the move towards mobile will not only increase the amount of consumer users, it will also increase the amount of business owners that adopt as more and more will want to capitalize on customers who prefer PayPal as opposed to other payment methods.

Make It As Easy As Transferring Money By Bumping Phones
To help make this easy, PayPal has launched a series of applications for smartphones including a version of the popular Bump app that most users have installed to make sharing contact information as easy as bumping phones. The PayPal version will take it to the next level by allowing people to Bump phones to transfer money. It is this kind of simplicity and real-time payment transfer technology that will open new opportunities for mobile commerce. Furthermore, with the authentication steps that PayPal has in place, security against fraud and charge-backs are in place to help mitigate any merchant risk.

Implications for Geo-location Services

Facebook places, Foursquare, GoWalla, Yelp and other location based technologies can benefit by highlighting businesses that accept mobile payments. It would be nice to see a technology emerge that allows for an easy check-in and then if something is purchased, a mobile payment. This will work by not only combining the convenience of a mobile transaction but also the potential for rewards, badges or points via the location based service you use. It would seem logical that Facebook will take the first step towards an application like this. Perhaps Masa Gift leveraging the eCommerce capabilities that Facebook leverages to integrate a PayPal mobile payment component. Either way it shakes-out, it seems eminent that at some point a discussion will be had amongst the leading check-in technology service providers and mobile payment processors like PayPal.

How Quickly Will This Adopt

Hard to tell. I had the benefit of working on the PayPal mobile payment platform back in 2007. We were experimenting with Text-to-Buy technology where payments could be transferred with a text message. I was also fortunate to have the opportunity to peek into the mobile browser check-out product that PayPal was testing. We worked with a small group of beta merchants that sold commodity styled products such as DVDs, Tickets and Batteries. The goal was to test how the transaction would flow end-to-end from consumer to payment processor and ultimately the merchant. We observed an overwhelming interest by merchants to experiment, but at the time mobile phones were not where they are at today and the low consumer adoption rate made the cost of implementing hard to justify. The project was shelved and refined over the years and just recently, PayPal announced that the mobile check-out capability was launched, again. Knowing how the process unfolded during that phase I think that the mobile commerce product of today will still have hurdles to exponentially increasing use, but with the ubiquitous nature of today’s smartphones and applications like the Bump as mentioned earlier, I can certainly envision a digital wallet emerging in the future.

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