Thursday, May 13, 2010
Just as mobile phones are growing into the focal point of both the payments industry and the technology sector at large, so were they the predominant focus at the recent Future of Money and Technology conference, held April 26, 2010, at the Hotel Kabuki in San Francisco.
Seminars comprised topics ranging from mobile payments to virtual and alternative currencies. In one forum, attendees were given the chance to deliver a one-minute, ad hoc sales pitch about a new business or product idea.
"There have been basically four innovations in payments over time: bartering, coins, paper – which stayed paper with checks – and then plastic," said Damon Hougland, Senior Director of Platform at PayPal Inc. "Now people talk of virtual currency as the future and the mobile phone you carry will be your new wallet, and what's really the future of payment is that it's everywhere you go.
"You have connective devices, whether mobile phone, GPS unit, laptop or point of sale devices that keep you connected with what's going on out there all the time."
In a seminar about mobile payments, panelists discussed the disparity between the advancement of mobile-based payment programs abroad and in the United States, which has lagged behind many other countries in the mobile payment department.
"We've seen populations, like in the Philippines, that wanted to buy online but couldn't, but that all had mobile phones and all had places where they topped up these mobile phones," said Ron Hirson, Senior Vice President of Product and Marketing at BOKU Inc., an alternative mobile payment company.
"So they essentially had a bank account, wanted to buy online but couldn't. And we built this enabling technology [whereby customers can make payments entering a phone number in lieu of credit card information] to get this population participating."
Hirson added that BOKU's program "ended up filling a need in the U.S. and Europe" as well, given the surprisingly high number of unbanked residents in both places.
Panelists also discussed the slower than expected growth of certain other payment channels, include near field communication payments at the POS. According to Hirson, the major stumbling block delaying the emergence of such payments has been the unwillingness of mobile phone carriers to accept a payment model mirroring the one used by traditional credit card brands and issuers.
"The biggest barrier for mobile payments to take off is the challenge between carriers and traditional banking institutions," he said. "Credit card [issuers] are taking 2 to 3 percent [interchange] where carriers are taking 30 to 50 percent [for online payments], and that kind of margin can't support physical goods."
Bill Barhydt, Chief Executive Officer of mobile payment company m-Via, envisioned a future where mobile phones would give all consumers an array of easy payment choices, including the use of virtual currency stemming from online gaming like Facebook's Farmville, a game in which players run a virtual, simulated farm.
"I think we'll have mobile accounts where you can choose how you purchase, whether from your credit card, your bank account or the credits you've earned from some game because someone's figured out how to make globalized virtual currency that's tangible in the real world," he said.
The forum on new business and product ideas included a company called Plastic Jungle Inc., which enables consumers to trade in one gift card for another online. Approximately 200 stores participate in the program. Plastic Jungle takes a fee by deducting about 10 percent of the gift card's total value from the new card that's issued.
Plastic Jungle CEO Gary Briggs said consumers often receive gift cards as presents from stores at which they wouldn’t normally shop; consequently, about 10 percent of gift cards are never redeemed. He said it behooves stores to bring gift card recipients in as shoppers, because the average shopper spends 40 percent more than the gift card value when redeeming it – and is profoundly more likely to return to that store.
"Cards move away from people who won't use them into the hands of a company's best customers," Briggs said.
Other ideas presented at the new products forum included a mobile application that mimics the coffee card "buy a certain number of drinks and get one free" model that has traditionally involved stamping paper cards. An online ticket sale and exchange platform for small or obscure events was also featured.
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