Digital Transactions Authoritative, insightful and timely information for payments professionals
It’s only human nature to be captivated by the new, the emerging, the sensational. In the case of mobile payments, about which we have heard much in recent months, many payments watchers have fallen head over heels for technologies that are not only new, but, shall we say, “cool.”
But as our cover story this month outlines, success won’t come easy in this still-forming market. Indeed, in the fields of wallets and mobile acceptance, many players will fail, and some sooner than they think. The dongle purveyors are still searching for a way to make money and control risk with tiny merchants that run very small volumes and may or may not be who they say they are.
Witness the recent case of VeriFone Systems Inc. Now, VeriFone’s decision last month regarding its Sail mobile-acceptance program was widely misinterpreted as an exit altogether from the business. What VeriFone is exiting is the business of acquiring for Sail merchants. It will continue to sell the Sail service through independent sales organizations and other third parties. Still, though, VeriFone boss Doug Bergeron’s message came through loud and clear: VeriFone couldn’t make money in this business, and so has dumped it after a mere seven months.
On the consumer-facing side of mobile payments, digital-wallet companies are struggling with problems that are as old as the payments business: how to build a brand, how to spark consumer adoption, how to sign enough merchants to get users excited. In other words, the technology may be exciting and new, but the problems are very old, and very hard. There is a reason that, since the emergence of Visa and MasterCard, only one new payments network, Discover, has found the traction to stick around.
Nor is it just startups that are flummoxed trying to make wallets work. Google Inc. was so vexed with the business of winning consumer and merchant adoption for its wallet that last summer it revamped a product it had only just introduced 11 months earlier. Isis, backed by the country’s three biggest wireless carriers, repeatedly delayed the launch of its two-city pilot as it tweaked one aspect or another of its product. The launch finally happened in October, months late.
There are solutions, of course, but they aren’t for the faint of heart or poor of purse. Indeed, they too come out of an old but reliable playbook. Perhaps the most critical of these, for wallets at least, is building a brand. Identity with consumers—especially as an acceptance mark—will separate the winners from the losers. So it has always been, and so shall it always be.
John Stewart, Editor
john@digitaltransactions.net
