Mobile payments: sweet trap?


credit card blessing and a curse for mobile payment

payment is one of the most brilliant rainbow bridge of science and technology, it has long been “seduce” with entrepreneurial companies and large enterprises set foot on, because the payment business volume big, precious data. But when the enterprise dive into this field after found that things don’t think so simple. Google wallet business is slow. Square is fraught with difficulties.

three weeks ago, suggesting that it has a tendency to seek to sell:

“since 2009 Square is the focus of mobile payments startup, raising up to $340 million. After the rapid development of the early, however, it faces serious losses. Sources close to the Square losses of $100 million last year, is further expanded in 2012.

Google in 2012 and Square in talks to buy, earlier this year to talk again. In addition, Square has had an informal discussion with apple and eBay to buy.”

the payment industry “market opportunity” can be roughly divided into two classes: based on the credit card, instead of a credit card. Square at the heart of the business model of the portable reader is belong to the former. This model is the most critical problem is that thin margins. Businesses with Square card reader brush a customer Visa card charge a $50 payment:

1, Visa alliance of intermediary fee of 1.51% + $0.10, the deal is $0.855.

2, and other miscellaneous collection (Visa real profits) about ~. 11% + $. 03, this trading around $0.085

3, Square merchants 2.75% credit card fee. Specific to the transaction is $1.375.

deducted to Visa fees, Square, the transaction can earn $0.435. Visa is ok, if the brush is American express, Square, doing business is losing money.

this is obviously not a profitable business.

however, Square to the businessman dare not to rise in price. The value of it is to make the businessman think with Square convenience the credit card machine more than pay for Square that spreads (conditions apply for Visa and after all this device, the cost is higher).

this is the mature credit system (almost universal credit card) for Internet companies pay business blessing and a curse: on the one hand, you can build on hit a large number of users, on the other hand, fierce competition thin margins. Square, so losing money, but still expanding scale (scale effect can more effectively reduce costs). Convenience brought by the own product can prop up the high premium on earth, this is a difficult problem in front of every aspiring mobile payment business, including apple, amazon and Google.

convenience and painful balance

another option is to circumvent the credit card to build a brand new means of payment. Credit card without the union of “exploitation”, profit space more clearly. But this choice to face new forms of harsh: how to prepare enough users network? Internet community knows, from scratch to build a new social network how difficult, because you want to register a user and Internet connection (not enough people to use there will be no more people to use, “chickens lay eggs, chicken eggs” paradox), it set up a new payment/mobile payment is more difficult, because aside from the size of the user groups, let merchants to accept the new payment method.

this is why I don’t think the United States can appear significant progress in the field of mobile payment.

note here is the United States. In the United States is difficult to establish a new pay system is the most significant obstacles mature credit card market. Comprehensive consideration, to maintain the status quo could be enough. Credit card network charge merchants a slightly higher, but its branches and improve coverage, seldom appears in the United States can’t credit card payment, almost all consumers have credit CARDS. We can even think, just like cash/cheque, credit card convenience due to the pain of it.

about similar to the following sketch, the horizontal axis for different means of payment to new pain/trouble, vertical shaft is that it brings convenience:

cash convenience is bad, but it is also the least trouble. Credit card convenience more don’t need to change, but businesses need to give credit union pay fee. The advantages of both were greater than the pain, so the most commonly used. In the future a better means of payment? It must solve the balance between convenience and pain, as soon as possible across the exploration stage of the pain is greater than the benefits. If for consumers the convenience of business/than pain, it cannot gain a foothold.

what pay for innovation, perhaps not in the United States produce

if we put the eyes a little wider, may be a surprising corollary: payment of innovation, in the future probably will not happen in the United States. But in other places. Although the United States over the past two decades has led to the innovation of the technology industry.

easy card from Taiwan, Hong Kong’s octopus are the CARDS, in these two areas has a wide application. In 2002 based on radio frequency (rf) easy card, used in Taipei’s new subway. Then the payment system development, not only can be used for bus, can also capture to expend and shopping. And easy card is no longer just a simple tube pass, but is inserted in the mobile devices such as (bought gray HTC friend may be seen in the phone called EasyCard pre-installed applications).

of course this is not to say that the rf card while it represents the future of pay, only provides a feasible idea.

in addition, the m-pesa in Kenya in Africa, in the network and the banking system is not enough to sound African through mobile phone text messages on the innovation of the mobile payment is also noteworthy.

related to SMS and mobile IM could change the future of the application of the payment industry:

1, contracts tied to the operators in the United States, SMS is basically free of charge.

2, operators have a lot of countries around the world to provide similar plans.

3, such as Whatsapp, Line and WeChat (Wechat) mobile IM platform itself has a comprehensive social relationship, have to explore the potential of new mobile payment way (the latter two are exploring).

eyes, staring at the mobile payment is not enough only

while editing the theme of this article is mobile payment, but I’m still trying to carry a larger background (a bigger picture). Perhaps mobile payments should not be alone, but should be as part of a broad market O2O business platform. Pay is just one of the links. Fusion of local business and online business may be able to make up for the inadequacy of “pay” a single business. If a platform to connect online and offline, goods and services, which pay a part of fee even low profit/loss? Maybe this will become a giant piece of amusement park, is a part of their business bigger picture.

is also Square, we mentioned today announced today that give up. Turning out the local O2O service Square Order, at present the main is to let users through this all used to takeout, conference line could be more local services in the future. The business change, mean Square in an effort to get out of the “mobile payment”, but to the broader O2O business exploration.

this article main ideas from THE article “THE PROBLEM WITH PAYMENTS”.

this article focuses on American Internet company to pay industry status quo.

in China, the future of the race to full swing between alibaba and tencent, the core of the battlefield is mobile payment as the center link of O2O new business, maybe this time can give us some experience of scientific community.