Saturday, January 30, 2010

Mobile Payment - Tipping Point?

The type of mobile payment I am talking about is the REAL kind, where the purchase shows up on your mobile phone bill. Now, as it relates to the purchase of content such as a ring tone whose sole purpose is use on the mobile phone itself, my opinion is - who cares? What I am writing about is the purchase of content or services that our outside of that realm. And, to further clarify, I would like to focus on what I refer to as Mini-payments ($2-$5) and especially on Normal-payments (>$5). Micro-payments are $1 or less.

I did find out that the Haiti donations are being handled completely differently than regular mobile payments for all the ring tones and digital goods being purchased. In other words, the vast majority of the $10 is going to get to Haiti (eventually).

The downside is that with all this positive attention paid to this method of payment and potential spill over to more people (who otherwise could easily pay with a credit card/Paypal) buying their digital goods with a Mobile payment, the merchant is going to lose roughly 47% of their revenue.

Now, in places like S. Korea where mobile payments have become mainstream, even for physical goods, the merchant pays roughly double what they pay for credit card transactions.

So, the question is, will Mobile payments (in the US) continue to cost the merchant approx 50%? If they do, then this moment will just be another blip and the mobile carriers will miss out on the biggest opportunity in their lifetime. Real mobile payments priced reasonably are the only real alternative payment threat to the card brands and PayPal.

(Note - I pay my mobile phone bill with my credit card!!! Interesting twist to this discussion?)

Friday, January 22, 2010

Text donations for Haiti?

It is wonderful that so many people have been inspired to make donations to Haiti and this has brought a lot of attention to the use of Mobile Payments to achieve this. (I made a donation the old fashioned way via my charitable trust account which will probably be paid by check to the Red Cross.)

In some ways this latest phenomenon reminds me of the people that lined up to give blood after 9/11. The problem was that sadly, not much blood was needed and a lot of it went to waste and with no crisis at hand, we are back to the mode where the agencies that collect blood have to beg people to come in for donations. Yes, I give blood regularly! (& if you can you should too).

The point here is that I wonder how much of that $10 is getting to Haiti? Normally payments by text messaging methods cost the receiver ~50% off the top and take 6-9 weeks to be received since the carriers wait to pay out until they collect from the consumer. Now, I have heard that at least in the case of Verizon, they were not going to wait. But, I have not heard if the carriers are waiving their fees or most of them?

The credit card industry has surely taken some criticism, some deserved, some not, over the last year or two. But, compared to mobile payments, they are much more cost effective and efficient. The fees are generally ~2-3% and the funds usually get to the merchant within 2-4 days. And of course, the dinosaur of all payments, checks, well we won't even go there. Those are close to free and if using the ACH almost as fast (wonder why PayPal tries to get you to use this as a funding mechanism!!)