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Cracking Ubiquitous Payments
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Cracking Ubiquitous Payments


A discussion about the mobile payments industry in the US and the problems it has faced in achieving broad market penetration.

A discussion about the mobile payments industry in the US and the problems it has faced in achieving broad market penetration.

Published in Business , Economy & Finance
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  • Here’s an example: in Hong Kong, they’ve got this contactless payments system that started as a subway card reader. It’s pretty popular now as a regular payment system. Know when it was invented? 1997! In 1997, people in the US were JUST TALKING about mobile payments. What gives?


  • 1. Cracking Ubiquitous Payments
    What the heck happened to mobile payments?
  • 2. My (Rough) Agenda
    Scope of the discussion
    Credit card industry overview
    Mobile phone industry overview
    Implications for mobile payment businesses
    How those models have played out
    Why it ain’t working
    Why it works elsewhere
    Staggeringly brilliant insights and takeaways
  • 3. SMS + e-commerce
    Technologically feasible since 1995!
    SMS, part of GSM protocol, approved in 1985
    First text message in history sent in 1992
    The message: “Merry Christmas”
    Later messages less cheerful
  • 4. RFID + cell phone saturation
    Real market since 1997
  • 5.
  • 6. So what happened?
  • 7. Scope of the discussion
    Mobile Payments: Not Really All That Rare
  • 8. 1997!
  • 9. 10%
    ~ 2%
    ~ 1%
  • 10. So now we ask: what happened in the US?
    And what was different about Asia, and now Europe?
  • 11. We need to understand the two pertinent markets
    Credit Cards vs. Mobile Phones
  • 12.
  • 13. The US credit card industry
    … by which I mean “cards with magnetic stripes you pay for stuff with”*
    *I’m not going to argue with you about actual credit
  • 14. “Invented” in 1888
    Eddy Bellamy: Interesting dude
  • 15. Used in the 20’s as a gas card
    Reached ubiquity by the late ’50s
  • 16. Many moving parts
  • 17. Value chain is split across function
  • 18. Card Networks
    The alphas of the group
  • 19. Retail banks
    Split beta duties with merchant banks
  • 20. Merchant banks
    Like retail banks on the merchant side
  • 21. Payment gateways
    The nerds who make it work*
    * and consequently are overlooked and undervalued
  • 22. Merchants
    Getting the short end of the stick since the ‘70s
  • 23. Consumers
    Getting the short end of the stick since day 1
  • 24.
  • 25. The US mobile industry
    … by which I mean “phones you can carry around”
  • 26. Launched in 1983
    Analogue network
  • 27. 2G (all digital) in 1991
    GSM: set the stage for scalable networks
  • 28. Telecommunications Act of 1996
    13,550% growth once interoperability enabled
  • 29. Side effect: massive consolidation
    Today, only three nationwide networks
  • 30. Nice simple value chain
  • 31. Right?
    Content Providers
    App Stores
    Standards Boards
    3rd Party Services
    Software Vendors
  • 32. Right, guys?
    Content Providers
    App Stores
    Standards Boards
    3rd Party Services
    Software Vendors
  • 33. Handset Manufacturers
    Increasing power in high-demand markets
  • 34. Carrier networks
    Pretty much run the commodity handset manufacturers and the poor consumer
  • 35. App stores
    Successfully maneuvered out of carrier control
  • 36. SMS gateways
    More nerds, beholden to carriers
  • 37. Consumers
    *Still* getting the short end of the stick
  • 38.
  • 39. Technology Solutions
    Like technology alone ever solved a problem…
  • 40. 1. SMS powered
    Digital wallet or carrier billing
  • 41. 2. Mobile internet powered
    Free from direct carrier intervention
  • 42. 3. Hardware powered
    Awesome, but require cooperation
  • 43. Four distinct business models
  • 44. Bank’s Involvement
    Carrier’s Involvement
  • 45. Banks vs. Telecoms vs. Hardware vs. Software
    Telecoms losing the fight
  • 46. Security vs. Ease of Use
    i.e., banks vs. independents
  • 47. What needs to happen?
    Collaboration on a massive scale
  • 48. The Road to Collaboration
    Leverage mobile standardization
    Leverage bank security
    Leverage independent innovation centers
  • 49. Will it work?
  • 50. La Caixa, Movistar, Visa
    Perfect coordination between the players
    Utilizing NFC!
    Under way now
  • 51. So what about the US?
  • 52. Thanks guys!