Mobile Manifesto

Soon Canadians using the EnStream Zoompass person-to-person (P2P) payment service will also be able to pay using contactless NFC stickers at select locations across Canada.

The Zoompass Tag NFC trial uses 44mm by 33mm stickers made by Giesecke & Devrient and lets Canadians pay at establishments with Mastercard PayPass Point-of-Sale (POS) NFC readers such as Tim Horton’s, McDonald’s, Petro Canada, and Loblaws.

EnStream is owned by the three largest Canadian carriers Bell, Rogers, and TELUS. The Zoompass product lets Canadians send money to each other using mobile phones.

Like almost every other P2P payment product, Zoompass and Zoompass Tag require funding a prepaid account. Users sending money must put funds into the account before sending. Receivers must have an account to access their funds. If a receiver doesn’t have an account when the money is sent, they are prompted to sign up.

Zoompass Tag avoids one key P2P problem in that it allows users to immediately spend money sitting in their Zoompass accounts using their MasterCard. This is not new however. PayPal has offered MasterCard debit cards for a while now.

So What’s New?

What’s new with this offering is that EnStream is offering phone stickers for use as an alternative to a plastic card.

The most obvious barrier to mobile contactless/NFC payments is that there are no phones with contactless chips in many geographies. Neither the U.S. nor Canada have any contactless phones in the hands of end users.

Ultimately, the only novelty here is that a P2P Payment provider is providing both a contactless MasterCard plastic card and a contactless sticker.

Stickers are a common alternative to the lack of chips in phones. In practice, users put the stickers lots of places beside their phones. A recent Discover NFC trial found that only 44% of users actual put the stickers on their phone. Employee badges were a popular alternative, possibly because the trial was with Discover employees.

Ultimately, the only novelty here is that a P2P Payment provider is providing both a contactless MasterCard plastic card and a contactless sticker. Canadian and American banks have been doing NFC trials for a while now using both cards and stickers.

What’s This All Mean?

Zoompass Tag is further proof that P2P Payments are a huge theme for 2010 in North America. There are many implementations in the works and a few banks are already live, namely CIBC, PNC, First Hawaiian, and FNB Omaha.

A June 2009 study commissioned by CashEdge found that 81% of online bankers want to do P2P payments. Increased availability of P2P products will only increase consumers’ comfort with using it. Use of P2P payments (both online and mobile) will in turn increase comfort with contactless/NFC.

More importantly, the EnStream and Firethorn efforts (which I covered a few days ago) clearly demonstrate that the wireless carriers are still focused on mobile payments.

If financial institutions don’t build mobile payments infrastructure, carriers will — in fact, they’re clearly doing it right now.

Banks need to provide an alternative to their customers if they don’t like the carrier-centric approach.

Banks and other financial institutions need to figure out how P2P and other mobile payments fit into their infrastructure and organization. Institutions also need to understand the positive and negative revenue implications and start managing the approach immediately.

Banks need to provide an alternative to their customers if they don’t like the carrier-centric approach.

I ran into one of the Firethorn guys last night at the Atlanta Wireless Technology Forum Mobile Marketing meeting. Firethorn now supports mobile banking for over 3,000 U.S. financial institutions in their carrier preloaded mobile wallet.

Let that sink in for a second.

You can now access mobile banking from a single preloaded, carrier-branded mobile banking application regardless of where you bank. Credit unions and credit card companies are also supported.

Firethorn is building a database of mobile phone numbers, email addresses, ZIP codes and FI login credentials. This is extremely valuable for both mobile payments and mobile marketing.

As a Wachovia customer, I have used the Firethorn application for years (despite working for arch-competitor mFoundry). At one point it stopped working. Rumor had it that Wells discontinued their contract with Firethorn after the Wachovia acquisition. So, I uninstalled the app. Just this week I noticed Mobile Banking back on the Wachovia site, so I reinstalled the app on our phones and was pleasantly surprised to see it working perfectly. Even all my bill pay payees were there.

Last night, after hearing about their support for essentially everyone, I added my American Express card and it worked perfectly. Today I tried adding my BB&T accounts and had some difficulties. BB&T is supported, but I encountered some technical issues. I also tried adding some Canadian banks, but not surprisingly none were supported.

When the database is hits critical mass, we’ll be able to send money to someone using our mobile phone address books containing email addresses and/or mobile phone numbers.

Firethorn (a Qualcomm company) provides mobile banking on AT&T, Verizon, Sprint, CellularSouth, Metro PCS, and T-Mobile. (The T-Mobile logo isn’t on their website, but I got an emphatic “Yes” when I asked about the carrier last night.)

Firethorn has also partnered with CashEdge to provide P2P payments. CashEdge also powers P2P mobile payments at PNC Bank, First Hawaii, and Omaha Bank. Presumably Firethorn is using CashEdge’s aggregation capabilities to access all these institutions. I haven’t gotten confirmation on exactly how they’re accessing all these institutions other than the fact that they’re “using a gateway.”

I credit Firethorn and AT&T for starting current rush toward mobile banking in the US. Firethorn sold their carrier-blessed solution to a number of banks over the last few years starting with Regions, SunTrust, Wachovia and Bancorpsouth. Pennsylvania State Employees Credit Union (PSECU) signed with them as recently as December 2009. While once ubiquitous in calling on FIs, it seems now they are less focused on selling to individual financial institutions and instead are focusing on providing solutions to the carriers.

Interestingly, the Firethorn mobile banking application prompts you for your email address and ZIP code when you enroll for an institution (in addition to your username and password for that institution). The app also asks you to opt-in to mobile marketing (and defaults to Yes, which is atypical in my experience).

This means that Firethorn is building a database of mobile phone numbers, email addresses, ZIP codes and FI login credentials. This is extremely valuable for both mobile payments and mobile marketing.

Firethorn is preloaded and promoted on the mobile web portals of all the major carriers. They have a good chance of being visible to almost every U.S. consumer. When they can map email addresses and phone numbers to bank accounts they become the “big directory in the sky” that has been missing from mobile payments in the U.S. Currently for mobile payments, there’s no user friendly way for consumers to send money to each other other than PayPal which doesn’t have complete coverage. ACH (Automated Clearing House) is the most common way to transfer funds electronically in the U.S. Routing this transaction requires users to know the bank ID and account number (the numbers listed on the bottom of paper checks). Most American don’t know their account number or even carry paper checks anymore. Plus, sharing these numbers is considered risky and invites identity theft.

Mobile payments needs a way to map a safe, commonly-known, easily-identifiable ID (like an email address or mobile phone number) to arcane ACH bank account information. That looks like exactly what Firethorn and the carriers are doing. When the database is hits critical mass, we’ll be able to send money to someone using our mobile phone address books containing email addresses and/or mobile phone numbers.

Banks, Credit Unions, Card Associations, and Credit Card companies need to think very long and hard about this. Mobile banking solutions in the developing world are often provided by the carriers with only nominal coordination by banks. Firethorn is providing a single, easy-to-find location to manage all your financial accounts and they’re building a key hub for money movement.

Banks need to figure out how they want the payments ecosystem to look or they might just have little influence at all.

CIBC is live with Canada’s first full-featured mobile banking iPhone application.

The native iPhone application provides a key money movement feature that have eluded American mobile banking solutions. CIBC leverages the Interac email money transfer system to allow sending money to others.

American bankers have been dreaming of a P2P payment system like this for a while.

The CIBC iPhone application also has all the standard capabilities found south of the border including full account management capabilities, including credit cards.

The application also provide a branch & ABM/ATM locator.

Scotiabank announced late 2009 it would offer a native iPhone application this Spring. Both Scotiabank and Desjardins have ABM locators in the app store.

Most Canadian banks have had browser-based solutions live since 2000 when the first wave of mobile excitement swept the world — then went nowhere for nearly a decade.

CIBC and Scotia are two back-to-back examples that the gloves are off in Canada and the mobile banking competition has begun.

Canadian consumers will definitely be the winners!

Today Fierce Wireless has two separate reports of mobile vulnerabilities. The attention of hackers is a very strong indicator of the importance of mobile technology. As a (mostly) glass half full person, despite the lurking danger, I see it as a bullish indicator for the industry.

Specifically, security experts warn that the key 3G encryption technology used by most phones and operators is vulnerable to hackers. Experts say the 3G encryption algorithm could be broken in as little as two hours.

What does this mean for mobile commerce and mobile banking? Nothing yet, in my opinion. Any reputable mobile commerce system uses SSL encryption for the traffic between the application and the mobile commerce server. The 3G encryption is around this SSL encryption tunnel. Therefore if someone were to crack the 3G encryption, they’d be stuck with a standard, Internet grade SSL encryption that so far has resisted attacks.

Of course there could be future risks where the vulnerability allows something malicious on the phone that tricks users into doing something dangerous that they think is secure.

The second security alert involves hackers breaking into smartphones to do old-fashioned phone phreaking exploits like using a trojan to dial expensive 900 numbers they’re in control of. As with traditional exploits, trojans such as Swapi.B get installed from porn sites or applications posing as helper apps.

The arms race has begun.

Text “HAITI” to 90999 to donate $10 to the American Red Cross for Haiti relief. The charge will appear on your phone bill.

Mobile Commerce has taken another major step forward. And America is taking another step toward recovery. Hopefully our efforts can bring some comfort to Haiti and possibly even save some lives.

When I woke up early this morning in Cleveland, Americans had donated $1 million to help Haiti. By the time I landed and got back to my office in Atlanta, we had donated $4 million. The money is pouring into the American Red Cross at roughly $200,000 per hour. Twitter is awash with tweets to make mobile donations. Libertarian talk show host Neal Boortz was urging people to make mobile donations every few minutes.

Americans are pulling together whatever they can, even if they don’t have much, to help our friends and neighbors in Haiti. We know that no matter how little we may have, Haiti needs us, and there’s something each of us can give. The American Red Cross’ phones are jammed, but they have plenty of capacity via SMS. Some carriers have announced they’ll waive messaging fees for donations. Some on Twitter are calling for the carriers to match the donations.

It’s times like these that we find creative solutions that bring us together and move things forward.

Hopefully our small efforts will be in time to save some lives in Haiti.

It’s been at least four years since I first heard an airline talk about developing mobile check-in. Despite all the time and energy I spend thinking about mobile commerce and using my phone, until today I had never successfully completed the entire airport check-in and flight boarding process using only my cell phone as a boarding pass.

When Delta first announced mobile boarding passes, I missed the “at selected airports” caveat. This created some interesting travel humor in San Juan, Puerto Rico when I tried to get through security with only my phone. Hijinx ensued in Philadelphia the next day. I promptly gave up.

So, today when I tried it, I made sure I had my paper boarding pass in my pocket – just in case. I didn’t need it though. I went through the Expert Traveler line in Atlanta’s new North Terminal security lanes. There were only a few other travelers in front of me. When it was my turn the TSA agent took me back about 15 feet in the line to the special reader which wasn’t turned on. It took me a few tries to get it right, but it worked fine. Next time I’ll likely get it right in one tap.

I started getting concerned while unpacking and undressing in the security lanes. Today was probably the first time in five years that I’ve gone through the metal detector without showing my paper boarding pass. As I put my things on the belt I noticed that no one was showing their paper ticket.

Have I been showing my boarding pass unnecessarily all these years? I’m pretty sure I recall more than one surly TSA agent telling people to keep their boarding pass out. I’m wondering if they’ve removed that requirement to facilitate mobile. It never made a lot of sense to me anyway. Paper is so easy to forge, and it’s already been checked at that point in the process.

Lastly, when I got to the boarding door, the gate agent happily scanned the image on my phone. It took him a few tries too. I knocked over my suitcase and briefcase trying to hand him my phone and hold a cup of coffee and keep track of my bags. With the coffee, paper would have been easier honestly. But this was for science!

So, all in all, I’m pleasantly surprised at how well the process worked. I’m sure there are more bumps in the road as they add more airports, but the system works. Getting TSA approval and adapting their processes must have been a big task, but it works. I’m sure the process is repeatable around the country.

Personally, my biggest complaint about the process is the web interface. I constantly had to open Safari on my iPhone and refresh the page to get the image to appear. Or if I lost my page, I had to dig through my email to find the message and click the link again and wait for it to load. I imagine an airline application could make this process much more user friendly. More advanced web interfaces could probably solve the usability issues as well. But that’s for 2.0.

There’s no way to tell if today’s unveiling of the Google Nexus One phone will turn out as momentous an event as the original iPhone unveiling. Today is our first glimpse and no consumers have one in-hand.

What is clear is that Android will play a prominent part in mobile commerce for the next few years. The Motorola Droid on Verizon appears to have sold around 1 million units in its first few months. Google has tremendous marketing power and ownership of arguably the most effective advertising platform around (the Google search engine). There’s reason to believe sales will be good especially if the economy continues to improve.

Android has made major market share gains in the last year. Increasingly Android and iPhone traffic dominate mobile commerce sites. The similarities between the devices (and their dissimilarities between the other phones they’re displacing) show us how consumers want to interact with their phone.

Organizations should plan for this type of device to dominate their mobile traffic in the near future. Consumers will expect organizations to leverage the advanced capabilities of these devices to make working with you easier.

Lowest common denominator won’t work much longer.

Buckle up. Mobile Commerce is finally happening.

2009 saw scores of name brands in retail, banking, insurance and other verticals step into mobile commerce despite the Great Recession and the near implosion of the banking sector. In November and December, we saw a significant uptick in the number of organizations planning for mobile in 2010.

If there was any doubt left, Compete has released a new survey of smartphone users that clearly shows that consumers are willing to transact from their phones. Most notably 28% of respondents said they use their smartphone to make purchases without seeing the item in a store. Another 34% of consumers said they make purchases on their phone after seeing the item in a store.

This is bona fide mobile commerce.

And, I assert, you can find further proof that this mobile commerce is real in the fact that consumers are complaining about the generally horrid mobile user experience. A full 8% of respondents said that they had tried to make a purchase but failed (45% of the time because the site wouldn’t load.).Most ecommerce executives would be fired if their web site consistently blocked 8% of users from transacting.

Most ecommerce executives would be fired if their web site consistently blocked 8% of users from transacting.

So these growing pains are the beginning of real mobile commerce. If 8% are failing, there are consumers trying hard to transact and consumers are buying. There’s an opportunity to improve the business and there’s a real business.

Now it’s time for organizations to learn how to optimize their site, just like they did with ecommerce. However, with mobile commerce, different optimizations are required for different devices, and different  user interface affordances (or, metaphors) are often required in mobile than in the ecommerce site.

Mobile isn’t a new view of ecommerce. Mobile is a new channel.

Most institutions offering mobile banking have found mobile banking to be a new banking channel, not just an add-on module to online banking.

Thinking of mobile banking as a separate channel requires transformational changes within the bank which oftentimes are overlooked during planning phases.

Many banks start their mobile initiatives in a small way, thinking of mobile banking as an add-on to online banking. This is especially true for banks that do only mobile web (WAP) which often is implemented as a derivative of existing OLB content. As usage increases, it often becomes very clear that mobile banking is used in different ways, requires different approaches to serving users, and requires a different set of resources than other channels in the bank.

Look at your online banking organizational structures. Imagine not having any of these people or processes in place while having 10% of your customer base already using the channel.

Furthermore, institutions discover that their existing organizations must evolve to support this new channel just as they did when online banking was new. Discovering this organizational need after implementation can cause a host of issues in supporting customers, security, and planning for future enhancements.

Look at your online banking organizational structures. Imagine not having any of these people or processes in place while having 10% of your customer base already using the channel. It’s a recipe for unhappy customers, security breaches, burnt-out employees, and losing ground to the competition.

Institutions need to plan for changes in their support organizations when they’re planing their mobile banking channels. Mobile will change how almost every part of the bank does business.

• How will line of business teams manage the various mobile modes (SMS, WAP, native applications)? Reporting, analytics, etc.?
• What technology teams will support the mobile modes? Does anyone have skills in each of the mobile technologies in the bank?
• What training & support do branch tellers need?
• How do we train telephone customer support representatives?
• How will marketing campaigns promote mobile?
• How will marketing campaigns take advantage of mobile technology?
• How can social media help promote mobile?
• In what order will other lines of business start using mobile?
• How will mobile affect product pricing?
• How do you calculate the value and/or cost of mobile to the bank?

Customers are adopting mobile banking much faster than they moved into online banking. Mobile banking is clearly a requirement for all banks and credit unions. Banks and credit unions just starting to consider mobile now have little margin for error. Now banks don’t have the luxury of figuring out how to support mobile after you launch it like the early adopters did.

Do you know how your organization must change? Do you have people with the skills to manage, support, and train others on mobile banking?

How will you do it?

Last week at the Mobile Financial Congress in Miami, Ginger Schmeltzer from SunTrust presented the results of their in-depth research into mobile banking that they performed in conjunction with Firethorn.

One of the most important findings in my opinion is that mobile banking causes three additional card transactions each month on average.

And to be clear, SunTrust’s analysis of the numbers didn’t just find a coincidental relationship between mobile banking users having higher card transactions. SunTrust found that when customers started using mobile banking, they increased their monthy card transactions.

This week Mercatus & VISA released another in-depth study that verified this connection. In particular they found that:

[Mobile banking customers] hold higher balances at their primary bank, use more banking and card products, and display lower rates of attrition as compared to traditional customers

In addition the Mercatus study found that mobile customers cost 20% less to support and atrite less than traditional banking customers.

Simply put, this means that mobile banking causes customers to be far more profitable and more likely to stay as a customer.

What else do you need in your ROI?