At the beginning of the year, Forrester made the call that the future of mobile wallets lies beyond payments. By adding marketing value beyond payments — such as integration of loyalty rewards, coupons and many other services, wallets will become marketing platforms complementing merchants' own integrated apps.
Consumers want a better shopping experience, not better payment systems. By adding support for rewards programs (from the likes of Walgreens or Kohl’s) and store-issued credit and debit cards, Apple will make this fall a first step in building a more integrated mobile wallet. The rebranding of Passbook to Wallet represents an explicit push by Apple toward a more comprehensive, consumer-friendly solution.
Less than a year after launching in the US, consumer adoption of Apple Pay is modest but encouraging, all the more Apple Pay has quickly become a trusted solution.
I believe adoption in the UK will be faster than in the US for a number of different reasons:
The NFC and contactless ecosystem is much more mature in the UK.
There is no consortium of retailers like MCX with ConcurC led by Walmart willing to launch a competing offering. That said, Zapp is likely to be main competing service when it launches in October with the backing of Sainsbury’s, Asda, House of Fraser, Thomas Cook, HSBC, First Direct, Nationwide, and Santander. Barclays, the one major UK bank not backing Apple Pay, just announced today they will also support Zapp at launch.
The inclusion of Transport for London as a partner is a way to raise awareness and accelerate daily usage.
Apple will benefit from a larger installed base of compatible devices (iPhone 6 and 6+) and from the awareness created by the media buzz from the US launch.
Apple Pay makes up more than $2 out of $3 spent on purchases using contactless payment across the three major US card networks. I agree with my colleague Sucharita Mulpuru that this is likely a big chunk of a small pie, considering the lower maturity of the mobile contactless ecosystem in the US. It's always better to look for absolute value. In this regard, PayPal processed $46 billion in mobile payment volume in 2014, up 68% over 2013.
Should marketers care about mobile wallets? Yes. Mobile wallets are not just about mobile payments. Consumers want a better shopping experience. Offering faster or more-secure payments is not enough; wallet providers will have to solve real pain points, such as giving consumers the ability to see what’s on stored value cards at any moment in time, access loyalty points, or automatically receive digital copies of payment receipts. In particular, 57% of US online adult smartphone users are interested in having access to loyalty program points and rewards within a mobile wallet. Access to loyalty rewards from brands is the most wanted feature from consumers, and it's the one least integrated in mobile wallets today.
I’ve been talking to a number of users and providers of bare-metal cloud services, and am finding the common threads among the high-profile use cases both interesting individually and starting to connect some dots in terms of common use cases for these service providers who provide the ability to provision and use dedicated physical servers with very similar semantics to the common VM IaaS cloud – servers that can be instantiated at will in the cloud, provisioned with a variety of OS images, be connected to storage and run applications. The differentiation for the customers is in behavior of the resulting images:
Deterministic performance – Your workload is running on a dedicated resource, so there is no question of any “noisy neighbor” problem, or even of sharing resources with otherwise well-behaved neighbors.
Extreme low latency – Like it or not, VMs, even lightweight ones, impose some level of additional latency compared to bare-metal OS images. Where this latency is a factor, bare-metal clouds offer a differentiated alternative.
Raw performance – Under the right conditions, a single bare-metal server can process more work than a collection of VMs, even when their nominal aggregate performance is similar. Benchmarking is always tricky, but several of the bare metal cloud vendors can show some impressive comparative benchmarks to prospective customers.
Japanese consumers are among the most mobile-savvy in the world: They were shopping, banking, and gaming on mobile phones long before consumers in other nations. The Japanese mobile ecosystem used to be unique; telecom operators specified to Japanese handset manufacturers the design of services to implement on multimedia phones. This is changing in an app world.
Indeed, the mobile market is opening up quickly to the smartphone app ecosystem. While Japan is a mobile-centric society, smartphone adoption has lagged behind other major markets. Many international brands launched their first mCommerce initiatives in Japan several years ago, but the market subsequently disappeared from the innovation radar due to the US-centric smartphone app ecosystem. But this is changing. It is time to take another look at Japan to uncover how the nation is combining innovation and scale as its market embraces smartphone apps.
More than a decade ago, I had the opportunity to work with NTT DoCoMo to introduce i-mode — the mobile multimedia service in France. At that time, Japan was clearly two to three years ahead of the rest of the mobile world. The Japanese market — and more specifically, the i-mode business model — is rumored to have inspired Steve Jobs to launch the Apple App Store. After that, Silicon Valley became the new source of innovation and inspiration for mobile marketers. Now that the app ecosystem has come full circle, marketers should again consider mobile marketing in Japan, benefiting from a more open ecosystem to distribute their apps and engage with Japanese customers. I recently spent a full week in Japan, and it is fascinating to see the relationship people have with mobile phones over there.
There are lots of lessons to learn from the likes of Rakuten, Line, Felica, Softbank, or NTT DoCoMo and from a mature ecosystem of mobile contactless and connective-tissue technologies.
At the beginning of the year in our yearly mobile predictions report, my colleague Julie Ask and I made the following call: "mobile will affect more than just your digital operations — it will transform your entire business. 2014 will be the year that companies increase investments to transform their businesses with mobile as a focal point." McDonald’s France is a great example of such a trend.
In France, you can now order a Big Mac anytime, anywhere on your smartphone, tablet, or desktop and pick it up later at any of 1,200 McDonald’s restaurants. But mobile ordering and in-store pick up are just the first steps of a broader and more ambitious strategy: differentiating McDonald’s brand experience and powering a future relationship marketing platform by enabling direct behavioral customer insights. Although it started with a mobile ordering and payment app nationwide, McDonald’s France aims to transform all points of customer engagement by building a platform to extend new services to loyal customers and evolving the entire organization.
Despite a less mature mobile ecosystem and lower mobile usage than in the US, McDonald’s France was the first subsidiary of McDonald’s to launch a mobile ordering offering at scale. Such an ordering service is only at pilot stage in the US. France is McDonald’s second-biggest market after the United States, with €4.35 billion in turnover in 2012. Most other countries had piloted mobile payments so far. With more than 16 million members, McDonald’s Japan mobile couponing and in-store contactless payment services is the only other mobile service for McDonald’s (and the vast majority of brands) that has scaled massively, but it does not yet offer the same value.
Ten years ago, Forrester published some research with the slightly awkward title of ‘New Payment Systems’ Survival Guide’. One of our findings was that many successful new payment systems have some kind of ‘must-have’ transaction that encourages customers to go through the hassle of learning how to use a new system in the first place. Good examples of ‘must-have’ transactions include eBay’s auctions for PayPal, travel to work for Transport for London’s Oyster, and online shopping for iDeal.
Ever since, I’ve been seeking the ‘must-have’ transaction that will spark consumer adoption of mobile payments in developed economies. But what if there isn’t one? (And, after 10 years, it’s probably time to admit that there isn’t). The answer is to focus relentlessly on both lowering the barriers to mobile payment by making it as easy as possible for customers to use a new system and to increase the benefits by maximizing the number of ways and places customers can use a system.
It’s that time of the year: the pilgrimage to the Mobile Mecca, Mobile World Congress (MWC), in Barcelona. This is my 10th pilgrimage in a row and, needless to say, the event has changed tremendously over the past few years – from 3GSM in Cannes to the new venue in Barcelona this year. While CTIA is still very US-centric and CES is still a lot about TVs, MWC is really the only global mobile event with a strong presence of operators and handset manufacturers from all over the world. Every year the show becomes not only more global, but also more open to new categories of players — such as advertisers and developers — willing to make the most of mobile technologies, and more open to connected devices that go far beyond the traditional definition of a mobile phone. Markets are colliding and mobile innovation is at the center of these upheavals. MWC used to be a telecom show focusing mainly on mobile technologies, but the event is now bringing together people from every industry.
In the light of today’s first announcements, here is my take on how to put in perspective the announcements to be made at MWC 2013 in the coming days:
Mobile payments saw continued innovation and competitive disruption throughout 2012, but consumer adoption lagged behind the industry hype. The Forrester Research Mobile Payments Forecast, 2012 To 2017 (US) shows that US consumers will adopt mobile payments at an accelerating rate over the next five years, reaching $90 billion by the end of 2017. Lower barriers to adoption, increased convenience, and early entrants striving for scale will be important drivers of growth.
As the annual retail pilgrimage to the Jacob Javits Center draws to a close, I started wondering if anything has changed since last year. As I met with Forrester’s retail clients during the show, it was clear that this is no longer just a brick-and-mortar show. The retailers I met with had all sent a delegation of cross-functional executives, including the CIO, COO, CMO, SVP of eCommerce, and head of store operations. These leaders are no longer working in organizational silos: they know that they need to find technology solutions that meet the needs of today’s digitally connected customer, not the needs of their legacy channel-centric business units. I was impressed at the way these retailers are embracing and executing on agile commerce.
On the expo floor, the same theme was abundantly clear. NRF has evolved to become a retail commerce show, not just a retail technology show. Joining the incumbent store systems and POS vendors were all the enterprise eCommerce solution providers, order management vendors, system integration firms, and digital agencies. Whereas last year was all about mobile, with hastily developed prototypes and lots of vaporware, this year the expo floor was a place more grounded in reality. Strategic relationships were abundant, with vendors realizing that customers are demanding integrated solution suites that go far beyond the scope of their own product portfolio. As I did my rounds of expo floor booth visits, executive briefings, and product demos, here’s what I found:
I attended a briefing from Visa Europe yesterday, about its V.me digital wallet. Here’s what Visa said:
V.me is more than a mobile digital wallet. Customers will be able to use V.me to make online payments too. It lets users check out at online stores using a one-click solution that remembers card details from multiple providers (including MasterCard and American Express cards) as well as billing details and postal addresses.
V.me is not just about mobile contactless payments. V.me will support a variety of ways to initiate payments including bar codes and QR codes, as well as NFC.
Visa intends to distribute V.me through its member banks, much as Visa cards are distributed today. BBVA will be the first issuer in Spain.
V.me is already in extended pilots in the UK and Spain to test the system and will launch formally in both countries soon. France will be next. V.me will start rolling out into stores in the UK next spring. Officially V.me will be available in France, Spain and the UK by next summer. (Visa Inc has already launched V.me in the US).