David Marcus, President at Paypal, shared his thoughts recently on the next wave of mobile innovation. In his article, he states that “These are very, very exciting times where we get to redefine how hundreds of millions of people will move to the digital age of money.” How exactly is this redefining of currency exchange happening? He points to three technologies. For months, Let's Talk Payments has been reporting on these same up-and-coming trends, and their ability to radically change the currency landscape. So what are they, and will they really redefine the way money moves for the masses?
Let’s dig in.
If you’re not already familiar, BLE (Bluetooth Low Energy) uses significantly less energy to provide essentially the same communication range of classic Bluetooth. The implications, as Marcus points out, is that the industry is enabled “to create very precise, fast, and secure shopping and payment experiences that are location and context relevant.” This translates into location-specific information, or offers delivered specifically to you. It means the ability to make purchases without waiting in line. This is great for shoppers, but even better for retailers, with a treasure trove of new data about consumers and their habits, right down to the smallest detail.
We’ve been watching closely for month, and have been tracking BLE, also known as Bluethooth LE, for even longer. Since we first caught wind of Apple’s iBeacon in MLB stadiums, we’ve followed various companies at work with BLE, and what it could mean to the way money moves in the days ahead. The longstanding question of security and customer adoption will inevitability be the true test, but we believe strongly that this technology provides the necessary tools to create engaging customer experiences.
NFC – HCE
Paypal’s president approaches NFC as a “massive skeptic” and addresses HCE with sentiments of “Cautious optimism.” So what’s the big problem with NFC? We actually pointed out five earlier, which really boil down to one big question that any new technology must address - Does it solve a problem, and does it do so in a way that retailers and consumers can easily adopt? Unfortunately, NFC’s very nature invites contention over control of the secure transaction element up for grabs, and everybody wants to grab it. This fight for control has lead to fragmentation, and rather than asking what is best for the consumer, the question has been all about what’s best for whoever owns the transaction gateway.
NFC – HCE (Host Card Emulation) enters the scene and along with it comes a wind in optimism. Rather than an app needing to access a phone’s secure element to make transactions, and host that information on the device, HCE stores payment information in the cloud. Now the rivaling parties are forced to leave control of the secure element, and the focus can return to providing a service that can be widely adopted by both retailers and consumers. How will this happen? Host Card Emulation provides lower development costs, works with existing POS infrastructure, and was incorporated in the release of Android 4.4, which gives a tremendous push towards enabling consumer adoption.
Smartwatches & Google Glass
The third technology David points out is the smartwatch. He describes this as “one of the most transformative payments experience I've had. No wallet. The phone never leaves my pocket. And I'm in control.”
There is no doubt we are on the cusp of the next step in mobile innovation with the smartwatch, but we would like to step back a bit and look at the big picture here. It’s not just the smartwatch that will usher in the next mobile wave, but wearables of all kinds, with the most notable being the smartwatch AND the pending Google Glass. While the 60’s often envisioned our generation fashionably wearing helmets, the connected helmet hasn’t made its debut, at least not just yet.
Smartwatches are already being built with QR code generation, voice recognition, NFC and integrated cameras–and we’re just at the beginning. Increased adoption will result in increased innovation.
While Google Glass has not hit mainstream just yet, a company in Barcelona, Banco Sabadell, announced their creation of the first ever banking app for Google Glass. The development naturally lends to users eventually walking up to an ATM, scanning a QR code and withdrawing cash without the use of a card, PIN, or without even touching the screen at all.
David Marcus and Paypal seem to be getting the story straight on the direction of mobile integration. Particularly worth noting is their acknowledgement of the challenges facing NFC and seeing HCE as a potential savior to a problematic approach to mobile payment. The natural conclusion is that David Marcus has been paying close attention to LTP over the past several months. You’re welcome Pay(pal).