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Posts Tagged ‘Mobile Payments’

QR Codes: Scanning for Loyalty and Payment

December 10, 2012 in Uncategorized | Comments (0)

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A few weeks ago, I posted about the recent Square round of funding and how there’s a battle going on over control of the point-of-sale (POS)—and it’s not only about payment. I believe it’s about loyalty, and leveraging the power of mobile to create a direct relationship with customers.

There are a number of solutions available that incorporate quick-response (QR) codes into purchase transactions. They all work like a virtual punch card, where customers spend a certain amount of money, and get some freebie or discount as a reward. They measure loyalty better than Facebook or foursquare “check ins” because customers actually have to buy something to get access to the QR code. Some solutions print the code at the bottom of each sales receipt (RewardLoop, Punchd), or allow customers to scan a code at the register (Perx, Belly).

The biggest bonus for retailers is that the QR code can contain information about the purchase: what was sold, date, time, location and payment method. Using this data, companies can get to know their customers buying habits and tailor their marketing based on that. The setup is lightweight, integrating with existing POS systems via an add-on device or software plug-in.

The quick scan also makes it easy for customers to enroll—and having your mobile replace the stack of paper cards in your wallet (or forgotten in your kitchen drawer) is a bonus too. You simply scan a code again each time you make a purchase, and the loyalty information is stored in the cloud. I myself have used a Subway iPhone application for the last few months, which follows this exact process.

Paying via QR code is gaining some traction as well, as we have seen with PayPal conducting some interesting pilots this year in Singapore on the walls in the MTR (the Singapore subway). It allows you to buy products directly from advertisements by scanning a QR code and entering your payment information. The QR code presumably captures the place and time you scanned, providing valuable information to retailers, as well as a direct connection to your mobile device.

At the same time, we’re continuing to see many banks start to incorporate QR codes into their mobile banking application for bill payment and also P2P payment. Start-up Paydiant, a white-label mobile payments API, recently received $12 million in funding. Pioneering restaurants, hotels and bars can use it to print QR codes on receipts, allowing customers to pay and leave when they want—and now Bank of America is testing the technology.

I’m not convinced QR code payments are the next killer app, but they are one more way to enable mobile payments without NFC. They’ll certainly play a role going forward in mobile CRM and payments. After all, Starbucks with its 2D barcode technology has already generated over $40 million USD in payment transactions as reported at the end of the first quarter this year.

Battle at the POS Heats Up

November 13, 2012 in Uncategorized | Comments (0)

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In September of this year, mobile payments provider Square announced that it had raised $200 million. Investors included, among others, Starbucks Coffee Company—a surprise for many in the mobile payments industry, as Starbucks has been so successful with its own app.

The press release about the funding includes some impressive numbers. Last fall (2011), Square had about 150 employees and processed about $1 billion in payments (annualized). This fall, it has over 400 employees and processes over $8 billion in payments (again, annualized). Talk about explosive growth.

Square pioneered a new point of sale (POS) by allowing small businesses and consumers to accept credit card payments via their mobile devices. Several Square-like equivalents have popped up lately, including PayPay Here, iZettle in Europe and Tortuga in Asia.

Now it’s clear that Square is onto something new. Its Pay With Square app allows consumers to pay for purchases by simply telling the cashier their name. GPS and a few apps cooperate behind the scenes to take care of the rest—no credit card swipe required. (See my earlier post for details.)

Square’s success is certainly helping to fuel the battle at the POS not only in terms of where the payment is taken, but also in the method of payment. Back in May, Visa and MasterCard both entered the ring in an effort to defend their long-established market dominance. Each launched its own “digital” wallet service—not “mobile” wallet, mind you. Yet.

Visa’s solution, called, is made for online transactions. It stores your credit card, billing and shipping details, allowing you to pay for online purchases by providing only your email address and password to the merchant. It’s not tap-and-pay, but it’s a start. And the company says it plans to introduce the mobile aspect soon via NFC, QR codes or other technology that would allow tap-and-pay, scan-and-pay or something similar.

MasterCard’s answer is PayPass Wallet, which expands on the PayPass brand that does currently offer tap-and-go NFC payments (i.e. Google Wallet). The new addition, PayPass Wallet, is also geared toward online purchases, storing the necessary card, shipping and billing details and allowing you to check out faster, though via a special button on the websites of participating merchants (or in their mobile apps). And like Visa, MasterCard says it has plans to roll out to points of sale at some point in the future, but offers no specifics regarding timeframe or technology.

POS rookie Google Wallet continues to march on, working out the kinks, adding more credit cards, and steadily signing up merchants and users. One stumbling block continues to be the small range of compatible consumer devices. Isis, the NFC mobile payment joint venture between AT&T, Verizon and T-Mobile, just launched its pilots in Salt Lake City and Austin in October.

It’s an interesting battle to watch, and not only because of the different companies vying for control. Technology is developing so fast that NFC may already be yesterday’s news. We’re clearly still in the learning phase, with each solution providing valuable lessons for the next. Offerings are also moving from payment only to payment + additional value. And I think that “additional value” is the key to making mobile payments work. Check back soon for my follow-up post about how QR codes are entering the fray and may give NFC a run for it’s money.

Apple iPhone 5 Ignores NFC Hype!

October 10, 2012 in Uncategorized | Comments (0)

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Apple’s recent launch of iPhone 5 had one glaring omission: NFC.

The industry had been looking to Apple, hoping it would give near-field communication (NFC) a leg up by bringing the mobile payment technology to its large user base, and hopefully wrapping it within a great user experience.

So be it. It’s another hurdle for NFC of course, but it’s far from a death sentence. If Apple had put an NFC chip in iPhone 5, it would have simplified adoption, and been a clear play to own the secure element. The omission means that Apple is not planning to own any NFC secure element at this stage, so the question of who will remain unanswered.

Other device manufacturers are designing and releasing enabled devices—more than 60 phones are available now. Accessory manufacturers are launching NFC-enabled sleeves and cases that add the payment technology externally to iPhone 5 like what we have seen with the CBA Kaching application in Australia. (See this video for details.) Operators will still continue to push it onto the SIM cards.

Other banks and payment networks worldwide (Raiffeisen Bank International in Austria and the UnionPay network in China, for example) are also rolling out contactless payment services using external accessories or existing phones, and there are more plans and pilots afoot in France, Taiwan, and the U.S.

What was Apple thinking? My guess is that the company feels it has a stronger bid with mobile commerce through the 400 + million credit card details it has from iTunes. With that, why does the company need NFC? Besides, Apple is a closed shop. Always has been. I’m not sure why the news that it’s not supporting a global standard has been such a surprise.

Apple is continuing to do what it’s always done: enabling its own closed ecosystem, and going its own way.

Mobile OS Vendors Continue to Invest in Mobile Payments

July 11, 2012 in Uncategorized | Comments (0)

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In the last several weeks, two leading mobile operating system (OS) vendors moved into the mobile payments space. Apple announced its new mobile wallet Passbook that will debut with iOS 6 this fall. Microsoft quickly followed with its announcement of the new Microsoft Wallet mobile payment app, also due out this fall as a part of Windows 8…and Google continues to revamp Google Wallet

It’s clear that Apple and Microsoft are making a big move into new territory. Neither company is waiting for an ecosystem to form before they jump in. They’re not waiting for co-ops like the Isis partnership, banks or brands. They want to make sure that they’ll become a key component of the value chain.

While on the surface it appears the three major mobile platforms now have a mobile wallet capability, as always the devil is in the details. Each vendor has taken very different approaches to create a mobile wallet service within their OS, particularly in how they authenticate payments.

Google’s wallet is device-centric, with a secure element embedded within the phone itself being used to validate payments. So if you want to access the service, you can only do so from a handful of devices. Microsoft has adopted the SIM-centric model that has been promoted by the GSMA.

With Google’s model, the Operator can be excluded from the value chain, but with Microsoft’s the operator is required for the provisioning of the SIM.

Apple, as they often do, has taken a very different approach. Apple’s Passbook enables third parties to push barcode- and QR code-based loyalty cards, store cards and boarding passes in to a single location on the iPhone. So the British Airways boarding pass for your flight tomorrow, or your existing Starbucks card barcode, could be stored in you Passbook.

Apple’s Passbook is, in many ways, more remarkable for what it doesn’t do. Whilst British Airways could update that boarding pass if the gate changes, you can also use the pass to confirm the time of the flight. And while your balance on the Starbucks pass can update, you can’t top up your account from within Passbook. To do either, you would need to use the existing iPhone app and not Passbook

Depending on your definition, you could argue Apple’s solution is not really a mobile wallet, as it purely stores passes, and has no payment capability of its own. Apple seems to agree, as the product name is Passbook and not (say) iWallet.

However, while Passbook is limited, it is an incredibly simple version of any existing service that uses barcodes or QR codes to push passes in to Apple’s Passbook. And there is no cost for third parties to do so.

This is the start of the bid from the mobile OS vendors to say that they’re going to control the wallets. Operators are making a clear play for a slice of the pie, but at present only the Microsoft wallet has a clear role for operators in the value chain. With the approach that Google and Apple have taken, the only thing mobile payments need from operators is really the connectivity. Again, it’s all coming down who is going to own that relationship with the customer.

Take Apple. When it launches Passbook, it will already have worldwide distribution. And though the current version has no payment capability, Apple has the credit card details of 400 million customers already banked in the iTunes Store, to which it could easily link to this. I can’t imagine that Apple won’t leverage that advantage in some way down the road.

Watch this space over the coming months, as this looks like it is just about to explode…

NFC Accelerates Toward Its Roadblock

June 12, 2012 in Uncategorized | Comments (0)

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We’ve heard a number of announcements lately about new mobile near-field communication (NFC) devices. In April, someone leaked news about the Nokia Lumia 610 NFC, the company’s first NFC phone, due out in early Q3. The same month, Barclaycard announced PayTag, an NFC sticker UK consumers can attach to the back of their current phones, which doesn’t add NFC capability to the handset, but does enable consumers to tap their mobile, rather than a credit card, to pay.

At the same time, there are a lot of opportunities in the market right now for creating the ecosystem for mobile NFC, in the form of requests-for-proposals from banks, mobile operators and other third parties.

The mobile NFC market is obviously starting to accelerate, but it still struggles with the same fundamental issues. Predominantly, those revolve around where the secure element (SE) will lie, and who will own and control it. If the SE is going to be secured on the SIM card, the mostly likely choice is that the MNO will control it. If SE is built into the device itself, or memory card or other add on, that would open up the ecosystem to other players. At the end of the day, the only easier way to create the NFC ecosystem is for banks, MNOs, and handset manufactures to cooperate, and work out how to manage the secure element in all phones. As we know, however, this is unlikely

Because of this stumbling block, we’re still years away from having a widespread NFC payment ecosystem. Industry leaders seem to agree, as 81 percent of those we asked at Mobile World Congress earlier this year said they thought NFC would not emerge as a driver for mass adoption of mobile payments for another two-to-five years. Consumers aren’t queuing up for it either: out of more than six billion mobile devices in the world, only around 40 million (or 0.0067 percent) have NFC capability.

It can be frustrating to know that we have the technology for NFC, just not the business model. A few enterprising souls among us are forging ahead, using the tools they have to figure out their own contactless payment methods, from gluing their entire contactless credit cards to the backs of their phones, or removing the RFID chip from the cards using acetone and gluing it to something else—even fashioning bracelets out of the chips and wire as in this story.

Maybe in less than the time it takes banks, operators and other players to agree on who controls what, we’ll be onto the next technology, and it won’t have the same issues. Two to five years is long time in the mobile payments industry.

Start-Ups Build the Mobile Payment Ecosystem

May 31, 2012 in Uncategorized | Comments (0)

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There’s been lots of hype in the North American market recently about mobile point-of-sale (POS) startup Square—and for good reason. The company has made a habit of revealing impressive stats about its rapid growth. For example:
• It processes at a rate of $5 billion USD per year (up from $3 million a year ago, and $4 billion in March).
• That divides up into about $416 million per month (compared to $11 million just last month).
• As of December 2011, the company had signed up over one million merchants.

Square and its disruptive cousins, including Intuit’s GoPayment and Swiff, make it easy for merchants to accept credit card payments using smartphones and tablets. Their simple, elegant solutions are creating a new ecosystem and accelerating mobile POS without waiting for the big players.

Even though they’re still processing payments through Visa, MasterCard and American Express, the startups are doing so well in part because they offer merchants a better deal. They provide for a market that would normally be unable to access card processing, and previously only accepted cash. In addition, Square just announced it’ll deposit funds in its merchants’ accounts by the next business morning for all transactions that go through before 5PM. Traditionally, merchants have had to wait two-to-five business days.

Square has also recently expanded its offerings to include a new mobile payment app for consumers. People with the app can pay at any merchant with a Square mPOS without even swiping a card. Compared with the successful Starbucks Mobile app, this solution is so interesting because it’s open and has tremendous growth potential. Starbucks Mobile is so successful because the company has a large and loyal following that buys coffee every day. Preloading the app with a credit card payment so they don’t need cash is a convenience, and getting the loyalty points is a bonus. For companies that sell products we buy less frequently to a smaller clientele, say books or appliances, the same kind of closed-loop system wouldn’t work as well. Something like Square’s growing ecosystem just might crack the code—or at least get us one step closer to a widespread mobile payments ecosystem.

Startups success doesn’t mean that the big players are out of the mobile payments game. Square is displacing some acquiring banks and the POS terminal suppliers, but Visa is a major investor in the company. MasterCard’s new Mobile Money Partnership Program (MMPP), in which Sybase is a partner, aims to deliver financial services to the unbanked and under-banked through mobile phones. The natural extension of the MasterCard approach is leveraging merchants.

These initiatives have potential to work together to create open payments systems and extend coverage from mobile wallets to payment through mobile POS. Nowhere are mobile payments poised for greater success than in emerging markets where POS infrastructure is limited. The main reason people don’t have bank accounts in these markets is that they lack access to banks—yet most people have mobile phones. That’s all well and good, but doesn’t make a success story unless there are also merchants who accept mobile payments.

The challenge is to create interoperability for mobile payments, so consumers can pay as easily with their mobile device as with cash or credit. Square, the MasterCard MMPP and solutions like Telefónica’s mobile wallet that are focused on interoperability will drive the market forward.

Mobile Payments: Marching On

May 23, 2012 in Uncategorized | Comments (0)

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Leading up to the CTIA Wireless Event in New Orleans earlier this month, there was some anticipation around a potential update on the timing for widespread availability of a NFC mobile payment deployment from Isis, the mobile payments joint venture between Verizon, AT&T and T-Mobile. Not surprisingly, it looks like we will have to wait a little bit longer to hear news about when we may actually start to see real progress in the availability of NFC. But as we march ahead on the mobile payments battlefield, we need to look beyond NFC and ask ourselves who are the key industry players in the mobile commerce war? And are they doing enough to educate consumers about the service’s security features and their benefits? The answer: probably not.

There’s been a lot of chatter in the media about whether NFC could be the missing link the mobile payments industry needs to achieve widespread adoption, but we’re not addressing the fact that mobile payments do exist without NFC, and are widely adopted all over the world. Americans tend to have a limited view of the world, so let’s take a look at our own market. Here, in the U.S., the mobile payments ecosystem is disjointed. In fact, it’s a bit of a mess.
This year we polled attendees at both Mobile World Congress in February and last week at CTIA to try and uncover what industry experts believe is holding mobile payments back. And in both cases, the overwhelming majority (76% and 71% respectively) of respondents cited that perceived security threats and lack of coordination among key industry stakeholders are the main obstacles to widespread adoption of mobile payments.

Security isn’t a threat to mobile payments adoption; it’s the perception that mobile payments are less secure than traditional payments. To date, the industry has failed to establish clear standards and ensure that everyone plays by the same rules.

Which players in the mobile payments industry are likely to succeed in facilitating widespread adoption of mobile payments? Almost half of our respondents at CTIA (47%) believe that financial service providers such as the banks and credit card companies are most likely to succeed in driving adoption rates.
There’s a clear disconnect between the service that mobile payment players are trying to deliver, and what consumers understand to be the value or benefit. Part of the problem with mobile payments in the U.S. today is that the credit card system works. There’s no flaw with plastic payments as they are, but in order to entice consumers to engage in a new way of doing things, there must be an added benefit.

This year’s CTIA survey results reveal that there’s still an unwillingness amongst consumers to pursue mobile payment options, and right now they’re not very optimistic the industry will be able to come together in the next year or so to deliver enough incentive to make mobile payments attractive enough.
NFC could very well become a universal standard, but it’s far from a sure thing. 84% of those polled at CTIA believe it’s still at least two to five years away. With all of the different providers looking to compete in the mobile payments space, they will need to find a way to come together, interoperate and make life easier for the consumer.

Plastic payments won’t be eliminated, but the industry will need to facilitate an extension of payments beyond the credit card, giving consumers more options. And consumers won’t consider the mobile option until the industry works together to develop standards and they understand the benefits. Until then, we’ll keep marching on.

Retailers Winning with Mobile Payments

April 19, 2012 in Uncategorized | Comments (0)

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Two recent announcements prove that retailers are very much in the mobile payments game. First, The Wall Street Journal reported that Walmart and Target were among two dozen retailers collaborating on a mobile commerce project. Then, Starbucks shared the impressive numbers from its Starbucks Mobile app, which launched in the U.S. in January 2011, and the UK and Canada a year later. 42 million: that’s how many transactions the company has processed in the 15 months since it launched, and 16 million of those happened between December and April.

Retailers aren’t waiting for NFC, or for banks or Google Wallet—or permission. They’re getting ahead and launching their own systems. And why not? They’re seizing the opportunity to take control of the customer relationship, which they already own, in a new channel.

The Starbucks Mobile app is a great example of what it takes to succeed with mobile commerce and mobile CRM. It’s not fancy or complicated. It’s simply a digital version of the coffee giant’s existing loyalty card, already popular with millions of customers. Load funds to the mobile app starting with a prepaid card and then a credit card, bring your phone to any Starbucks in the U.S., UK or Canada (it works across countries), and scan the barcode at the register after selecting your coffee. Simple, and here’s the key: more convenient and rewarding than cash or credit. (Though the loyalty aspect, which only applies to U.S. customers, requires a hefty 45 purchases to receive your first free drink, it only takes 15 to earn them thereafter.)

Once a company has a successful mobile payment method, it’s a short road to mobile loyalty and engagement programs. Not only do retailers have a direct marketing channel for sending offers, coupons, alerts and reminders, they also receive detailed information about each customers’ purchasing behavior.

The two-way communication that’s possible with mobile means retailers and brands can truly know their customers, and deliver the right message at the right time to the right person. “Haven’t seen you in a while, Mr. Talbot. Come back in for 15 percent off this month’s signature drink.”

Retailers understand that making the most of mobile means tying it into what they already do, enhancing every stage of the customer lifecycle.

Mobilizing the Unbanked at Home

October 14, 2010 in Uncategorized | Comments (0)

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Partnering with Sybase, MobiKash Afrika launched a pilot of the first intra-region, mobile network- agnostic and bank-agnostic mobile commerce solution for sub-Saharan Africa in September. The pilot is in Kenya, which is already a much-quoted reference country for banking the unbanked, due to Safaricom’s successful M-Pesa solution, and 63 percent of households owning a mobile phone according to the 2009 census. (Compare that to the 3.6 percent with computers.)

It’s exciting news for a few reasons. First, mBanking is real, live and available today, and the Sybase 365 mobile commerce platform is on the leading edge. Second, due to MobiKash being operated by an independent third party, it’ll be available to all users irrespective of their Mobile Network Operator, leading to a greater network effect.

Third, and most important, MobiKash will provide a range of banking services to people who have never had access before. Less than 10 percent of Africans currently participate in formal banking for a variety of reasons. On the one side, banks have been unable to maintain the profitability of services to this population via standard channels. On the other, the target customers distrust traditional banks and lack efficient transportation to branches that are few and far between. Using the new service, Africans will be able to conduct commerce from their mobile phones, be it purchasing goods and services, securing loans, and (of course) traditional banking.

MobiKash plans to expand to other African countries in the near future, where mobile adoption rates are growing rapidly, and provide intra-country services where possible.

This mBanking revolution (if you’ll allow me the term) to bank the unbanked is happening all over the world. Internationally, the media has written quite a bit about it, but there hasn’t been as much coverage in the U.S. We seem generally less interested over here, and I don’t know why. Maybe we think we don’t have an unbanked population here, but we do.

A January 2009 FDIC survey reported that approximately 7.7 percent (9 million) U.S. households are unbanked, meaning they don’t have a checking or savings account. Another 18 percent on top of that (20 million) U.S. households are underbanked, meaning they rely on alternative financial services such as check cashers, loan sharks and pawnbrokers.

So why, when the vast majority of Americans own mobile phones — something like 90 percent — and mCommerce technology doesn’t require high-end devices, aren’t we doing more about it? The MobiKash service enables customers to access and conduct business with any financial institution via any mobile phone service provider, and includes integration into networks of ATMs, POS terminals, EPOS systems, the Internet and local agents. It would be great to see lessons learned in Asia and Africa being applied into the U.S. market. Aren’t the issues—banks unable to provide services at a profit, customers distrust and lack of transportation—the same? At present, we see a lot of activity in Latin America, but not yet in the U.S. We expect it to change as early as next year, with mobile carriers that serve the unbanked through their prepay offerings leading the way, and some banks putting some trials into the market, looking to see if mobility gives them the lower-cost channel they need to serve the unbanked market.

A service like MobiKash, which allows customers to pay bills, send money, manage their accounts and transfer funds could do a lot to create a gateway into the mainstream financial system. It could help the unbanked right here at home build savings, improve their credit score, secure lower rates for loans and fees for transactions, and reduce a source of personal stress.

This is not only a huge business opportunity, but also a huge do-the-right-thing opportunity. Who’s with me?

Read more on MobiKash Afrika:

Do Consumers need NFC?

August 27, 2010 in Uncategorized | Comments (0)

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With all the recent announcements surrounding NFC in the last few weeks, including news of the cross carrier JV, Apple recruiting experts in this area etc., it has given me pause to wonder if we’re finally going to see some real adoption of NFC in the US over the next 2 years.

To answer this question we must start with the consumer benefit, as that will drive adoption (or not). Does the consumer need NFC? This is like asking do consumers need LTE or WIMAX – consumers need faster mobile broadband, they don’t care how technology delivers it. Near Field Communication is a radio frequency standard, not a consumer-facing payment type. What consumers really need is more convenient ways of making payments – although I think solving remote payment is more pressing than solving proximity payment issues. How many times have you not had quarters for a parking meter or failed to get crumpled bills into vending machines? Sybase 365 mobile payment implementations in Europe and Asia focus on a server-side mobile wallet, which can be triggered by a variety of mobile channels, SMS, Browser or Apps. We have not been waiting for NFC handsets and terminals to start offering consumers the benefit of paying by mobile. In the parking example, there is the added benefit that you can receive reminders and auto extend when time is running out on the meter. We are now starting to add NFC as an additional trigger method for remote and proximity payments, but in most cases the payment instrument remains server side in the cloud as it is for other mobile channels

In the US, where credit and debit and the terminal infrastructure is so established, do we really need a different way of doing proximity payments? Where mass transit is prevalent there is a case for NFC combined with payment card instruments stored locally on the handset (be it through sticker, SD or in handset). For speed through turnstiles, transactions and utilization can be driven by pricing (as London Transport does with Oyster on the Contactless card side). Outside of areas of mass transit, I struggle to see the user benefit or where we will see significant uptake. The convenience factor of tapping a phone vs. swiping a card (outside of mass transit) is not significant enough to change user behavior, so I remain somewhat dubious about widespread adoption. In fact the main clear benefit of driving payments from handsets is actually for the retailer rather than the consumer. A handset is a 2-way communication device that can receive offers and promotions in a way that a physical wallet cannot. However there are ways that we can entice consumers into opening up that 2 way channel with the retailer or brand that are not dependent upon NFC – based on our existing mCRM products.

At the end of the day, if our industry can find ways of improving remote and proximity payments via Mobile, we will see adoption, but we should see NFC as part of the enabling technology mix and not as the solution to push at consumers.