Never Ending Excitement in Digital Payments
It’s official – I can’t go on holiday anymore. Or at least, not if I want to keep up with all the interesting developments in digital payments. Vacation and business travel conspired to keep me out of the office for nearly 3 weeks and in that time, there were important announcements from Apple, Microsoft and Facebook. And that’s just the highlights – there plenty more. No, don’t worry, I am not under any illussions of grandeur that good folks at Apple or Microsoft are checking my holiday schedule to time their announcements. But it does highlight the incredible “blink and you’ll miss it” pace of developments in payments.
Having kept everyone on their toes about their plans in payments, Apple has recently announced a Passbook app. While the idea at the moment is to store various “passes”, such as boarding passes, store cards, and movie tickets in one place, I do agree with others who view it as the first step towards the development of a full-scale mobile wallet. It is perhaps telling that one of the early examples of “passes” is a payments app – a Starbucks card which automatically appears on the phone screen when the customer walks into a store. For now, such a use of geolocation technology to automatically display passes is perhaps the most interesting aspect of the app. It remains to be seen what Apple does in payments more broadly. I and many others have long noted the potential for iTunes to become a payments wallet given the ever growing number of cards registered there (400 million seems to be the latest number.) However, despite multiple patents around NFC technology, Apple continues to be silent on its plans (or lack of) around NFC.
One of the companies annoucing recently that it would be embracing NFC was Microsoft. At an event about its upcoming Windows Phone 8 mobile operating system, Microsoft said that it would be supporting NFC with a SIM card-based secure element. It will also include a new wallet app that will store credit and debit cards as well as loyalty and membership cards. As somebody said on the internet, Microsoft is taking on Google and Apple, while keeping the telcos happy. Orange, which is the launch MNO partner for the Wallet, praised the SIM move and said it was “important that Microsoft has aligned with the recommendations of the telco trade body, the GSMA, on the issue.”
Perhaps the most surprising recent announcement was also the one with the least fanfare. Facebook posted on its developer blog that it would be dropping its virtual currency Facebook Credits in favour of local currency pricing. The phenomenal rise of Facebook Credits in recent years made many in the industry wary of potential implications of an unregulated global currency gaining mass adoption. However, while the central bankers looking after fiat currencies might breath a sigh of relief, I don’t think the new announcement means that Facebook is giving up on its ambitions in payments. In fact, it’s likely to be the opposite – by transforming its Credits platform into a localised standard-currency payments platform Facebook is positioning itself for opportunities beyond its own ecosystem. Add Facebook Connect as a solution for the identity problem on the net into the mix, and the opportunities become really interesting.
Lithuanians have a proverb, “a silent pig digs the deepest root.” The quietest of the announcements here may yet prove to have the most far reaching consequences. What do you think of all this?