With the Launch of Foursquare-powered Social Currency, American Express Now Has 7 iPhone Apps

In the spring, we predicted that 10 to 15 years from now there would be tens of thousands of iPhone apps from financial institutions alone (note 1). Our reasoning: Many (most?) larger FIs would have more than one app, perhaps dozens. At that time, nine financial institutions (note 2) were tied for most-prolific app deployers, each with two iPhone apps.

imageToday, I found out that American Express has blown that record away. With the release this week of a youth-oriented Foursqure-powered app, Social Currency (app link), the card issuer now has seven apps available for the iPhone alone (but still none for the iPad).

AmEx iPhone lineup
Two are from American Express Publishing (making the comparison to other financial institutions a little unfair):

  • Best New Chefs
  • Eat and Drink

Two are published by other companies:

And finally, three more from core card-issuers:

  • American Express used to access most AmEx cards
  • OPEN Forum for small business clients
  • mobileXtend that can only be used by employees of corporate clients who have licensed this service option 

American Express has seven apps available for the iPhone
Note: Shown here in search via iPad (22 Sep 2010)

American Express has seven apps available for the iPhone

Notes:
1. See Online Banking Report: The Case for Mobile Banking (published March 2010)
2. See Online Banking Report: Mobile Banking and Finance Apps (published April 2010)

Innovations Don’t Always Work: PayPal to Discontinue Browser Plug-in

image For years I’ve longed for a financial institution-delivered browser plugin that would help manage receipts, verify available funds, complete online forms, and provide secure payment options at legitimate ecommerce sites. The PayPal browser plugin, launched less than three years ago, offered most of that, in theory. 

I used it successfully a few times, but too often it popped up offering assistance when I didn’t need it. So I disabled it. Evidently, I wasn’t the only one who found it not worth the hassle (for more insight into the problems, read the comment thread and updates to the original announcement post). The company is pulling the plug on the service next month.

Now that PayPal’s plugin is off my computer, it’s time to give Billeo’s another try. I used previous versions in the past, but hadn’t given it a thorough test since I moved to a Mac for most Internet browsing.

PayPal login splash screen (link, 9 August 2010)

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Note: We wrote about plugins, toolbars, and tools in Online Banking Report: Grabbing Desktop Mindshare (published Aug. 2002).

Future File: Digitizing Paper POS Receipts

image Some of the best innovations come from inventors that develop a solution to a personal pet peeve, then commercialize it. In financial service, Aaron Patzer has told the story many times about how he developed Mint to solve his own needs for a better financial management tool.

If I had Aaron Patzer’s drive, or funds, I’d be working on a solution to digitize point-of-sale receipts. In our household, none of us can keep track of a receipt past the first 24 hours. Someone or some thing must come into our house during the night and make off with all paper receipts.

So when it comes to returning something to a store, we usually end up replaying this sad process:

  1. Try to remember where the receipt is
  2. Look for it
  3. Ask spouse if they’ve seen it
  4. Look again
  5. Curse bad memory (of spouse) and give up for the day
  6. Repeat above steps the next day
  7. Curse bad memory (of self and spouse) and give up for good
  8. Rehearse story to tell store on why you don’t have receipt
  9. Return item to store without receipt
  10. Receive gift card instead of cash refund (because there’s no receipt)
  11. Forget/lose gift card
  12. Curse paper receipts and vow to better organized

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That’s why I was excited to hear Square founder Jack Dorsey tell the audience at NACHA Payments in April that one of startup’s key strategies was “focusing on the receipt” (see my Tweet right).

Shortly thereafter I met David Crossett at FinovateSpring 2010 who shared his vision of how his startup, ReadyReceipts (note 1) is gearing up to solve this very problem. The product, still in development, uses a unique approach that doesn’t rely on the end-user carrying another loyalty card (thank goodness).

If you’ve ever bought something in an Apple Store (in the USA at least), you can see what he has in mind. Mobile POS systems that email you the receipt and skip the easy-to-lose paper altogether.

In addition to Ready Receipts and Square, a number of other companies are working on solutions including:

Relevance for Netbankers: Receipt management is a very real pain-point that costs consumers millions of dollars and millions of hours of frustration every year. Financial institutions, retailers, and/or direct online financial management (OFM) providers that solve this problem stand to gain market share and/or profitable fee income (see our recent Online Banking Report on OFM features for more info).

Intuit’s QuickReceipts is tackling the lost receipt problem (22 July 2010)

Intuit's QuickReceipts

Intuit is spurring grass roots support by enabling visitors to send a Tweet requesting their favorite store adopt QuickReceipts (link)

Intuit's tweet campaign for its QuickReceipts

MyReceipts.com from Third Solutions promotes Whole Foods participation (22 July 2010)

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Note:
1. ReadyReceipts.com is currently under construction as they build out the company and product.

U.S. Travelers Need Chip & Pin Prepaid Travel Cards

imageLast summer, I had the opportunity to spend a week in an apartment in Paris’s 6th. The wonderful 1920s building overlooked a transportation solution even older: bicycles.

But Paris’s popular Velib bike-sharing program has a modern twist, an automated rental system run entirely by unmanned kiosks that accept only debit and credit cards.

Subscribers (29 Euros annually, 5 Euros weekly) can ride the bikes free for the first half hour, then the price rises steeply to 3 Euros per hour and higher. But with stations every 300 meters, you can tool around the city very cost effectively. That is, if you are not American. 

imageWhy? Our old-school mag-stripe cards are no longer in step with the international gold standard of security, the imbedded computer chip unlocked by PIN entry, i.e., chip & pin or EMV. 

At most European merchants, it’s not a problem. They are plenty willing to take the old-school mag stripe card in order to make the sale. Last year, we never had any trouble using plastic from our friends at Wells Fargo and Bank of America. But in certain situations, such as unattended ticket machines, U.S. cardholders can be out of luck.  

The Paris bikes are one very visible place where mag strip cards are not honored (see note 1). That explains the perplexed tourists I watched last summer struggling at the Velib kiosks trying repeatedly to get the machine to release a bike.

Financial institution opportunity: Here’s a great way to pick up market share among well-heeled international travelers. Offer a chip & pin prepaid card. It’s a modern-day travelers check, something every traveler will tuck in their wallets and purses, then forget about when they get home (note 2). And it’s perfect for Internet distribution, especially if you issue cards nationwide.

Besides card fees, interchange, and travelers-check-like float, first movers could gain real market share with a great demographic.

According to Payments News, Gemalto is offering a chip-and-pin solution for U.S. card issuers. A few weeks ago, United Nations Federal Credit Union became the first U.S. financial institution to announce deployment of the Gemalto card (press release). The CU says it will be available in the second half of 2010. But, you’ll have to be on staff at the UN to get it.

Notes:
1. Apparently, there is an exception. American Express cards, with or without a chip, can be used at Velib machines. I wish I’d known that when I was in Paris.  
2. Closer to home, Canada is also in the process of converting to the new standard.
3. Photo credit: Clive Andrews. This was the typical tourist look at the Velib kiosk queue, utter confusion.

Now That’s Payments Innovation: Parkzing Puts Your Parking Tickets on Autopilot

image When talking about payments innovation in the 21st century, PayPal is usually the first thing that comes to mind. The company took existing payment methods (debit, credit, and electronic/ACH transfer) and used the Internet for delivery and messaging. Ten years later it is one of a handful of financial companies that can claim nine-figure customer bases. 

And there are dozens (hundreds?) of companies working on creating their own PayPal in relatively new frontiers: mobile, social networks, health care, micropayments, and so on. We’ll have several of them demoing at our upcoming FinovateSpring event May 11 (lineup here).

image But you don’t need millions of users to create something of value. Case in point: Parkzing is a new service (with a great name) created in his spare time by Aren Sanderson, CTO of Third Ave Labs, the creator of mobile app discovery service Apptizer (great name #2).

Parkzing is a mostly free service that removes the hassle, and worry, from remembering to pay your parking fines. How it works:

  • Users register their license plate number with the service
  • Parkzing scans city parking fine databases daily
  • If it finds a match, it contacts the user with a reminder to pay; reminders continue until the fine is removed from the database
  • Optionally, users can give Parkzing their credit card number and the ticket  will automatically be paid for a very economical $5 per ticket fee (see note 1)

This is one of those ideas that is so simple, yet so valuable, that you cannot believe it wasn’t invented the day that city databases went public. As you might suspect, not all cities post this info online, so it currently only helps those in San Francisco, Washington D.C. and NYC (request your city here).

Relevance to Netbankers: This would be a valuable service to offer online/mobile banking customers. It would differentiate you from the competition, help fill your city’s coffers, and add value to your payments card(s). The main downside? Liability for technical glitches that cause fines to go unpaid. A nominal fee for the service could fund a payments guarantee and provide a small bit of revenue.   

Also, think about the bigger picture here. Why limit this to parking tickets? How about if my bill-pay provider scanned all my accounts every day and told me what I owed? Utilities, credit cards, school lunch account, the dentist, and so on. To some extent Mint, Yodlee and the other PFM/bill-pay players already do this. But as Parkzing demonstrated, there’s still room for innovations in bill pay. 

Note:
1. Five bucks is incredibly low considering the convenience and the savings in late fees; in Seattle we owe an extra $25 after only 15 days. I’d be willing to pay $25 per year + $5/ticket for the service.
2. HT to VentureBeat for writing about it. 

Credit Karma Provides Free Credit Scores to Sears Cardholders with Private-Label Version

image Finovate alum Credit Karma recently started providing a private-label version of its credit reporting service to Sears cardholders (see note 1). The service includes free credit scores and other data to help put those scores in an understandable context (see FinovateStartup 2009 video here).

image The new service, launched Sep. 2009, is delivered through a dedicated site, searscreditscore.com. Since Sears cardholders must make a purchase each year to use the site, it provides an ongoing usage incentive.

The Credit Karma-powered service is clearly branded as a Sears and Kmart offering (note 2, screenshot #1). Interestingly, Sears also takes the opportunity to offer targeted advertising space to financial companies (screenshot #3). It also markets the credit-analysis service on its own credit card site (screenshot #2).

While Credit Karma traditionally derived revenue from advertising on its site, this move into the private-label channel provides additional growth opportunities. The Sears private-label site had nearly 140,000 unique visitors in February, about one-third the total at Credit Karma (see table below). It’s a good deal for Sears, too: Offering credit-score analysis differentiates it from other retail card providers and conveys concern about its customers’ financial well-being.

Website traffic at searscreditscore.com vs. creditkarma.com  image 
Source: Compete.com, March 2010 (link)

1. The Sears credit score site, powered by Credit Karma

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2. Sears promotes the credit score service on its website

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3. Sample page from Searscreditscore.com
Note ads for Citi and ING Direct

clip_image006

Notes:
1. Sears cards are issued by Citibank, one of the advertisers in the private-label site.
2. Kmart acquired Sears in 2004.

Discover Card’s User-Generated Card Design Contest

image Personalized card designs have been offered by Capital One and others for years. But I’ve yet to see the idea turned into a contest. Discover Card is running a promotion for the best design submitted through its microsite or Facebook page.

The winner will pocket $1000 and the design will be featured on the next Discover Card Student Card. There is also another $1000 split among five runner-up designs.

To enter the contest, users must log in at the Discover microsite using Facebook connect (see screenshot #2, below). After creating the design, users end up on a Facebook page where they can provide optional personal information (screenshot #3). 

The promotion is powered by the Graffiti Facebook app.

As you can see by my handiwork (inset), most card designs are pretty crude. But there are also some pretty creative entrants. There is only one design tool available, a brush you run with your mouse. The only variations are color, brushstroke width and opacity. No uploads are allowed, so you cannot add any fancy graphics created in other apps.

The contest ends tomorrow and so far there are nearly 5,000 entries. 

Bottom line: It’s a drop-dead simple contest with excellent Facebook integration and a link to apply for Discover’s Student Card. It’s a great idea, with good execution, and the card issuer will end up with a cool new card design for a relatively small cost. Grade A+ 

Thanks to Payments News for the link.

1. Discover Card microsite (31 Dec. 2009)
Note: Homepage showing the 10-most recent entries with our lame effort in the lower-right.

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2. Discover Card design creation page

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3. Facebook optional personal info page

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4. Designs appear on the Discover Facebook page under the Graffiti tab (link)
Note: Considering the crude input tool, some of the designs are amazing. As you can see, I will not be in the running for prize money. 

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American Express Jumps on the Alt-Payments Bandwagon in a Big Way; $300 Million Acquisition of Revolution Money

image_thumb[9]Frankly, I haven’t got my head completely around the latest acquisition in the alt-payments space (and I’m not the only one). I know that it makes my analyst life more interesting, but not sure what it means to the competitive landscape. Scott Loftesness over at Glenbrook Partners has the best analysis I’ve seen (also read the comments).

I’ll break it down here. Revolution Money has two products:

1. RevolutionCard: Alt-payment card for use at the point of sale, both online and in-store.(see inset below from SeattleLuxe.com where RevolutionCard logo is right below Visa; full screenshot below). Unique PIN-based card with no account number or name (see below).

2. Revolution MoneyExchange: A person-to-person payment service.

image_thumb[2]Neither product appears to be very large. In the Q&A of the announcement webcast (press release), Revolution Money chairman Ted Leonsis said the company had signed 8,000 customers per day during a 90-day marketing test about a year ago. In total, it registered about 400,000 consumers (note 1). They also said they’d built merchant acceptance to about 1 million locations.  

The company declined to disclose the number of cardholders, but mentioned that each of its dozen marketing partnerships had brought in two or three thousand good cardholders. Leonsis said that given the current credit environment, they elected not to expand the cardholder portfolio, instead “doubling down” on platform features, such as ATM acceptance (note 2). 

But according to traffic figures from Compete, few Revolution Money customers were actively using its services. The P2P service, MoneyExchange, was the most-visited of the company’s three sites with about 20,000 unique visitors last month, but that was down from 70,000 a year ago (during the marketing test). On the other hand, the Revolution Card volume was similar, just under 20,000, but up more than 50% year-over-year (see chart from Compete below).

image[12]
 Compete: 18 Nov 2009, link

American Express opportunities
On the call (replay here through next week), American Express CEO Kenneth Chenault outlined seven opportunities it would pursue when the transaction closes early next year. Notably absent, person-to-person payments:

1. Reloadable prepaid products for new segments

2. Compete with other alternative payment companies (aka PayPal)

3. Payment products in social media services

4. Mobile payment offerings

5. International markets

6. Offer through banks that issue American Express cards

7. Pin-based debit offerings

During Q&A, Chenault emphasized how the acquisition was all about getting the Revolution Money platform/engine to allow AmEx to do things faster and for a lower cost. There was little talk of RM’s brand, customers, or merchant base. The biggest discussion, during Q&A, was about reloadable prepaid cards.

My take: American Express purchased a platform they hope will allow it to get various new features/products to market faster and at lower costs to help head off total online-POS domination by PayPal. In addition, it acquired a proven team and management duo, and kept the whole works out of the hands of potential competitors such as Discover Card, Barclays, and others. While no one on the outside can understand the assumptions in the make vs. buy analysis, given its track record, American Express should be able profit from this $300 million IT investment. 

Online cards are sprouting new payment options
SeattleLuxe offers ten choices plus a link to pay by check (18 Nov 2009)

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Notes:
1. This is a registered user count, not necessarily a user of the service. Many of the new customers came for the $25 signup bonus or just to kick the tires. There was no cost or obligation to register.
2. On the call, Revolution Money said that 80% of ATMs accept their card.