Zong: A Payments Company Name to Remember

Editor’s note: This guest post was written by Daniel Thomas, a 25-year veteran of the financial services industry and a principal consultant with Mindful Insights LLC. He’s been involved in strategy and product development for Online Resources Corporation, ARINC, and TeleCheck. He recently authored a report on merchant-funded in-statement rewards for Online Banking Report.

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imageAdmittedly, my online game prowess is more closely aligned with Pong and Donkey Kong than the latest complex and socially intricate diversions. Back in the day, computer games garnered only a single payment transaction: when it was actually purchased. But today, in order to reach the next level, buy virtual pets or beat your opponent a half a world away, a player/avatar/consumer will typically transact multiple times per month in order to buy Facebook credits or other virtual currency (cash, coins, gems, etc.).

These transactions can often occur in the heat of battle (literally), and the last thing any good soldier wants to do is stop progress in order to begin the seemingly weeklong process of taking out their credit card and typing a bunch of numbers just to spend a $2.99 to re-fill their weapons cache.

imageBefore you could say billabong, along came Zong to make it as quick and as easy as a song. How? They ask if you want the charge to tag along on your mobile phone bill. And before long, you are back in action and that much stronger.

So, what’s the big deal? What has tickled my lifelong fascination with payments is not where Zong is now but where they are headed. Keep in mind that all these newfound payment transactions are seen only by the game company (merchant);, Zong (acquirer and network); and the mobile phone company (issuer). Financial institutions are involved only when the phone bill is paid at the end of the month.

Furthermore, the fees that Zong and a throng of other “carrier billing” processors command can be as high as 40% of the transaction amount. Ding-dong! Hello? After all, the cost of goods sold for a new virtual tank is pretty small and so is the actual transaction amount once the price has been converted from the game company’s internal currency.

But even so, 40% ain’t chicken singsong, especially when you consider that the online gaming (not gambling) market today is along the lines of $100 billion. Admittedly, 90% of that market belongs to the non-virtual console and PC games that Zong will be moving into as those products enter headlong into the virtual world.

Future plans
Zong, which now has 100 employees, is already available as a form of payment for Facebook Credits and virtual goods in 42 countries. The company has big plans to expand with its model. Online gaming is just phase one of its multi-prong strategy. Zong knows that moving into markets where physical and digital goods are purchased online (phase 2) will require a reduction in the processing fee percentage. But they already have millions of loyal consumers enrolled in their service which they can leverage to expand to merchants selling relatively low-priced products with reasonable margins (think: books, music, etc.)

Phase three takes things one step further as Zong’s strategy intersects with mobile payments at the physical point-of-sale. The idea is that consumers will use the Internet to research their next purchase, as they do today, and will buy the item online using Zong to place the charge on their mobile phone bill. That payment information is then stored in the cloud so that their customers can go to the physical store, pick up the item and show proof of purchase to the merchant.

That should keep traditional payment providers awake all summer long.

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Purchasing Facebook credits with Zong

Step 1: Choose number of credits

Step 1: Using Zong to purchase Facebook credits

Step 2: Enter mobile number

Step 2: Using Zong to purchase Facebook credits

 

 

 

 

 

 

 

 

 

 

 

Step 3: Random 4-digit authorization PIN is sent via Text message

Text message from Zong authorize purchase Facebook credits

Step 4: The PIN is entered into Facebook

Step 4: Using Zong to purchase Facebook credits

Final confirmation screen

Final confirmation when using Zong to purchase Facebook credits

Chase Adds 2 Million Facebook Fans in $5 Million Charity Giveaway

image If a category existed for “corporate wins in social media” in the Guinness Book of World Records, Chase Bank would surely hold the top spot today. In its recently concluded effort, two million users became Facebook Fans of Chase Community Giving in order to direct $5 million in donations to their favorite charities. 

In round one, Chase fans were given 20 votes to parcel out among 500,000 eligible 501(c)(3) charities. First-round voting ended Dec. 12. The 100 charities with the most votes were declared finalists and moved into round two. Round two voting ended Jan. 22, 2010.

The winner was awarded $1 million; five runner-ups received $100,000 each; and 100 finalists received $25,000 each. The winning charity, Invisible Children, received more than 100,000 votes as did second place Isha Foundation. But anyone looking to recreate Chase’s success should think carefully about the official rules. With less than 1200 votes separating the two charities, and with $900,000 at stake, there were accusations of voter fraud in the Chase contest. Future contests will likely give the bank some leeway in declaring a tie and splitting the pot equitably.

Relevance for Netbankers: If you still have social media naysayers in your company, give them the link to Chase’s recap page (screenshot below). That ought to get their attention. 

Contest recap on Chase’s Community Giving Facebook page (link, 31 March 2010)

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Note: For more info on social media strategies for financial institutions, see our subscription site.

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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Blippy: Do We Really Want to Automatically Tweet our Purchase Transactions?

image I love startups. Just when you think you’ve seen everything, along comes someone doing something that no one would have ever thought of five years ago, or in this case one year ago.

image The latest inspiration: Blippy. The service allows you to automatically broadcast your credit or debit card purchases using the Twitter/Facebook model (see screenshot below; note 1).

The first question everyone asks is why? (see comments at TechCrunch) But really, it’s not much different than broadcasting personal details via Twitter or your whereabouts via Foursquare, especially if you limit viewing to friends. The founder, serial entrepreneur, Philip Kaplan explains in the TechCrunch interview, that he has one credit card for “social purchases” broadcast on Blippy and another for purchases he prefers to keep private.

Blippy will contain privacy controls that allow users to share everything or keep it within a closed loop of friends. The company also envisions many other privacy controls to turn the service off and on, allow users to approve transactions before publishing, suppress certain merchants, or merchant categories, and so on.

The use cases shown so far are centered around media purchases, for example using it to automatically tweet (blip?) what song or movie you bought on iTunes or social “check ins” where the service lets people know you just bought coffee at Starbucks. But I can see where it would be helpful for spouses to “broadcast” purchases only to each other. Or for a salesperson to broadcast their purchases to their assistant to build expense reports on the fly. 

The service is in closed alpha (only in use by a handful of friends and family, note 2) as the three-person company gears up for a launch. You can follow Kaplan on Twitter (@pud) for more info.

My take: I like the idea of easily sharing purchases with joint-account holders or a bookkeeper. But many (most?) online banking systems and PFMs already allow this through the alerts system. You may want to boost education efforts on this capability.

imageAs for Tweeting about songs downloaded via iTunes, wouldn’t most users prefer to maintain more control over that by simply using Twitter or Facebook to directly type a short note? But we know from experience, if there’s a way to do something with less effort, it stands a good chance of succeeding.  

I’m not expecting widespread adoption any time soon, but I think there is a market for sharing spending transactions.

Here’s something for innovative FIs to consider: Add a “share this” button next to credit/debit card transaction and let users send the info via email, Twitter or Facebook with a couple keystrokes (see inset from FiLife).

I know it sounds far-fetched, but it might be just the thing to make your card stand out with heavy users of social media.

Blippy homepage showing spending stream (16 Dec. 2009)

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Note:
1. For more info in Twitter, see our Online Banking Report on the technology published in May.
2. Twitter’s Evan Williams is using Blippy as shown in screenshot taken by CNET’s Rafe Needleman in his article earlier this week.

Donors Choose Checkout Includes Amazon Payments along with Facebook and Twitter Integration

image I love how the Internet removes friction from everyday tasks, especially payment-related ones. And one of the great success stories of recent years, beginning with Hurricane Katrina relief in August 2005, is how easy it is to make charitable gifts online.

I’ve used the Red Cross site several times. It gets the job done, but not with the flair and superb user experience of Donors Choose (note 1). 

Thanks to Fred Wilson, blogging at A VC, I contributed to the Social Media Challenge last week and got a first-hand look at Donors Choose. The simple checkout process has three features that I’d not seen before:

  • Amazon Payments as a payment choice (along with PayPal, credit card, or check; first screenshot)
  • Automated Facebook wall post integration (second screenshot)
  • Automated Twitter posting with two options:
    — allow Donors Choose to Tweet a thank-you to you referencing your @twittername
    — provides a template for you to make a Tweet from your own Twitter account

If you want to see a state-of-the-art checkout system in action, and support kids in the classroom, check out Donors Choose.

Or if you are looking to add a charitable-giving feature to your banking site for the holidays, you can easily create your own giving page at Donors Choose and run a widget on your website tracking the campaign’s progress (see inset). You can choose which projects to support so long as they fall within the nonprofit’s mission of “helping students in need.”

Donors Choose cart with Amazon Payments and PayPal integration (13 Oct 2009)

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Facebook wall post integration
This screen popped up after I checked out

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Twitter integration

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Donors Choose shout-out page on Twitter (link)
Note: First Tweet was Sep 29. Have done 342 since then (through 13 Oct 2009).

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Note:
1. My first donation via Amazon Payments failed because I accidentally used a canceled credit card number. And evidently there is a bit of a bug in the feedback loop to the Donors Choose site. I got an error message, but when I clicked “next” to re-enter the payment, the site transferred me out to the thank-you page and I was unable to go back and re-do the transaction. I had to start all over again, and now the site shows that I’ve made two donations instead of one. 

Target Taps Customers via Facebook to Designate Recipients for its Corporate Giving

imageTarget is running a clever Facebook promotion that allows Facebook users to allocate the retailer’s $3 million weekly corporate donation among eight pre-selected charities. I heard about it in an email from the Red Cross encouraging its supporters to go to Facebook and vote more of cash its way (see screenshots below).     

How it works: When Facebook users vote, they are given the opportunity to automatically publicize their activity with their friends (see second Target screenshot). Finally, after a vote, Target shows the running totals for each charity. As of today, nearly 70,000 votes had been tallied.

Analysis: This is a good way to leverage social networking. Not only is Target reinforcing its brand, and its commitment to donate 5% of its income to charity, it’s created a non-intrusive viral campaign with both Facebook users and the charitable organizations motivated to spread the word. Nicely done.

Opportunity: This approach would also work great for a financial institution.

From Target website (link)

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Target’s voting page on Facebook (14 May 2009)

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Voters are given the opportunity to spread the word to their Facebook friends (14 May 2009)

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After each vote, Target displays a running total (14 May 2009)

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E*Trade Casts a Wide Social Net to Support the "Baby" Campaign

image In my pre-Super Bowl post about E*Trade’s “baby” franchise, I wasn’t aware of several other ways the company is using social media to increase awareness:

  • Baby’s Twitter page (screenshot #1 below and note 1;): This is a new effort launched Jan. 22, the same day the 2009 outtakes clip was released into the wild via YouTube and press release. The baby Tweeted a few times on the days leading up to the game, and a few since, but the funniest part was the 26 game-day Tweets that actually incorporated real-time events into the script. There are only 650 followers today, but that’s up 150 since Monday morning  not a bad start for a low-cost marketing tool. 
  • Baby’s Facebook page (screenshot #2 below): Also launched around Jan. 22, the E*Trade baby Facebook page already has 3,825 fans. The commercials are posted along with a photo album. 

The E*Trade homepage has also been used before and after the game to take advantage of interest in the baby ads. The baby dominated E*Trade’s homepage the day after the big game (see screenshot #3 below of the Monday morning homepage). 

Lessons for financial institutions
You don’t have to be a Super Bowl advertiser to use social media to support your advertising campaigns. Banks and credit unions of any size can use these relatively low-cost tactics.

Here are the eight key support elements to consider for your next campaign:

   1. Press release
   2. Blog entries
   3. Facebook page
   4. Twitter stream
   5. YouTube page
   6. Homepage placement
   7. Landing page
   8. Google keyword buys (see screenshot #4 below)

1. E*Trade baby Twitter page (link, 3 Feb. 2009)

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2. E*Trade Facebook page
(link, 3 Feb. 2009)

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3. E*Trade homepage the morning after Super Bowl XVIII
(2 Feb. 2009)

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4. E*Trade is running Google ads on searches for “etrade baby”
(3 Feb. 2009, 6PM Pacific)

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Note:
1. Thanks Jeffry Pilcher for the Twitter tip.

2. See our Online Banking Report: Bank 2.0 for more ideas.

Rate Surfer and MyMoney to Demo at Finovate 2008

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Finovate takes place four weeks from today (Oct. 14), and we’ve already surpassed last year’s attendee total. Luckily, we booked a bigger space, so there will be more bankers and tech execs to network with and everyone in the audience will have a seat at a table to park that laptop, Blackberry, iPhone, or whatever.

But the space isn’t unlimited and if we continue the sign-up pace of the past few weeks we’ll sell out well before Oct. 14. So, don’t wait too long, register here (see note 1).  

When we announced the Finovate lineup, there were three companies that chose to remain secret. Two of those are now being named (note 2):

  • Rate Surfer which participated in the TechCrunch50 DemoPit last week (post here)
  • MyMoney from Fiserv’s Galaxy unit, a Facebook application that allows users to check their bank balance and transactions from within their Facebook account (post here)

Note:
1. Clients with annual subscriptions to our All-Access Online Banking Report are eligible for a conference discount; email info@netbanker.com for your client discount code.

2. The 24th company is in stealth mode and will be revealed on or very near the conference on Oct. 14.

Visa Launches Business Network on Facebook

image After seeing the little blurb buried deep in today’s Wall Street Journal
(p. B-9), I checked out the press release, and then headed to Facebook to see Visa’s new app aimed at small businesses. To gain that all-important viral effect, Visa is giving away $2 million in Facebook advertising credits, $100 to the first 20,000 businesses that join its new The Visa Business Network on Facebook (see note 1).

Visa’s Facebook page advertising the network looks good (see screenshot below). It’s very “corporate,” but I prefer that over lame attempts to look hip. It’s dominated by a large video at the top explaining the program, plus three more along the bottom explaining other aspects. 

Visa Business Network (promotional) page on Facebook (24 June 2008)

Visa Business Network on Facebook page 24 June 2008

Selecting the Join this Network button takes you to a page where you are encouraged to add the Visa Business Network app to your Facebook profile. After adding the app, you must complete a short form to identify your business to the network and upload a picture if desired.

Visa Business Network app signup 24 June 2008

It only takes a few minutes, and your company is visible to anyone searching the Visa Business Network. It doesn’t appear that Visa’s network is searchable through the regular Facebook search. If and when that happens, the network would gain considerably more value.

Here’s how my Visa Business Network page looked after uploading a graphic:

Online Banking Report page on Visa Business Network 24 June 2008

Summary
The application also features a Business Resource section with the usual collection of business tools (from Google), articles and videos plus an Ask the Expert section. 

While the idea of a general business network within a larger network seems a bit superfluous, Facebook isn’t exactly known to be particularly accommodating to business needs. Maybe this will work. Certainly, if Visa attracts the 20,000 businesses it’s earmarked advertising credits for, it will have a head start on others wanting to do the same thing.

However, we wonder how much effort the card giant will devote to the service. It doesn’t seem to align that closely to its core card-processing business. But if its goal is to merely improve brand recognition with small business owners, it could be a valuable effort. Clearly Visa has the deep pockets to fund it for the long term. Who knows, maybe some lucky Business Network member will appear in a Visa Super Bowl ad some day. 

Note:
1. The $100 advertising credit was handled flawlessly. A few minutes after joining the network, I received an email to my main email account explaining how to redeem the credit.

13% Would Use Banking in Facebook

In an unscientific poll of 500 Facebook users (see note 1), we found that 13% of respondents are interested in accessing their bank balance through their Facebook account (red bar below).

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Source: Online Banking Report, 9 April 2008, n = 500

While that’s not exactly a ringing endorsement of the idea, it’s potentially enough early adopters to get the service rolling. Most of the interest emanated from younger segments. For example, 18% of 18-to-24 year-olds said they’d probably use Facebook banking (gray bar below) compared to about 5% of the 25-49 group (green and yellow bars below).

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Source: Online Banking Report, 9 April 2008, n = 500

But it will take education to move “Facebook banking” into the mainstream. The majority of respondents, 70%, said there is “no way” they’d bank within Facebook and another 13% said probably not, resulting in a strong 83% negative rating. Given well-founded concerns surrounding online security, that’s not surprising. 

For more information:

Note:
1. Survey was conducted April 9 through Facebook’s polling mechanism. Total respondents = 500. Respondents are self-selected so the results should not be used to forecast specific demand.