Mobile Wallet Providers Woo Retailers at Annual Convention

image Last week I was just at ground zero of the mobile wallet battle, the National Retail Federation annual convention in NYC. It was a great opportunity to see what the folks from MCX, ISIS, PayPal and Google were telling the audience of 25,000+ retailers.

No one has won the war, but a few winners emerged at the skirmishes I witnessed:

  • Best Tradeshow Branding: ISIS absolutely owned the show in terms of branded impressions. They had their name on the bags (inset), on the registration desk, ISIS brand on NRF convention bagat two lounges and at their purple booth. Congrats to its Seattle-based marketing/PR team who made quite a splash with that six-figure buy. 
  • Best Product Launch: Google was the only one of the four which launched a new product, its digital coupon/POS initiative, Zavers. The new service isn’t solely a mobile wallet, and the Google Wallet is a key piece of enabling technology. Although its booth was buried in the back, Google had a lot of traffic when I stopped by on day two.
  • Best Partnering: PayPal was the clear winner, announcing a huge partnership with NCR. (NCR, which owned the front of the show floor, seemed to have a huge buzz going at all times, and I don’t think it was a coincidence that the color scheme of the whole show seemed to revolve around the NCR booth). See the post at our Finovate blog for a summary of the deal making.
  • Retailer BFF award: The MCX panel featured execs from Walmart, Gap Inc., Lowe’s, Dunkin Donuts, and WaWa doing some serious bonding for an hour. It made me want to become a retailer, just so I could join MCX. It was impressive.
  • AWOL award: The bank networks, Visa and MasterCard, had virtually no presence, neither exhibiting nor speaking. Square was not represented either, unless you count the keynote by Howard Schultz of Starbucks, which owns a small chunk of the startup.  

Bottom line: Things are still wide open and it’s impossible to see the winners yet to emerge. Silicon Valley remains enthralled with Square (which is partly owned by Visa), valuing it at around USD3 billion. NFC technology is hotly debated, and so far ignored by Apple, PayPal and MCX. There are 280 mobile payment startups hoping to become relevant. And all eyes are on PayPal and Google to further their partnerships with Discover.  

American Express Now Serves Walmart with Bluebird Prepaid Card

image Wow, the national press jumped all over the American Express and Walmart partnership to sell/service the Amex-branded Bluebird prepaid card nationwide (882 articles linked from Google news).

Analysts waxed eloquent about how Walmart is building out its “banking” services and how much cheaper the prepaid card is compared to a checking account.

But in fact, there will be little impact on Walmart shoppers, who can already buy a similar Walmart-branded prepaid Visa card in its stores. And that Green Dot-powered Moneycard will continue to be available, though it sounds like Bluebird could get more prominence. But that will depend on which company is paying the highest slotting fees/revenue share. 

But what almost all the press coverage overlooks is that Bluebird is only good at locations that accept American Express (4.5 mil in US), whereas the Green Dot card is good anywhere Visa is accepted (8 mil in US). While most major retailers take both (note 1), that’s still a huge difference in value for many Walmart customers.

Look at the current Walmart financial services menu (pre-Bluebird). It already offers every money-handling service under the sun, including a general purpose reloadable prepaid card with no fees for heavy users (see screenshot below).

Walmart MoneyCenter homepage (9 Oct 2012)


Pricing for both the Amex Bluebird (inset) and Visa MoneyCard are low (see below). The main difference is that BlueBird eliminated monthly fees, while MoneyCard charges $3 per month for anyone who loads less than $1000.

Bottom line: Amex got amazing press out of the deal that should help establish it as a leader in prepaid. But it’s a real unknown how many Walmart shoppers want to carry around an Amex card with less merchant acceptance.

I think it may even cause quite a bit of confusion in-store if the BlueBird card is pushed ahead of the Green Dot version.

And while American Express seems to have made important in-roads, it’s not possible to assess the ROI since we do not know how much it is paying Walmart for the distribution deal.


Current MoneyCard fees (9 Oct 2012)
Note: Monthly fee is waived for those loading at least $1000 per month to the card



1. Costco takes only American Express, so score one for Bluebird.
2. Customers involved in the Bluebird pilot (sold this year at 80 western U.S. Walmarts) must close their old account prior to 8 Dec 2012 and open a new one. The company is offering a $20 bonus to cover the hassle (link).
3. Amex acquired the website which currently redirects to A greeting card company operates, which currently ranks high on Google, but will get crushed by once the product launches nationwide.

Feature Friday: Paying Online with Cash

imageI love headline alliteration and it’s good to have a shtick, so I will periodically post a “Feature Friday” here. It turns out I started last Friday with Capital One’s new mobile rewards feature, the ability to trade rewards points to pay for PAST travel (and they did it without resorting to time travel).

PayNearMe mobile option This week, old-school cash was in the news:

  • Finovate fan favorite PayNearMe launched a mobile version of its cash-based payment service that allows users to buy online then take the receipt to 7-11 to pay in cash (or card). Until now, the system relied on a printed receipt to hand over to the cashier. And printing is so 2009. The new mobile version (inset), does away with the printing, allowing users to show the cashier a barcode rendered on a mobile phone. From then on, the process is the same.
  • WalMart just launched a “pay with cash option” that works with its site (screenshots below). The company could extend the service to purchases at other ecommerce sites if it wants to drive more traffic to stores.

Relevance for Netbankers: While we don’t spend much time here discussing cash, it’s still important across most demographics. And banks have a huge stake in the game with their ATM bases and other cash-handling infrastructure.

Banks could do the same thing as PayNearMe, using their branch and ATM networks to take cash over the counter as payment. And many parents may prefer sending junior to the bank instead of the convenience store.

But I also wonder if we’ll see the reverse? Instead of handing cash over to the 7-11 clerk, parents can transmit a bar code to their kid’s mobile to allow them to walk out of the store with a crisp $20 for lunch and a bus ride home. And it would make sense to extend that capability to mobile-enabled ATMs and even branches.

Anyway, that’s all for this week, have a great one!


Walmart homepage (27 April 2012)

Walmart homepage promotes pay with cash option

Homepage popup lays out how it works popup lays out how it works

Walmart checkout

Choose “cash” icon under “enter a new payment method”

Walmart online cart with "cash" payment option

Wal-Mart Sells Paper-Check Fraud Protection for Just $1.95 per Box

imageNaturally, we use online payments as much as possible both at home and in our business. But even so, we still go through a box or two of old-school paper checks every year.

Running low on business checks, I today logged in to my bank to order a box. Unfortunately, it does not support online reordering of business checks, only personal ones. I was referred to a toll-free number. But rather than go through an unknown phone ordering process, I went back to (note 1), a service from Wal-Mart that I had tested many years ago.

imageThe reordering process was drop-dead simple: Just click Quick Reorder on the homepage, type the bank’s routing number, account number, and beginning check number, then make a few selections from the menus, and press reorder. It takes all of about 60 to 90 seconds. You don’t even have to input payment info, because the total is simply deducted from your checking account.

But the reason for this post is to highlight the interesting cross-sale made during the reordering process. For $1.95 per box, Wal-Mart offers a check-fraud protection service called EZ Shield from a company of the same name, a recent spin-off from printed-check marketer, Custom Direct (CDI). I was pitched the product through a yellow-highlighted box in the middle of the order-confirmation screen (see first screenshot below).

I wasn’t sure what it was, so I clicked on More Details to learn that EZ Shield reimburses users for fraudulent use of the checks in the box (see second screenshot). The service provides coverage of up to $25,000 total if one or more of the 200 checks is altered, stolen from the payee and deposited, or used with a forged signature. The EZ Shield logo is printed on the checks to remind users that they are protected.

Bottom line: While paper-check fraud is not a major concern to me, I still value the small improvement in peace of mind I get for just $1.95. And for Wal-Mart, the $1.95 was a 28% revenue lift to a $6.96 box of checks. More importantly, the value-add makes it more likely I’ll be a repeat customer even when my bank eventually enables online check reordering. shopping card with EZ Shield cross sales (9 Sep 2010)


Popup explanation of EZ Shield (link)


1. According to Compete, the check-ordering site gets about 150,000 unique visitors per month and traffic has been relatively flat the past year.

Wal-Mart Bank and Financial Protests Getting Serious

We note with some bemusement that Wal-Mart Stores Inc.’s application for a Utah industrial loan corporation charter is attracting predictable suspects, both for and against.

WalMart’s plans have, of course, spread panic in the ranks of bankers large and small, which panic has reached sufficient pitch to prompt the FDIC to schedule hearings on the matter. Indeed, 40 members of Congress have signed a letter in opposition to WalMart’s application.

Continue reading “Wal-Mart Bank and Financial Protests Getting Serious”

News from the Online Fraud Cyberwar

The same week that Pay By Touch settled outstanding government claims against CardSystems, news of a new computer breach that could be at least as damaging emerged from California, while keylogging made the front page of the New York Times.

Continue reading “News from the Online Fraud Cyberwar”

Motorola Introduces Real Mobile Payments to US Market

Two weeks ago, Motorola Inc. introduced the same mobile payments platform already being used in Japan and India, opening the door for U.S. banks on a retail payments future that could spell prosperity or doom, depending on the choices they make.

Those loaded alternatives have little to do with the immediate future for mobile payments in this country. Buying cheeseburgers by waving a cell phone will begin as a gee-whiz novelty in this country, packaged in ways that will preserve the bank brand, and allay the current boardroom anxiety that banks are fated to become mere payments utilities.

The real danger to banks is the next generation of m-payments, when the payments chip is miniaturized to fit into a ring or necklace; at that point, opportunities to remind customers of which bank’s card they’re using will disappear, along with the visible screen, taking with them much of the bank’s relationship with its customers. But this generation is here now, says Dan Schatt, a Celent Communications analyst, and likely to shake things up.

Continue reading “Motorola Introduces Real Mobile Payments to US Market”

Take a Deep Breath About PayPal and Wal-Mart Banks

This week eBay reported that PayPal’s volumes were above $8 billion for the first time, and the Federal Deposit Insurance Corp. (FDIC) agreed to hold hearings this spring on whether to issue FDIC insurance to Wal-Mart Stores Inc. as part of the retail giant’s application to get a Utah industrial loan corporation.

Both companies are being watched almost microscopically by banks and other payment providers who are afraid that these companies are going to somehow walk away with their payments franchise. Our advice: Relax.

Sure, PayPal is doing well: Net revenues this past quarter grew 48 percent over the same period last year—they were $298 million—and gross volume was up 45 percent by the same measurements. But unnoticed amongst all the heavy breathing was that PayPal user accounts grew 51 percent in the same period. In other words, the growth in volumes and revenues was proportional to the growth of eBay’s core business, not some indication of a sinister plot for world domination.

The hysteria surrounding Wal-Mart’s moves is even worse. The suspicion in the payments industry, of course, is that once Wal-Mart has the license and the insurance, it’ll begin pushing into community banking, driving all those small institutions into the famous Wal-Mart meat grinder and emerging a coast-to-coast financial services colossus. And considering Wal-Mart’s history, it’s easy to succumb to those anxieties.

But we believe Wal-Mart when it says it only wants the license so it can be its own payment card acquirer. For one thing, the move makes sense for it: According to our calculations, it’ll save Wal-Mart at least $650 million a year, based on its 2004 revenues of $172 billion (see Electronic Payments Week, July 26, 2005). And for another, Wal-Mart’s application to the FDIC says on page one that this is their reason for wanting the bank, and we are skeptical that Wal-Mart executives would willingly commit perjury in such a closely-watched event; there’s absolutely no evidence that these guys are stupid.

There may be some logic to our view, but our belief, touching though it may be, hasn’t prevented over 1,500 comment letters to have been sent to the FDIC on the matter, nor has it discouraged the House Committee on Financial Services from scheduling hearings about Wal-Mart’s plans. And the FDIC has already agreed to delay any decision on the insurance application until the issue has been fully aired.

Those hearings will make interesting viewing on C-SPAN, but in our view, banks and payments processors would be better served in the case of both companies by studying what they’re doing, and drawing useful lessons from them. We can understand why the success of PayPal, and the motions of Wal-Mart, would arouse anxieties within the industry: It’s being swept by transformative change, and both companies represent what Harvard professor Clay Christensen calls disruptive technologies.

But aside from finding any irony in the spectacle of capitalists trying to stifle competition, there’s the deeper concern that the industry may be losing faith in itself. Banks began as counting houses, and unless they do something unreasonably boneheaded, they are unlikely to be driven out of their inner redoubt as long as they meet that competition head on.

Our recommendation: Remember what U.S. Grant said at the Battle of the Wilderness. Robert E. Lee had whipped the Union twice before on the same ground, and Grant’s staff was beside itself wondering how Lee would whip them again. “Stop worrying about what he’s going to do to you, and start thinking about what you’re going to do to him,” said Grant. That campaign ended with Lee's surrender at Appomattox.