Showing posts with label Amazon. Show all posts
Showing posts with label Amazon. Show all posts

Thursday, October 17, 2013

Tuesday Morning at Money2020 Filled With New Product Announcements

After an evening of fun at the Haze Nightclub, Money2020 kicked it into high gear on Tuesday with a series of industry updates and major product announcements from PayPal, Citi, MasterCard, Square, American Express, Ericsson, Discover and Amazon.


While not being at Money2020 in person, I have compiled the highlights of the day from tweets posted during the day from my fintech friends as I did at the end of Day One.


Note: Each of these tweets are 'live' allowing you to access, re-tweet, favorite, etc. Thanks to everyone for the great digital conversation that makes the event a worldwide gathering.
















































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Wednesday, October 16, 2013

The Rise of PayPal as a Major Payments Player

No place in financial services is transformation and innovation more apparent than in the world of payments, where the convergence of mobile and new data-driven business models have the potential to completely disrupt both the consumer and merchant experience.


The recently concluded Money2020 illustrated that there is no shortage of payments players vying for attention,  but no firm seems to be as aggressive as the new PayPal, which continues to roll out new innovations impacting the payments ecosystem.


While some of the 'innovation' at PayPal may not seem new or disruptive (such as the use of QR codes), the ability to quickly build scale by using the existing payments infrastructure may be the key to PayPal's success. The company hopes to transform its reputation as a means of exchanging cash over the Internet into the default payment system for many everyday transactions.

At stake for PayPal is control of a mobile-payment market that is expected to grow more than three-fold from this year’s $235 billion over the next four years, according to researcher Gartner. PayPal faces a host of competitors, including Google Wallet, Square, Lemon and Stripe (and potentially Amazon and Apple).

Brian Roemmele, researcher and business advisor says of a recent PayPal announcement, "The true innovation that PayPal has achieved is really quite invisible and perhaps even boring to technologists. No iOS devices or android devices deployed at the merchant locations. No new add-ons needed, just the a boring laser bar code scanner that every single major retail store already has."

It is clear that PayPal is moving fast to become a ubiquitous option at retail merchants, introducing products for both the consumer and the retailer. In fact, there have been so many changes recently, it may be difficult to keep up.

To that end, I am providing a brief overview of what has occurred over only the past couple months and what the future may hold.


New PayPal Mobile App


In early September, Paypal introduced an updated version of the PayPal mobile app for both iOS and Android, turning it into much more of a mobile wallet. Maintaining all of the old features, the new app added tools to facilitate shopping and paying for goods online at the physical POS.



 The app features five clearly labeled sections on the home page, with the major sources of innovation residing within the new Shop tab and Bill Me Later integration. Within the Shop screen, you can find nearby merchants that accept PayPal. Once you check in at a merchant (using your PIN), you can download any special offers from the store and can complete the transaction simply by saying "I'm paying with PayPal". Since the merchant will have your PayPal photo on their POS device or phone, funds can be transferred without needing to pull out your phone a second time.

Leveraging the app's location-based capabilities, there is the ability to push coupons based on a consumers specific location and even allow for ordering and paying for a meal within the app.

As for payments, PayPal is providing the option to pay directly from a bank account, from a PayPal balance or to use a credit card on file within the app. It's also expanded the 'Bill Me Later' function, providing credit for large purchases within the app. 


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PayPal Beacon: No Tap, Swipe or Signature


One of the biggest challenges for PayPal over the years is expanding their online merchant capabilities to the physical point of sale, making it easier to use PayPal than swiping a credit card. As any payments player knows, simplifying the payments process is made even more difficult with today's merchant technology and the entrenched consumer payment behaviors.

PayPal hopes the introduction of Beacon may be the answer to this challenge. Beacon uses Bluetooth Low Energy, otherwise known as BLE to enable phones and merchant POS systems to communicate with each other seamlessly, without opening an app, without GPS turned on and even without a clear phone signal. In other words, hands-free payments.

All a merchant needs to do is plug a PayPal Beacon device into a power outlet in their store. Once the Beacon is plugged in, they will be ready to offer a highly personalized shopping experience (including personalized coupons or even offers based on the consumer's location within the store).

Consumers control the stores they will want to check in to, those they want to get prompted to confirm payment for, and stores they will want to enable a complete hands-free experience for. In the latter case, simply walking in a store will trigger a vibration or sound to confirm a successful check in. After checking in, a photo will appear on the screen of the Point-of-Sale system so the shopper can be greeted by name. Paying only requires a verbal confirmation.

In addition, PayPal is giving developers access to the PayPal mobile in-store API to create experiences such as being able to self-checkout on a mobile phone or automatically placing a customer’s usual order as soon as they walk through the door.
David Marcus, president of PayPal says that PayPal has been showing the device to retailers, large and small, and they “love it.” Part of the reason, he says, is that not only does it help them connect and potentially bring in customers, but it also integrates seamlessly with their existing point of sale systems. “I want to create an operating system for the retail environment,” he said.
It’s interesting to note that in iOS 7, Apple is debuting iBeacon, which could provide similar services for apps. But VP of PayPal global product, Hill Ferguson, maintains that the Apple version does not extend to Android, and that Beacon will work for any smartphone.
Piloting of Beacon is slated for Q4 2013, with rollout planned next year.


PayPal Working Capital


To help drive sales volume from the merchant perspective, PayPal introduced PayPal Working Capital in late September as a way to offer a simplified financing alternative to their customers. Initially offered to about 90,000 of it's business partners, potential loans from $1,000 to $20,000 will be underwritten based on PayPal sales history, with no credit check needed.

One unique aspect of the program is that PayPal said merchants could receive funds in a matter of minutes and that repayment would be based on a fixed percentage of sales generated with no minimum payments (if no sales are made on a particular day, no payment is required). In addition, rather than charging interest for the loan, PayPal will charge a fixed fee. The faster the payback period, the smaller the upfront fee. It is felt that this transparent fee structure will be welcome to retailers. 



"In talking to merchants, a lot of them are very capital constrained," says Brian Grech, who is in charge of risk management for small-business products at PayPal. "In a lot of cases, their next best option would be a personal credit card or a very high-priced merchant cash advance and we expect to displace those overwhelmingly with our new loan product."

Since PayPal cannot legally make loans directly to merchants, it is collaborating with the Salt Lake City, Utah-based lender WebBank.

PayPal Acquires Baintree


On the heels of announcing PayPal Working Capital, PayPal finalized the acquisition of Baintree, moving even more aggressively into mobile payments. In a very short time, Braintree leveraged a mobile-first mentality to build impressive mobile payment solutions that handle transactions in 130 currencies in more than 40 countries.

In addition to gaining an impressive list of clients such as Airbnb, OpenTable, Uber, and TaskRabbit, PayPal also acquires the very popular Venmo app, which lets users pay for free using their mobile device.

While Baintree will operate as an independent unit within PayPal, it is believed the superior application programming interfaces of Baintree will help PayPal work better with developers going forward. 

PayPal Payment Code


As part of the global Money2020 event in Las Vegas last week, PayPal continued their string of major announcements by introducing Payment Code, which will use QR codes and a PINs to verify in-store smartphone transactions over merchants' existing POS equipment. While initially seeming 'old school', this introduction leverages existing equipment and employee training while improving the experience for both the consumer and merchant.

Initially, PayPal is partnering with Discover and their 7 million retail locations to introduce this technology. To make an in-store payment, customers would first check in using the PayPal app. Once the app knows the customer’s location, it determines what kind of equipment the store has. 

If the merchant has a barcode scanner, a QR code will pop up on the phone screen. The customer then simply runs that code under the scanner finalizing the transaction. If the merchant only has a PIN pad, the app will supply a randomly generated four digit PIN, which the customer types into the terminal to verify the payment. (Note: This process is virtually the same as being used by Starbucks)

While the Payment Code does make the checkout process smoother, with easy access to all funding sources in one simple place (the customer's phone), the real benefit is that it will allow consumers to automatically redeem any special offers, gift cards, merchant rewards programs or other forms of payment that might be saved in their PayPal wallet in one quick transaction.

As with many of the innovations PayPal has introduced over the past several weeks, Payment Code is expected to roll out in Q1 of next year.

Amazon Challenges PayPal



Not to be left behind, Amazon responded to the recent wave of PayPal introductions and innovations by announcing a new service that will let customers of other online merchants pay for purchases using their Amazon credentials.

Login and Pay with Amazon takes advantage of Amazon's 215 million active customers and helps participating merchants make sales easier by allowing customers to access their account information safely and securely with a single login.

The new offering expands on the existing Amazon Payments program that lets customers pay with Amazon at check-out. The new log-in system ties merchants even further into Amazon's platform, including fraud protection from Amazon at no extra fee. Merchants get more information on customers, while the customers can buy without entering their address and card information on multiple sites over and over again.

Some merchants may be reluctant to work with Amazon because the company is a major retail industry rival, however.

Amazon will collect $2.9 percent plus $0.30 per transaction for transactions of $10 or more, and all fees are assessed on a per-transaction basis - always based on a percentage of the total amount. Login and Pay with Amazon will work on tablet, mobile, and desktop devices, the company said. Gogo, which provides in-flight wifi, already uses Amazon's basic payments service, but is planning to add the new service.

PayPal Penetration Challenges


Despite all of the innovation described above, PayPal is still an emerging mobile payment service provider, without the market size of penetration of the more popular credit card companies.

To alleviate this challenge, PayPal has worked hard to sign partnership agreements with consumer credit (Discover), money transfer (MoneyGram) and POS hardware and software providers (NCR, MICROS, etc.). By leveraging these partnerships, PayPal has expanded merchant coverage from just 18,000 in 2012 to close to 10 million locations expected by 2015.

"In 2013, Discover helped PayPal grow from the 250,000 retailers who accepted PayPal in store earlier this year to more than 2 million by the end of 2013," said Don Kingsborough, vice president of retail services at PayPal.

PayPal + Apple?


On October 11th, 2013, former Apple CEO John Scully mentions in passing during a BBC interview some ideas he suggests for Apple.  John referred to the logic of Apple acquiring larger companies with the huge amounts of cash they hold in reserves. In particular, John mentioned the idea that Apple acquire eBay for the single purpose if integrating PayPal into the iPhone.
"Apple's never been an acquirer of big companies before, and when you look at Passbook, the iPhone5S and fingerprint recognition - What would it mean if Apple went out and bought eBay? And they had PayPal, and integrated that?"
If you buy into the logic that Apple wants to be a facilitator for payments and not a merchant account supplier nor a payment card issuer, this idea may make sense. Combined, Apple and eBay would have over 760 million active payment cards on file, with some overlap.

So, maybe we will see a day when PayPal is part of Apple . . . or Discover.

I've definitely seen crazier ideas become reality over the years.

Additional Resources


 The Future of POS: Point of Sale Evolution and Its Impacts - PayPal White Paper (September 2013)

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Saturday, October 12, 2013

Amazon's Mayday Button Could Revolutionize Banking

It's time for banks and credit unions to consider the potential of providing mobile banking customers single-click live customer support similar to Amazon's Mayday button that is embedded on the latest Kindle Fire HDX tablets.


Similar to a virtual version of Apple's store-based Genius Bar, without needing to wait in line or leave your house, a banking version of Mayday could provide both basic customer support as well as specialized or advisory services that could revolutionize both mobile and online banking.


This concept may seem like a major leap into the future for an industry that has yet to fully embrace 24x7 'push to talk' or text-based customer support for the mobile or online customer or extensive video banking at physical locations, but as technology advances and more customers are relying on mobile, tablet and online banking, there is significant potential. And, with the desire to create powerful emotional connections with customers, live video may replace the telephone for customer support.

The Amazon service is easily accessible with a button on the Kindle HDX device home page. Press the Mayday engagement button and a customer sees a remote Amazon Tech Advisor on their screen within seconds (over the holidays, Amazon beat their goal of 15 second response with a 9 second average wait). While a customer can see the live advisor, the advisor can't see the customer, just their screen. Once credentials are authorized, Tech Advisors can annotate the screen, change settings, download apps and do anything needed to help a customer step-by-step.

"With a single tap, an Amazon expert will appear on your Fire HDX and can co-pilot you through any feature on your screen, walking you through how to do something yourself, or doing it for you - whatever works best. Mayday is available 24x7, 365 days a year, and it's free," stated Amazon CEO and founder, Jeff Bezos. The commercial for the Mayday button is a great illustration.


While some people were initially concerned about privacy, the advisor can't access a customer's camera or access information within the computer that is private. Only audio is transmitted back to the advisor.

For Amazon, the Mayday support teams reside within the normal call center. While these advisors most likely didn't replace any of Amazon's other support channels, there could be additional resources that were needed (Amazon does not reveal details).

Supporting this capability required video-equipped computers and a de-cluttered environment for the advisors to work that appears more professional than a traditional call center cubical. For Amazon, they actually put each agent into well branded 'mini-studios'. Video agents also needed to be 'camera ready' based on wardrobe, visual appearance and even body language.
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Mayday in Banking


None of the hurdles above seem to be insurmountable for the financial services industry. In fact, the latest generation of self-service devices (ATMs, Kiosks, etc.) are video-enabled and institutions such as Bank of America have already launched relatively small scale real-time video communication support services such as Teller Assist.

According to a recent Capco blog post entitled, 'Will Video Replace the Telephone in Banking', banks would need similar capabilities to deliver video support to customers.
      • People. Skilled resources would need to be engaged who can handle a wide range of customer inquiries.
      • Process. Live video support requires banks to redefine aspects of their operating model. As opposed to self-service applications, video support requires the discussion of product options based on insight already available and insight captured during discussions. Security is also important.
      • Technology. Vendors already provide quality video services. The challenge is to successfully integrate these capabilities into existing operating systems.
Here are some ways a direct link to a human being could provide differentiation for banks or credit unions:
      1. Basic account inquiry calls. While this may seem resource prohibitive at first, how much more difficult would it be for a bank to provide video support as opposed to a call center connection? Because more context information is available with this solution, the call time could be shortened and savings could be realized. Long-distance costs would also be reduced since video interactions would be IP-based.
      2. Contextual specialists. If a person is having difficulty conducting mobile or online banking, the customer support area can direct the interaction to the best CSR who can 'take over' the customer's screen (with customer approval) and provide technical channel support to help the customer conduct their banking. This is the foundation of Amazon's Mayday service and would increase deeper digital engagement beyond balance inquiries.
      3. Insight collection. One of the major reasons Amazon introduced Mayday was so that they could collect insight directly from customers that could improve service and products in the future. While this can be done via traditional channels at a bank or credit union, a live video agent could gather greater insight into financial needs, services held elsewhere, etc. They can also verify information already on file like email addresses and cell phone numbers.
      4. Cross-selling. At a time when organic sales by financial institutions are needed more than ever, precise real-time offer management could be leveraged by skilled personnel utilizing enhanced contextual insight known about the customer. With the potential for enhanced insight gathering as discussed above, better recommendations could be made.
      5. Advisory services. It would not be too difficult to expand the Mayday type service to include advisory services from other areas of the bank. With a simple live transfer, the customer could be connected with an investment advisor, small business specialist, commercial banking or loan officer. With video engagement, the ability to conduct much more involved interactions is possible.
      6. Customer acquisition. The abandonment rate from a digital shopper in banking is extremely high. A live video agent could provide an abandonment intercept by allowing a shopper to talk to live CSR as part of their shopping process. This is especially helpful for consumers who do not want to visit a branch.
      7. Customer retention. With the ability to access a live agent immediately, and with greater contextual insight available to the agent, issue resolution will be faster and will provide a superior customer experience.

Testing Proof of Concept


I imagine most banks and credit unions aren't ready to jump into the 24x7x365 single click live video customer support ocean just yet. So how could an organization test this concept in more shallow waters?
      • Determine the nature of most of your customer support questions and determine which ones could be better answered by a live agent.
      • Instead of placing access to a live video agent on the home page of your mobile or online banking application, place it where abandonment occurs the most or in areas where you want to increase engagement. Are customers confused as to how to use mobile deposit or online bill payment? Is your current rewards program not meeting expectations? Place the video agent access button on the pages for these services first.
      • Test live video support during regular business hours. While not optimal, it provides parameters for testing the scalability of the service.
      • Have a live video agent available only to brand new customers of your mobile or online banking services. In this case, it may be best to provide the link to a live agent via email as part of your new customer onboarding process. This may also provide the ability to cross-sell additional services early in the relationship.
While your organization is testing the scalability of a live video agent, it may be good to also test customer support via text and push-to-talk. The upside potential may not be as great, but the customer experience is definitely better than current customer support options at most financial institutions.

The banking industry has just received a Mayday customer service wake-up call, requiring customer support centers to rethink their strategies and raising the customer experience bar. What financial institution(s) will answer this challenge?

Case Study: ASB Video Customer Support


ASB Bank in New Zealand is one of the only banks in the world that I have found that as developed applications for live video customer support. Discussed in a recent article on The Financial Brand, ASB customers can connect directly with banking specialists face-to-face at a time and place convenient to the customer. 

While not quick a 24x7x365 immediate video link, ASB allows a customer to set up an appointment with a banking specialist for more involved interactions such as insurance, home loans, business banking, etc. With this application, customer can securely share documents, providing all of the convenience of a branch visit without needing to leave home.

ASB has been at the forefront of video technology banking integration, offering in-branch video banking for some time and even introducing a Facebook Virtual Branch, also written about by The Financial Brand.

Amazon Mayday Feature Video


Below is a great video highlighting the features of the Mayday solution from Amazon.


Additional Resources


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