The Ultimate Mobile Payment System?
Danny is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
The topic of the week seems to be mobile payment systems.
Starbucks (NASDAQ: SBUX) recently announced they would partner with Square to bring mobile payments to their stores. They were so impressed with Square, they even invested $25 million in the company and Howard Schultz, Starbucks founder and CEO now has a seat on Square’s board.
Starbucks has perhaps the largest mobile payment app in North America, processing as many as a million mobile phone transactions per week. Starbucks released their first mobile payment app about two years ago and has seen phenomenal success. The app allows Starbucks customers to check their balance, reload their card with any major credit card and view their transactions. The app features a consumer’s Starbucks card bar code that can be scanned at the point-of-sale to make a purchase.
Not to be outdone, several major retailers, the largest being Wal-Mart (NYSE: WMT) have announced an initiative to develop their own mobile payment network, including mobile apps and digital wallet. Other retailers include Best Buy and Target, as well as Shell and Sunoco gas stations, among others. This group of retailers processes nearly $1 trillion in transactions per year, so this alliance gives them scale and clout.
Meanwhile, eBay (NASDAQ: EBAY) payment unit PayPal, which sports 50 million active users in the US is making moves of their own. PayPal announced that they are expanding their brick-and-mortar payment services in a partnership with Discover Financial Services. PayPal users will be able to make purchases using their cell-phone number (and a security pin code), which will access their cloud-based, digital wallet.
Google (NASDAQ: GOOG) Wallet was one of the first mobile payment services commercially available, but it has failed to catch on with consumers. In an effort to revitalize the system, Google’s upgrades allow consumers to load any existing credit or debit card numbers into the app. These numbers will be linked to a separate MasterCard-branded virtual account and the payment would ultimately be charged to their underlying debit or credit card.
ISIS, a mobile payment system developed by an agreement with the Electronic Transactions Association and wireless carriers AT&T, T-Mobile, and Verizon will use Near Field Communications (NFC) technology, a set of standards for smart phones and similar devices to establish radio communication by bringing them into close proximity of each other.
One name notably absent from the list is Apple (NASDAQ: AAPL). However, recent reports place the number of iTunes accounts with associated credit cards at 400 million. Apple merely needs an app for that. Fear not Apple fans. Rumors suggest that iWallet may be a component of the newest iPhone. Apple’s acquisition of Authentec in July may set the stage for securing such an app. Apple has already been granted patents for processing shopping related transactions with a handheld electronic device. Given Apple’s history of entering an industry or field and then dominating it, I would not yet count Apple out.
In this nascent field, there are as of yet no clear winners. We do not know what the future holds or who will be the top dog. Only time will tell. This brings me to the technology which may be a future iteration of mobile payments.
The August 2011 issue of Science magazine reported on the Epidermal Electronic System or EES – an electronic circuit mounted to your skin. These electronics are designed to flex and move the way your skin moves. The researchers illustrated applications related to healthcare (neonatal care, sleep apnea), fitness (heart rate monitoring), and physical rehabilitation (electrical stimulation of musculature). They have demonstrated that the device could be used to control a computer program when affixed to the throat by speaking commands.
But what, you may ask, does this have to do with mobile payments? I’m glad you asked. Is it a stretch to imagine this same EES technology, electronic circuits, embedded in the skin of your forearm, waived over a sensor that communicates with your chip and records your payment to a unique personal account number? Each one of us would be our own ultimate mobile payment system.
Of course, the same radio transmitter that would communicate with the payment sensor could also be used to track your every move. Big Brother is watching you!
Are you frightened yet?
Danny Vena pays with credit cards and has no epidermal electronics. He owns shares of Apple, Google, and Starbucks. The Motley Fool owns shares of Apple, Google, and Starbucks. Motley Fool newsletter services recommend Apple, eBay, Google, and Starbucks. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.
