Author: chaunguyen

Visa announced its payment-enabled sunglasses earlier this week at South by Southwest (SXSW), a yearly event held in Austin, Texas that celebrates the convergence of the interactive, film, and music industries through music festivals and conferences.

To pay using the glasses, simply remove the glasses and tap them on a Visa near field communication (NFC) enabled terminal. No phone, cards or watches necessary. It is meant to be casual, quick, and highlights the way payments may be made in the coming months and years.

These sunglasses are not available to the public yet, instead Visa is currently testing the concept to see if there is a demand in the general public.

In my opinion, I don’t think we need every portable item in our life to become a form of payment. Sunglasses, in particular, are an accessory that is very easy to lose, which is a little scary. I would be a little paranoid about misplacing these sunglasses. The hassle of having to cancel the card associated with the glasses in the case they go missing seems troublesome and altogether avoidable. In addition, sunglasses aren’t something you’d use in the dark, so this product isn’t actually that convenient. I think I would worry more about losing this product than feeling like it is making my life easier.

Source: https://www.slashgear.com/visa-sunglasses-prototype-uses-nfc-for-mobile-payments-14478709/

The number of people worldwide using mobile phones are impressive at almost 5 billion people with 40 percent of all mobile device users in the U.S. having made at least one mobile payment in this past year. Despite these strong numbers, the adoption of mobile payments hasn’t come as quickly as expected. A possible solution for it to gain momentum could by through unconventional channels including virtual reality and in-vehicle payment systems.

Virtual Reality

In just two years, it is projected that more than 170 people will own virtual reality products. It will soon be a reality where consumers who want to purchase an item can browse a store, check out items of interest and quickly pay for whatever they need–all in VR. As VR technology grows in popularity, we will see it intertwine with mobile payments. For example, online marketplace, Alibaba has already started working on a payment service that will allow VR shoppers to pay for things just by nodding their heads.

In-vehicle Payment Systems

There has been a slow shift towards the offering of paying in-vehicles. Credit card companies and vehicle manufacturers such as Visa and Honda, are working together to provide in-vehicle mobile payment solutions, making it easier and faster to pay for gas and parking. Both companies are working with fuel pump manufacturer Gilbarco Veeder-Root and parking solutions provider IPS Group to install beacons that will communicate with a Honda via Bluetooth in order to complete payments through a Visa Checkout integration with what’s essentially a “smart” dashboard.

In my opinion, this is an exciting opportunity, but I’m skeptical of consumer adoption. I think Honda and Visa will have to spend a lot of marketing dollars to raise consumers awareness and educate drivers on the benefits as well as how it works. I’m also unsure if fuel pump operators will want to adopt this system. This new system completely cuts them out of the picture — a driver only has to interact with the actual fuel dispenser at the gas station. Another challenge that might hinder this is ensuring that Honda and Visa can set up beacons in all the cities. If the feature is not widely accepted, I don’t think consumers will care for it.

Source: https://www.mobilepaymentstoday.com/articles/unconventional-channels-driving-mobile-payments-adoption/

Bank of America announced that it will integrate Zelle, a peer-to-peer (P2P) payment feature, into its own banking app, allowing users to send payments to one another. With the growth of P2P payments,BoA hopes to attract users to its mobile banking app.

“U.S. mobile P2P volume is expected to reach $336 billion in 2021, which is a 61% compound annual growth rate since 2015 when it was $19 billion.” Banks may be trying to capture a share of this massive payment volume before likely industry leader Venmo can freeze them out.

I think adding a P2P feature is an effective way for banks to better engage their consumers. According to the article, the average Venmo user accesses the service at least twice a week. Banks can potentially be more effective since they can also provide other services in their app, giving consumers more mobile offerings and more reasons to stay engaged.

Banks also have the upper hand in terms of consumers’ trust when it comes to financial services. As studies show, 75% of customers trust their banks more than mobile wallets. With the mobile app, customers will never have to leave the safety of their financial institution to make a payment. In addition, they won’t have to provide their account number to a third party app, which is a very attractive aspect for users concerned with protecting their identity and payments.

Source: http://www.businessinsider.com/bank-of-america-app-gets-zelle-p2p-capabilities-2017-2

Mobile commerce is the wave of the future and is no doubt redefining the retail industry. With a rapid growing trend towards mobile, PayPal has a secret weapon in its arsenal that no payment industry competitor has been able to match: One Touch, which facilitates fast checkouts, enabling users to breeze from site to site without logging into his/her PayPal account or filling out billing information.

One Touch has redefined online checkout with the best conversion rate in the payments industry by making it faster and simpler for customers to pay with a single tap. In addition, PayPal’s One Touch helps combat the common problem many retailers are faced with — conversion and cart abandonment. Once a PayPal account holder logs into their account on any given device, opting into One Touch allows them to stay logged onto PayPal for all future purchases on that same device. This saves the consumer the inconvenience of having to retrieve their login information for each and every purchase.

As a frequent online shopper, One Touch is definitely a feature that would make me more inclined to follow through with a purchase on my mobile device. Typically, I browse for products on my phone, but revert to my desktop if I want to make a purchase because its easier to type in all my information and I will be less likely to make an accident when typing in my info on my desktop vs my phone.

Source: https://www.fool.com/investing/2017/02/06/paypals-one-touch-is-driving-mobile-growth.aspx

About a week ago, PayPal launched its first bot for users of team messaging app, Slack. The bot lets people send peer-to-peer payments for up to $10,000 in a single transaction.

The bot is available as a Slack app through the company’s online directory. It can be used by typing “/PayPal” followed by a command once it’s installed. For example: “/PayPal send $5 to @Michelle.”

As people are turning away from cash and moving towards making payments digitally, PayPal is trying to capitalize on this growing demand for P2P payments. Because Slack already engages 5 million daily active users, PayPal has made a strategic move to launch a bot on its platform and take advantage of their growing user base and the company’s potential growth and expansion. With this, PayPal is ahead of the game and is hoping to establish itself as the payment service of choice for Slack users. I think there is great potential for this bot. Since Slack is usually used at work, I can see this being popular among co-workers. Co-workers can use the bot to split a lunch order for a team outing, coffee morning runs, or splitting a cab fare, and other quick P2P payments. I think this bot is promising since it will allow Slack users to send money without ever having to leave the messing app. This provides Slack users with more of an incentive to use the bot versus other P2P platforms like Venmo.

Source: http://www.businessinsider.com/paypal-adds-p2p-bot-for-slack-2017-2

After completing the Market Map individual assignment for mobile payments, I wanted to look further into how mobile payments are shaping retailers, specifically Starbucks. Starbucks has been notably recognized as a leader in mobile payment thanks to their mobile app that seamlessly integrates their loyalty program, My Starbucks Rewards, with the Mobile Order & Pay feature. Customers have adopted the mobile app rather quickly, and has ironically caused operational challenges to the business. The Mobile Order & Pay feature was designed to reduce long queues, but instead has created congestion at the handoff plane due to high volumes. This is discouraging walk-in customers to leave the store without making a purchase due to congestion and heavy rush. Currently, more than 1 in 4 U.S.-based Starbucks orders comes from a mobile device, one of the highest rates in the country’s retail sector and likely to continue to grow. Because of the large number of mobile-based orders, Starbucks is trying to deal with this demand that is causing operational challenges by introducing new in-store procedures and tools, adding new roles and resources to specifically support mobile order and pay and the testing of new digital enhancements.

Specifically, they are addressing this issue with additional staff and in-store kiosks completely dedicated to the filling of digital orders. It might resemble the Apple store’s layout. They might get rid of the counter, and instead have latte and espresso stations, where customers can simply walk up to the station. Starbucks recently added a text-messaging feature that notifies customers when their orders are ready and last week introduced voice-activated orders through its mobile app and Amazon’s Alexa AI platform.

With mobile payments on the rise, other retailers offering mobile pay-and-go services will have to adapt their retail experience to complement the technological progress.

Sources: http://www.salon.com/2017/02/07/a-digital-bottleneck-mobile-payments-breed-new-challenges-for-to-go-retailers/

Ever since the creation of Bitcoin in 2008, its underlying technology, blockchain, has been shifting how the world does business. Essentially, blockchain facilitates peer-to-peer transactions without any middleman such as a bank . It also keeps the user’s information anonymous, while validating and keeping a permanent public record of all transactions. The benefits of this are that personal information is secure, while all activity is transparent and incorruptible.

As we’ve seen the use of blockchain technology in real estate, insurance, and money transfers, there is a new growing need for blockchain to serve ERP. ERP software integrates all the different functions in an enterprise together by providing a single version of the truth in real time throughout the organization cutting across departmental boundaries. Blockchain technology is also similar in that it is a real time common database that provides a single version of the truth to all participants.

As we’ve learned in class there is sometimes confusion and lack of trust within the company by departments due to perhaps different formats and processes across departments. Blockchain seems like a neutral solution that everybody in the organization can adopt.

This article highlights one company in particular called Finlync that is developing what it claims to be the “world’s first technology to integrate blockchain into ERP systems like SAP.”

Sources:

• http://www.pymnts.com/news/b2b-payments/2017/finlync-blockchain-erp-data-integration-b2b-payments-automation-document-invoice-management-processing-ar-ap-buyer-supplier-banks/
• http://dontapscott.com/2015/06/blockchain-revolution-the-brilliant-technology-changing-money-business-and-the-world/

 

 

Ford Motor Credit has partnered with SF fintech startup AutoFi to launch a new platform on the Ford dealerships website for purchasing and financing cars, accessible from anywhere and on any device. Providing digital financing options is appealing to customers since it allows them to secure a loan online without having to go to the showroom. As of now, the only in-store location is in Ohio, however the platform will soon be rolling out to all national Ford and Lincoln dealerships.

Personally, I think this is a great strategic move on Ford’s part and I believe many others in the automobile industry will follow in their footsteps. They were smart to act on the data they had collected from a survey conducted by Harris Poll that showed 83% of Americans said that they would like to spend as little time as possible at the dealership when shopping for a vehicle. Not surprisingly, the respondents also said they would like to touch and feel a car before purchasing it. Thus, this new platform caters towards both of these survey results since it speeds up and simplifies the buying process using technology, while also offering it in-stores so that customers can still have the opportunity to see the car in person before purchasing it. As customer expectations are evolving, as seen from the survey, Ford’s decision to adopt AutoFi’s technology will be a game changer for both consumers and car dealers.

Source: http://www.altfi.com/article/2602_fintech_car_finance_firm_strikes_deal_with_ford

http://www.marketwatch.com/story/ford-teams-with-startup-for-online-car-shopping-2017-01-23

Fintech has already disrupted the banking industry, and is now treading in new territory by making its entrance into the $14 trillion mortgage lending market. To put things in perspective, the mortgage market is about 14 times larger than Student Loans (about $1 trillion). Despite the massive size of the mortgage market, there hasn’t been much disruption in this space, allowing banks to claim major market share. Wells Fargo, JP Morgan Chase, Bank of America, and US Bank are the key dominant players. However, mortgage lending from commercial banks have significantly dropped from 74% in 2007 to 52% in 2014.

There are currently a handful of fintech players making its way in the mortgage market such as Radius Financial Group, Clara, and Lenda by offering a digital mortgage solution. With the help from a few other home loan mortgage companies, Radius was able to close six loans without paper documents.

The mortgage loan process can be tedious, frustrating, and never-ending. I think there is great potential for automation in this space and believe there is a growing demand for electronic mortgage solutions. According to a recent survey conducted by J.D. Power, “20% of buyers of all ages weren’t happy with their lender, providing further support that there is demand for a new type of mortgage service.” Automation will make it easier and more convenient for home buyers and sellers since it will cut down on time, fees, and face-to-face contact.

Reference: http://www.investopedia.com/articles/personal-finance/011917/how-fintech-can-disrupt-14t-mortgage-market.asp

Singapore’s central bank and financial regulator, Monetary Authority of Singapore (MAS), has a fintech lab that aims to attract fintech companies through the “sandbox.” The “sandbox” allows fintech innovators to conduct small-scale experiments and test them in a low-risk environment before pushing it out on a larger scale.

A big reason why Singapore has created the “sandbox” is because of reports that state a huge loss in jobs due to fintech. According to a 2016 Citigroup report, European and American banks could lose about 2 million jobs in the next ten years due to fintech’s ability to allow customers to do more online. Naturally, Singapore fears this could happen to them as 12.6% of its GDP is reliant on finance.

Singapore aims for a flourishing fintech industry that supports rather than interferes with big banks. In three years, the MAS plans to invest $158 million dollars in the fintech sector. The goal is to combine the strength of both fintech and banks. Fintech firms are more nimble and cost-effective, while banks have built an image of credibility and stability, as well as being better equipped with resources.

I can see the benefits of working in a partnership between banks and fintech innovators to expand the market. It will be interesting to see whether banks and fintech merge or collide in the near future.

Reference: http://www.economist.com/news/finance-and-economics/21714384-city-state-wants-fintech-bolsters-not-disrupts-mainstream