Alternative marketing thinking


Archive for the category “E Payments”

Making Money With Mobile

Interesting little story in AdAge digital that links into a Yankee Group research. Banks, the study says, should look at generating from people taking their accounts onto their mobile. Generally, banks have largely viewed the channel as a way to generate savings by diverting customer service away from call centers or interactive voice response. But at some point, says Yankee Group, they have to look beyond saving overheads and use mobile as a revenue generator. Using an embedded payment chip on the phone, a mobile phone should be able to do everything a credit card does, faster and without a hassle, hence adding to convenience and more transactions. Read here in AdAge.


Cash, Card Or Cell Phone, Maybe…

An article that should have featured here sometime ago, but it’s here now, looks at the emergence of cell phone as a payment mechanism, albeit differently. This is not the like many of the MPay systems we are reading about, but in Japan, NTT DoCoMo have found a way to embed a small chip in the phone that works as a contactless card. Millions of people are using the system to buy everything from vending-machine sodas to train tickets. To pay, a user passes a chip-enabled handset over a compatible reader. Credit is then deducted from a stored-value account provided by NTT DoCoMo, Japan’s dominant cell-phone carrier. Getting the idea working in the US however is facing a hurdle, not so much from consumers, as much as from not having the infrastructure in place to use such a facility. But that is changing slowly, it seems. While contactless cards have faltered in the United States, mobile-phone banking has taken off. At the end of 2007, 1 million people were using mobile banking. That number is now more than 5 million, and it’s expected to reach 42 million by 2012, according to TowerGroup. Bank of America’s (BofA) program. Watch a flash demo here alone totaled more than 1 million customers in June, about a year after it launched. The browser-based application allows them to check balances, pay bills, view transactions, find branches and ATMs, and transfer funds from their mobile phones. One of the other reasons why the uptake of such and idea in US and many other countries will take a lot more time is the lack of a dominant mobile phone company like NTT DoCoMo in Japan. One other option that is emerging is the association of credit card companies like Visa and mobile service providers. Maybe 2009 is not the best year for an idea like this to really take off, but an interesting look at the many dynamics that come into play when new ideas need mass adoption. More from CFO magazine. A counterpoint to this story is this one in MobileCrunch that states that users in the US don’t trust mobile banking security.

Get Paid In Card

For the 10 million or so unbanked in the US, there’s a new way to get paid. Instead of converting a paycheck into cash, prepaid cards let users pour it into a piece of branded plastic. One of the new players in the space is Prepaid Visa RushCard, the product is a partnership between Unifund (a company best known for buying up and collecting on bad debts) and Russell Simmons, a founder of Def Jam records and the Phat Farm apparel brand. Simmons devised the card because he “thinks everyone should be financially empowered. Ram Palaniappan, general manager of RushCard thinks that the cards are meant to offer the “dignity” of inclusion to consumers otherwise left at the margins of American money culture. While RushCard is not new, it’s been around since 2003, looks like a product that’s sure to do well in these downtimes. More in NY Times.

New Online Bank From Goldman Sachs?

May not be the most anticipated news in the world just now, but Goldman Sachs, according to Wall Street Journal, is mulling an online-only bank. Why you may ask. According to this brief in Finextra, the new unit will seek deposits that can be used to fund future business initiatives. The retail banking market is unfamiliar territory for Goldman, which recently converted to a bank holding company and won a New York State banking charter. As well as opening an Internet bank, Goldman executives are also mulling plans to grow its deposit base by tapping its wealth management operations and large corporate clients. From here.

Banking Unbound

Umpqua is one of our favourite examples of a bank unboxed. And going by this story in New York Times, there’s more we can learn from the little bank in Portland.

Umpqua, according to the bank is not a bank, but a community hub. The company trains its employees through a program offered by the Ritz-Carlton hotel chain, with the goal of providing service that’s better than what you might expect from a bank. And it gives its managers the autonomy to, for example, stay open during a snowstorm if the manager thinks the customers will want that. But the community-hub notion also plays a role in the curious-sounding decision to start selling CD’s (the kind with music on them) through a program called Discover Local Music.

Originally, Hayward says, Umpqua simply planned to offer free music CD’s to people who opened new accounts; it was part of an effort to woo younger customers. The bank worked with a Portland music marketing firm called Rumblefish, which put together what has become a 214-song library of tracks by local, relatively undiscovered talent in the markets where Umpqa operates.

Mobile Payments For Visa

Visa has unveiled several partnerships to move payment processing from the PC to the mobile phone. Visa was quoted as saying that a partnership with Nokia would allow consumers to make payments with next year’s Nokia 6212 Classic and other next-generation Nokia phones. Visa will also develop an application with Google’s Android platform that will allow mobile payments, as well as deliver financial information to Android-based phone owners who also hold Chase Visa cards. Visa also said that it would launch a trial with U.S. Bank and up to 6,000 cardholders to allow secure funds transfers to other Visa cardholders via mobile phones and PDAs. To Visa, this partnership with Nokia is an evolution of its existing payWave program, where contactless credit cards can be used in participating retailers. By placing the smartcard inside the phone, a user’s physical wallet can be replicated. Each phone will be able to store several accounts, and the application can be password protected with a PIN or remotely disabled if the phone is lost or stolen, she said. Finally, the credit merchant said that it was expanding its ReadyLink pre-paid service. Read more here.

Easier Payment Route Of The Poor

With oil prices hitting yet another high mark in August, the Tories have devised a way that they think will help UK households reduce their energy bill by £100 pounds a year. They are targeting more than four million families who have accounts with the Post Office and therefore cannot benefit from lower energy and water tariffs offered to customers paying their bills by direct debit. The Tories say they will reform post office accounts so that for the first time they can be used to pay utility bills using the equivalent of a direct debit. Shadow Chancellor George Osborne said: “It is deeply unfair that many of the poorest households end up paying more for their energy and water bills because they don’t have bank accounts and can’t pay by direct debit”. For every one of their post office customers who agrees to switch over to paying by direct debit, the energy companies will pay the Post Office a fee of between £5 and £10 for administering the service. Not paying bills by direct debit adds a substantial penalty onto household bills because of the higher collection costs faced by energy companies dealing with customers without bank accounts. It is estimated that direct debit customers save up to £80 a year over standard customers, such as those with post office accounts, according to Energywatch. As well as helping to fund the plan, the Tories reckon the fees will generate enough money that the Post Office could have a surplus of about £20 million a year. The funds “could help keep some Post Offices from going to the wall as a result of Labour cuts”, the Tories said.

Mobile Banking Is The Possible Future Of Microfinance

In an interesting chat with Vikram Akula, the founder and CEO of SKS Microfinance, India’s fastest growing microfinance institution, Wharton reports on the emerging trends in microfinance. Akula talks about how once the RBI recognises the full potential of mobile banking, regulations will be eased so that time and money are not wasted in traditional brick and mortar infrastructure. Akula also talks about the constraints that come up, the dispute about high interest rates charged from the poor and how the future is looking for SKS.

Technology Change, Don’t Forget Customers

A recent survey in the US has found that lack of customer awareness is the top challenge impeding the usage and adoption of contactless payment systems. According to technology research firm Aberdeen, 63% of Best-in-Class companies that have already adopted contactless payments at retail locations are responding to the challenge of customer awareness by defining a set of return-on-investment (ROI) objectives and goals surrounding contactless implementation. Aberdeen’s research shows that forty-one percent (41%) of the companies have implemented a contactless solution, and 41% are considering implementation. Of the Best-in-Class that have contactless technology, 91% have improved their total number of transactions, and 100% have 80% or more of their customers extremely satisfied. Read more from Bloomberg.

Stopping Fraud By Getting Retailers From Storing Card Data

In an effort to stop credit card fraud, a new campaign has been launched by the US National Retail Federation to get credit card companies to permit retailers to not store credit card numbers. The problem is that many retailers use customer credit card numbers to identify purchases with specific consumers as a convenient link into CRM (customer relationship management) systems. This, especially useful for customers who weren’t using the traditional retailer-issued loyalty card. The proposal could sharply minimize how long the sensitive credit card data is in the retailer’s system, but it’s not likely to eliminate it. More from eWeek.

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