Monday, August 30, 2010

Mobile POS for Micro-merchants

I have been intrigued by the trend to accept mag stripe cards while on the go.  Mobile POS terminals have been used by large organizations for a while now (e.g., rental car drop-off).  However, acquirers did not find it cost-effective to offer similar services to micro-merchants (baby-sitter, handyman...) [US Market size/TAM of 26M].  The total transaction volume handled by these micro-merchants did not justify addressing this unmet need.  Payment received via cards by micro-merchants monthly can vary widely, starting from as little as nothing to thousands of dollars.  While most micro-merchants would like to keep their fixed costs to a minimum, those that wanted to have the facility to accept cards had very few service providers selling them this service [at a premium].

Note: This post evaluates the opportunities in the US market only.

Sunday, August 8, 2010

Who cares about US mobile payments

The latest mobile payment announcement (Mercury NewCo) is note worthy.  AT&T and Verizon among them have over 170M subscribers, and would deploy 60M handsets annually (assuming an average of 3-year plans).  Assuming half of the handsets on offer support mobile payments, and a third of those subscribers activate their mobile payment service, we can expect about 10M new mobile payment cardholders each year.

It may not come as a surprise that nearly half a dozen banks offer MasterCard PayPass cards, and 10 issuers offer Visa PayWave cards. These banks have already deployed over 60+M contactless cards over the past 5 years.  There is a 1 in 3 chance that US readers of this blog have a contactless card in their wallet.

You might wonder why I jumped from mobile payments to contactless payments.  Elsewhere in the world, these two payments are synonymous.  I would tap my phone to pay for products/services.  Consequently, I am assuming that this latest announcement is going to be along similar lines.