New Ventures in Financial Services

Focus on Payments and Mobile

Mobile Payment: “Picture This”

leave a comment »

23 February 2010 (updated 4 March)

Related Posts

For those that read my blog… I’ve been rather tough on mobile payment start ups run by execs that have no payment background (ex Obopay). Rather then continue to put vendors through the ringer (a penchant from my Gartner days), thought I would talk about something positive. Although I do disagree with most of SquareUp’s approach, I do agree that there is a market need for cash replacement and ease of use in a “Craigslist purchase”.  Banks and the cards networks are actively working to increase use of cards in this space, with the idea that everyone agrees with: enabling cell phones to be a cash register. Although banks and card networks love the idea of expanding card use, merchants have other options that are available today which present both substantially lower costs AND provide for improved fraud management.

USAA has such an application available today: Deposit@mobile and it is just fantastic.

In the background, USAA has integrated into the shared fraud database used by both Telechek and most of the banks (at the teller line). This provides the merchant with ability to see if check is valid, if drawn on a “good account” and assess fraud (among other things). This is what really impresses me… this is not JUST a slick application that was build by some non-bank. This application has solid risk management.  My only recommendation for USAA is to change the restaurant use case to a yard sale or Craigslist purchase. Other potential uses:

  • Any customer that receives any type of check in the mail… no more trips to the bank
  • Landlords
  • Small Merchants doing BIG sales (since it takes 90 seconds)
  • Yard sales/Flee markets/Craigslist purchase
  • People in remote locations (Farms, military bases, …)

Merchant benefits are substantial:

  • No transaction costs (savings of 150-350bps)
  • Simplified sign up
  • Same day availability of funds
  • Fits existing consumer behavior pattern (checks)
  • Instant verification, risk and fraud management
  • Leverages bank imaging systems and processes (regulatory and consumer receipt)
  • Notification/receipt to consumers

Other Vendors such as EasCorp’s Depozip provide similar functionality. Would love to hear from readers… As a buyer, which would you rather do? Let someone swipe your card or give them a check?

As a seller? Take a card (knowing that you bear fraud risk for 60 days) and bear costs of 150-350bps? Or take a check with instant availability of funds and a much more limited risk (no reg Z)?

Advertisements

Written by tomnoyes

February 23, 2010 at 4:31 pm

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: