Smart Phones, Dumb Companies

I first heard about mobile phone payment systems in 1999 and incorporated this “technology of the future” into a business plan for a start up I was consulting for. That was 12 years ago and while I can do some mind boggling things with my smart phone I still can’t buy a mind scrambling double scotch with it (on second thought, maybe this is a good thing).

Why? It seems completely natural that Google or Microsoft should have jumped on this technology years ago and pushed hard for general adoption.

Just in case they haven’t realized it I’ll build the business case for these titans. Google, Microsoft, listen up because this is going to be far more valuable than some of your other ideas. Ahem, don’t make me mention the words Zune and Google Wave, OK?

You should do this because:

1. You’re both now in the mobile phone business. Well, Google certainly is, Microsoft, not so much.
2. You’re both in the search business. Well, Google certainly is, Microsoft, not so much.
3. Your companies know what I search for, what’s in my Gmail or Hotmail account and what sites I visit. You know what I buy online but you don’t know what I buy in real brick and mortar stores. With mobile payments you’ll have that data and can target me more precisely than a Delta force sniper half a click out in a ghillie suit.
4. You could steal Visa’s, Amex’s and Discover’s (titter) lunch. Which, in Discover’s case, is not so much lunch but more like one of those cheese and cracker packs with the red plastic spreading knife. But Visa in Q4 of 2010 did over $2 billion in revenue and has a 40% profit margin. That’s not lunch, that’s a 12 course meal at Delmonico’s.
5. You have more cash than God. This is tip the valet money to you.

But how to change hearts and minds of consumers and retailers alike? Mobile phone payments sound scary.

For the retailer:

1. Offer the hardware for free.
2. Offer no transaction fees for the first 6 months. Retailers HATE credit card transaction fees. Note all those (mostly illegal) hand printed signs saying “Credit Card Minimum $20” slapdashedly taped to the side of cash registers.
3. Great demographics. Who owns smart phones? The rich and the young. The customers you crave.
4. Geolocation targeting of customers. “Benny’s Donuts is 2 blocks away, all bear claws are 10% off for the next 2 hours.”
5. Easy to manage and highly effective loyalty programs. “Buy 5 bear claws with your mobile phone and get the 6^th for free.”

For the consumer:

1. Geolocation targeting of customers. “Benny’s Donuts is 2 blocks away, all bear claws are 10% off for the next 2 hours.”
2. Easy to manage and highly effective loyalty programs. “Buy 5 bear claws with your mobile phone and get the 6^th for free.”
3. Rock hard security with biometric payment approval. A fingerprint or face recognition is required to process the payment.

The benefits for all players are so stupendous there must be some barrier to making this happen that I don’t know about. I mean, if Microsoft can come up with Clippy and Google can create Buzz, well, they must be working on this late at night.