Payment Context Will Matter as Much as Ubiquity

by George Peabody 0

This year’s lively Electronic TransactionAssociation Annual Meeting and Expo had just concluded and an issuefrequently raised in conversation with attendees, especially frompayments industry incumbents, was ubiquity, the property of apayment method’s widespread, if not universal, acceptance. This, ofcourse, is a characteristic shared by cash and cards today and itis a competitive barrier for most alternative payment methods. Toincrease its transaction volume, to establish near ubiquity, PayPalis working hard, and investing heavily, in broadening itsacceptance at the physical point of sale.

However, mobile-based applications have the potential to obviatethat need for ubiquity when transaction context drives the value ofthe approach. For example, Austin-based Tabbedout is a mobile appthat allows a bar and restaurant patron, after having registeredand provided a card number or PayPal account to the firm, to enteran establishment, open a tab through its app, get served, and leavethe establishment without having to wait for the check and thewaiter to return with the receipt. Because Tabbedout is integratedwith popular POS systems like MICROS and Aloha, the establishmentknows it’s been paid through its existing POS system. The patroncan rush off to the game, movie, or next party. It enables atransaction work flow that is convenient for both the consumer andthe merchant.

Tabbedout believes, and has some evidence for, the propositionthat its context-specific approach, for this well defined niche,trumps the canon of ubiquity. A major implication for industryincumbents has to do with branding. In most cases today, and in thedigital wallet world to come, the accountholder’s card account orDDA will be the true method of payment but not the transactionorigination technique that provides the lion’s share of the userinterface to the consumer. The brands of both the card network andthe issuer, in particular, will have very limited presence duringthat transaction sequence. We are already seeing this in the AmazonOne Click context. We know which card we have active within ourAmazon account. We don’t, and don’t need to, see a brand logo or anissuer name.

Given the relative ease with which such apps and niche-specificsolutions can be developed, we expect many more such offerings toemerge. Already as consumers, we are very familiar with whichpayment or loyalty card to pull out of our wallets for eachtransaction context. We will certainly know which app to use andwhen. Mercator’s own CustomerMonitor Survey Series on mobile usageshows smartphone owners are very willing to downloadmerchant-specific, context-specific apps to their handsets.

So, when ubiquity is held up as a barrier for a new approach, lookhard at the transaction context to see if there is a way to addvalue to that transaction for the merchant, the consumer, and thepayment service provider. Convenience, permission-based dataacquisition, advertising are all sources for value-add. Ifvalue-add is possible then ubiquity may not be such a big dealafter all.