Group items tagged

Of course, some aren’t so bullish on NFC, notably eBay (who owns PayPal) CEO John Donohoe, who in a recent earnings call said merchants refer NFC “not for commerce.” And odd statement considering PayPal just dipped its toes in the NFC pool with support for Android.

Gajda tells is, “I think for some people NFC will replace the actual physical credit card but it will be a long time before NFC replaces all payments.” He believes that we are going to start seeing more traction by end of this year but says the capability of “taking credit cards and putting them on mobile phones will represent the long tail” in payments. But he adds, “the pieces are in place for NFC to take off.”

The second part of the Visa’s mobile strategy involves the digital wallet and the mobile web. Gajda says that as e-commerce ramps up on mobile phones, there is a need for one-click, simple username and password checkout experience in a transaction being made on a mobile device. That’s an area where PayPal has been working hard to dominate in but Visa sees room for other players. Should we expect a PayPal-like, one-click mobile payments technology coming from Visa soon? Perhaps, the company hasn’t been afraid to enter PayPal’s territory in the past, launching a peer to peer payments service earlier this year.

Gajda tells us that the biggest challenge of mobile payments in the current market the massive amount of fragmentation in the mobile industry. He explains that with all of the various mobile operating systems, specific manufactured phones, applications and more, keeping up with pace of innovation on the development side is a major challenge for Visa.

Visa actually tested a partnership with retailer The Gap earlier this year which alerted customers via SMS of discounts in stores near them. Gajda tells us Visa is working with a number of other retailers and banks on similar deals which will be announced soon.

Gajda says there are a number of other factors at play in the mobile payments place that need to be highlighted when talking about mobile payments. International is a huge growth area in mobile payments. He tells is that outside the U.S., there are a large number of people who have mobile phones but don’t have banking relationship or credit card. In fact, he says there are 2 billion people in world that have phone, but don’t have a bank account or credit card.

In these markets, Visa’s goal is to bring prepaid accounts, purchasing power and other financial services to basic phones. These could include topping up a mobile phone with airtime, buying transit tickets, peer to peer payments. And this goal was the mean reason behind the purchase of behind the $110 million purchase of Fundamo. The company’s platform delivers mobile financial services to unbanked and under-banked consumers around the world, including person-to-person payments, airtime top-up, bill payment and branchless banking services.

Connecting with the small business world that don’t yet use credit cards or are new to the system is another area where Visa feels there is strong potential, especially with mobile payments. That’s why the company invested in disruptive mobile payments company Square and took an advisory role in the company. Gajda says that the power of Square is that it is enabling small businesses and independent workers such as doctors, designer and other merchants to start using credit cards and grow their businesses. It would make sense for Square and Visa would somehow work to harness the power of their partnership (As of April roughly two-thirds of transactions using Square’s payments service were through Visa credit cards.), but it’s unclear what the two companies will reveal any new co-produced products soon.

MOBILE Gajda explains that there are three prongs to Visa’s mobile payments strategy. One of these is NFC, and focuses on payments using a mobile phone at a physical store. For background, NFC (near field communications) enables people to make transactions, exchange digital content and connect electronic devices with a simple touch. As we’ve seen with Google Wallet, Android phones such as the Nexus S are being built with NFC chips, making your cell phone a mobile wallet. Visa recently joined the ISIS network, a NFC mobile payment network that is a joint venture formed by AT&T, T-Mobile and Verizon. ISIS will soon launch in a number of markets, including Utah and Texas.

But he says that there is still so much room for innovation around how we pay with mobile phones. “With the rise of smartphone usage, we are already seeing a lot of innovation around commerce,” he explains. “It’s inevitable that this will extend to the payments around the sales in mobile commerce.”

DIGITAL Visa’s digital payments guru Schulz outlined her strategy for digital payments at the company, which centralizes around the creation of the digital wallet. Schulz says that because of the fact that e-commerce is being more easy and convenient with customers, especially with m-commerce, the underlying payments infrastructure has to evolve.

And Visa’s answer to this is a new digital wallet initiative. Here’s how it works. Users will have an account, and they can add their credit card numbers (and cards from other credit card companies such as American Express and Mastercard). Visa is partnering with a number of financial institutions to offer this product to their customers.

Users can also load their loyalty points and rewards cards, as well as organize their shopping lists. Schulz describes it as a “wallet in the cloud.” But she says the key to the success of the wallet is a seamless, one-click payments experience for the consumers. So Visa has partnered with a number of large-scale retailers (which will be announced soon) to integrate what Schulz refers to as a ‘new acceptance mark’ on a merchant payments page.

So there will be a button you can click on, which will prompt you to sign-on and then will sync your digital wallet with the purchase in your shopping cart. So for example, imagine you had a camera in your cart, and Visa offered a 20 percent off at camera’s purchased at BestBuy, the wallet would sync and show the discount in your cart. The same works for loyalty points and more.

Visa competitor American Express is also working hard to innovate both at the large retailer level, as well as among smaller retailers, with GoSocial.

She compares the digital wallet offering to “two-hand clapping.” ” You can have a digital wallet,” Schulz explains, “but you need a merchant solution of click to buy, and Visa’s going to transform that experience.” And Schulz highlights another recent acquisition, Playspan, has helping drive a simplified commerce experience, a.k.a. click to buy, within game or within app.

Of course adding another checkout experience to online retailers’ sites can be a complicated and time-consuming process. But that’s where Visa’s $2 billion acquisition of CyberSource comes in. CyberSource is said to process about 25 percent of all e-commerce dollars transacted in the United States, and operates e-commerce for hundreds of thousands of retailers. Schulz says this relationship has helped speed up the pace of implementation.

Creating the digital wallet, both on the mobile and web platforms, is no easy task. Visa has a name for itself in the credit card industry but the fact is that the brand still has to attach innovation to itself in order for people to take these products seriously. Perhaps that’s one of the reasons why Google’s Mobile Wallet news created waves, even though NFC technology is in its early stages.

Schulz explains that the idea behind the wallet is that consumers want control over their wallet and want to have payment information and access available to them at all times. She believes that the digital wallet will click to buy incorporated on retailers’ sites is essential to the future of e-commerce in both the U.S. and emerging markets.

While Visa, American Express and others are looking to capitalize on the changes taking place in the payments industry, it is a challenging effort. Local commerce is a big part of this, and everyone is trying to find a way to close the redemption loop. But e-commerce, amongst larger retailers, is also a multi-billion dollar market that Visa hopes to continue to play in with products like a digital wallet. And in-store payments, whether that be through NFC, Square or others, represent another market.

I’ve been talking to a number of executives of payments companies and founders of innovative payments startups, and while their objectives are different, they all seem to agree on one thing. It’s early and there is still much more innovation were going to see in the next few years in the online and mobile payments space.

Some of the rewards come fairly easy, with prices beginning at 200 points; others run into the thousands. To help make these rewards more appealing, Zynga is offering exclusive virtual items like a Purple Cow in FarmVille (540 AmEx member reward points), a Café World Amex Lightning Stove (1945 points), and other goods that can’t be acquired any other way in the games. More items will be coming on December 6, with support for more games, including FarmVille.

Obviously none of this is actually free — you’ll be giving up cash, discounted hotel rooms, or whatever other reward program you might have chosen instead of Zynga’s. But you can bet that plenty of people will make the switch regardless, if only because they want access to the exclusive items that Zynga is offering through the program. And the relatively small number of points needed to ‘purchase’ a new virtual good will mean that users can reward themselves more often, which they always like. After all, who doesn’t want an elusive purple cow wandering around their farm?

Much like Apple with iTunes, Facebook takes a 30 percent cut on every dollar spent through the Credits platform.

Today users can buy Credits with 15 currencies, including U.S. dollars, Euros, the British Pound and the Venezuelan Bolivar.

It is important to first highlight, that for any mobile payments system to work, consumers will need to open some form of application to allow users to connect the phone to complete the payment. 

To date, Facebook sees over 200 million unique users accessing the social network through a mobile devices each month.

Almost all of the major brands who would adopt mobile payments in the beginning (i.e. Best Buy, Gap, Target) have invested heavily into growing a Facebook presence. It is this ability to connect to users and their social graph through a Facebook payment option that makes Credits and mobile payments an attractive model.

From this point, it is Facebook’s network that makes its payment option so attractive. As I scan my phone to finalize my purchase, I am presented with the option to share this purchase with my friends. Selecting yes, opens up an additional discount for my friends and I. From there my friends have the option to use the promotion through Best Buy’s ecommerce page or on location.

For now, Facebook prefers to play down talk of its broader ambitions for Credits. The 30 percent tax Facebook imposes on those who accept Credits might be too high to allow for the regular sale physical goods and services.

Other big players include PayPal who has more than 81 million active registered accounts and 210 million accounts, in 190 markets and it supported 24 currencies.

One factor that is definite is the speed at which small business will adapt mobile transactions.

Probably an even bigger player is Apple and its 100 million iTunes users. The iPhone is set to be the main phone to drive mobile payments, even if other phones offer these features. But one thing is for sure: the mobile (social) payments market will be fragmented for the first few years and Facebook is easily in the position to come out victorious.

While analysts feel 2011 is the year for mobile payments, there is still uncertainty of how quickly consumers will move their wallet to a digital format or what platform they will use. 

Google, with its Google Checkout and Android phones is also set to be a big player. With NFC technology being implemented on all future Google phones, we expect a mobile payment app preloaded on these phones. 

Third-party companies such as Bling Nation and Square to name a few win over merchants by cutting the transaction process fee by as much as 50 percent. With consumers swiping their debits cards more so than ever, this is a huge savings for any company.

Additionally, the three major U.S wireless carriers, Verizon Wireless, AT&T and T-Mobile partnered with Discover Card to form a mobile payment company called “Isis,” a venture to provide mobile payment carrier billing solution for payments.

The closet form of mobile payments in the U.S. that can be utilized nationally is the Starbucks digital gift card. 

While this option only applies to Starbucks stores, consumers can now makes purchases by scanning their phones.

The biggest challenge, currently keeping mobile payments from going mainstream is technology adoption. 

Not only do consumers need to carry a phone that has the correct technology, retailers also need to implement technology that connects with the phone.

Other challenges that could cause slow growth are the number of companies attempting to break into the space. 

From small start-ups to large tech companies such as Google and Apple, many consumers could be slow to adopt as they wait it out and see which platform becomes widely adopted.

To truly accelerate growth, we believe a large company needs to step up and look at the opportunity as a way to break into the $6.2 trillion retail market by covering the costs of technology adoption.

One player who is seen to have this ability is Apple. 

As the largest tech company in the world, rumors have come up, that Apple will implement NFC technology into the next generation iPhone 5 and with 100 million users already connected through iTunes, giving away the retail technology to scan mobile payments could be a quick way to gain accelerated usage.

Though it cannot be applied to all of your purchases, Starbucks seems to be the furthest along, allowing customers to purchase digital gift cards that can be scanned at all Starbuck locations nationwide.

To help accelerate growth, implementing a rewards program will draw more consumers to try the new payment platform.  This option to collect and track rewards is one of the key features that have helped Starbucks see quicker adoption.

Foursquare wants to make sure it gets the product experience right for both merchants and users before turning on revenue, but it can’t wait too long, especially if it wants to justify that billion-dollar valuation in its next round of funding. The race is on to create as many great local deals as possible to present to mobile consumers. And its biggest competitor is Groupon Now.

While Groupon is already the largest daily deal company in the world, it wants to move from deals people sign up for in advance through massive email marketing campaigns to instant deals they find on their mobile phones. The company is testing its own mobile app called Groupon Now in a few cities like Chicago and New York. Groupon Now deals are different than regular Groupon deals in that consumers don’t have to wait a day to redeem them. They are available instantly and you can find them on your mobile phone when you are nearby a merchant offering one of these deals.

A Groupon Now deal is directly equivalent to a Foursquare special powered by AmEx in that it is instantly redeemable and the payment can be linked to the offer. Closing this loop is the Holy Grail of digital local commerce. But closing that loop is not enough.

Foursquare simply doesn’t have the salesforce to craft the same kind of deals that Groupon can. Groupon’s deals tend to be more alluring with deeper discounts. AmEx is helping Foursquare here by sourcing many of these deals itself through its own salesforce and existing relationships with local and national merchants, but it also gets to keep all the revenue. At least for now.

Foursquare is bringing the users (and some of the deals), and is betting that eventually that will be worth something. It’s all about who can create a market of users and deals faster. Foursquare’s approach is to build up its users first—now it’s got 10 million—and then hope the deals trickle up organically or through partnerships. Groupon is almost taking the opposite approach, trying to build up an inventory of great mobile deals first and then hoping that the consumers will come. The thing is that it takes both sides to make a market.

The second half of the NFC conundrum is that there are a lot of hands reaching for the supposed pile of money that NFC payments will enable. Look at Google's announcement of the Wallet product. Or the ISIS partnership between Verizon, T-Mobile and AT&T. Google is partnering with Mastercard, CitiBank, Sprint, FirstData, Verifone, VivoTech (the NFC partner), Hypercom, Ingenico and NXP (another NFC partner). All of these large companies are going to want a slice of the pie. Where does that leave the retailers? You know, the ones that are actually trying to make money with good and services? Sadly, on the outside of the circle. The carriers are the biggest culprits, wanting to take as much as 50% of transaction revenue because it is "going over their pipes." The financial services companies will be happy taking their normal rates in the 1.75% to 3% range as long as there is a promise that more people will pay electronically (read: sans cash). Between retailers, partners and infrastructure, NFC has years to go before it will be viable for all parties involved.

What will happen in this time frame? Think about the so-called "4G" technology WiMax. The technology is already becoming antiquated with LTE and all the major carriers are working on the next version after that. Sprint is keeping a hybrid of WiMax and LTE going forward but overall it is a tech that died before it even matured. NFC may be the same. What if there are massive leaps in quantum teleportation in the next several years? Does NFC become the WiMax of the payment world?

Maturation Of Direct Carrier Billing The "I do not see myself buying a fridge with this" line comes mostly from the direct carrier folks. Direct carrier billing is the perfect area for micro-payments and payments that stem from ease of use. Think of parking. If you could pay for your parking on the street with your phone, would that convenience be worth an extra couple of cents on the dollar to you? The direct to carrier ecosystem has evolved to the point where it actually makes sense for offline and online use. Zong (acquired by eBay for PayPal integration), PaymentOne and Boku are the leaders in this space. PaymentOne has processed $5 billion in mobile payments and lets users pay with their phone numbers, validating transactions via text. Zong allows that capability as well. Payment One's "One Care" features, announced last week at CTIA, makes direct to carrier billing safe and secure. Transparency is important in mobile commerce because consumers do not really trust their phones to handle their money quite yet. The most important aspect of direct to carrier billing now is that the revenue mechanism has been flipped. It used to be that merchants only got some 40% or less of payments while the carriers and partners took the rest. Even with high margin transactions, that is unacceptable. Today, direct to carrier billing provides the merchants with more than 80% of the revenue, sometimes nearly 95%.

The Dongle World: Smartphones As Credit Card Readers Square, VeriSign and Intuit are pushing hard into the dongle department. Jumio is doing the same thing, just without the dongle. There is not much to be said about the dongle world that we have not already touched on at ReadWriteWeb outside of the notion that it is bringing easy credit card readers to the mobile masses.

The dongle competitors are not worried about what is happening in the ecosytem because it does not really touch their core business. For instance, PayPal does not see NFC or dongles infringing on its business in any way, shape or form. As Laura Chambers, PayPal's head of mobile, said in a recent interview, "we are not worried about much in the ways of competition. There is a lot of white space in the industry for horizontal movement."

What Is PayPal Really Doing? In the interview with Chambers, the first question I asked was, "Why does it seem like PayPal has become a "me too" operator in mobile payments?" It is a fair question, even if Chambers balked to acknowledge that PayPal has been in "me too" mode for the last year or so. PayPal has ignored the dongle movement and NFC is not on its radar as a technology it feels it needs to integrate. "What is the difference between a tap versus a swipe?" Chambers asked. "We are working with what works in the current infrastructure ... We have sat down with consumers and merchants to work with them on what they want." PayPal is growing sideways because there is not a ton of room right now to grow vertically. PayPal will get into NFC solutions when the time is appropriate. Its strategy now is to create as much flexibility for consumers as possible through its mobile wallet program. PayPal's stance is data driven - the company can track when and what consumers buy from mobile phones and tablets. Hence, PayPal is focusing on the shopping end of the spectrum, as opposed to a pure payments play. "60% of people buy more and spend more on mobile," Chambers said. "But, we see that people are not really buying different things on mobile ... the No. 1 driver of growth in mobile payments is boredom." That fits in well with what PayPal sees as "couch commerce." They released a study recently saying that mobile shopping is going to boom this holiday season. As such, PayPal is ready to deploy an end-to-end solution for merchants and consumers to reward loyalty and provide deals and offers along with digital receipts. PayPal believes that it has a lot of room to grow in mobile through these types of horizontal movements. We are also seeing this on a non-mobile front with eBay partnering with Facebook and the Open Graph API and the new X.Commerce initiative that consolidates the PayPal, Zong, Magento, RedLaser and Milo technologies. The company is calling it an "open commerce ecosystem."

Future Of Mobile Payments This article is the first in a series of the trends in mobile payments that ReadWriteWeb will be working on in the next several months. There are a lot of questions and the answers are just beginning to emerge. Who are the winners in the space? Are retail shops in danger of "becoming expensive fronts for online shopping," as Chambers said in the interview? Does NFC really have potential to disrupt offline payments or is it just cool technology? These questions and more are what we will be tackling in the months to come.

Having thoroughly figured out how to cover giant events from ground level, they are now exploring ultra-cheap alternatives to the hundreds of thousands of dollar news choppers used for aerial reporting of big events like protest marches and police clashes. In the process, the video bloggers are discovering both how far low-cost consumer technology has come and how much farther it needs to go.

Built-in Wi-Fi allows control from an iPhone or Android phone. The Wi-Fi also beams back moderate-resolution (640-by-480-pixel) video to the phone

Introduced in 2010, the one-pound styrofoam craft has four rotors and a plethora of sensors to keep it stable and navigable. In some ways, it resembles an iPhone, with accelerometers and a gyroscope to measure movement and location, for example. Parrot says that it can fly 50 feet high, up to 11 miles per hour and stay aloft for about 12 minutes on a charge.

Shapiro tracked down a European hobbyist group that had written its own software, called Javadrone, from scratch “and did a much better job of it.” Pool first used the AR Drone, which he’s dubbed the Occucopter, in December to cover a New York City rally for immigrant rights, but he said that the video from that attempt was unusable. He also made a test-run at Occupy Albany. Pool expects his first coverage with the new software and high-quality video will be at the Occupy Congress action on January 17 in Washington, DC.

the AR Done isn’t in his long-term plans due to its clear limitations. “You need perfect weather. It just doesn’t weigh enough,” said Shapiro.

Pool and Shapiro are already thinking bigger for their projects, and developing better tech to eventually provide to other live stream journalists. “The most important thing is the zeppelin,” said Pool. Basically a big balloon, it will be able to lift a lot of gear with just a little power for the rotors that steer it. And the slow speed is a benefit: It holds the camera steady and won’t suddenly go out of control. In fact, they are trying to build copters that work more like zeppelins.

“All it needs to do is hover and take a proper picture.” Instead of relying on constant commands from the ground, the zeppelin and copter will dial in periodically for updates.

2012 will be the year of "NFC training wheels."

NFC smartphones will outnumber deployment targets.

Carriers will deploy NFC faster than consortiums.

Any business that ignores these transformations does so at its own peril. Despite recession, currency crises, and tremors of financial instability, the pace of disruption is roaring ahead. The frictionless spread of information and the expansion of personal, corporate, and global networks have plenty of room to run. And here's the conundrum: When businesspeople search for the right forecast--the road map and model that will define the next era--no credible long-term picture emerges. There is one certainty, however. The next decade or two will be defined more by fluidity than by any new, settled paradigm; if there is a pattern to all this, it is that there is no pattern. The most valuable insight is that we are, in a critical sense, in a time of chaos.

To thrive in this climate requires a whole new approach, which we'll outline in the pages that follow. Because some people will thrive. They are the members of Generation Flux. This is less a demographic designation than a psychographic one: What defines GenFlux is a mind-set that embraces instability, that tolerates--and even enjoys--recalibrating careers, business models, and assumptions. Not everyone will join Generation Flux, but to be successful, businesses and individuals will have to work at it.

Digital competition destroyed bookseller Borders, and yet the big, stodgy music labels--seemingly the ground zero for digital disruption--defy predictions of their demise. Walmart has given up trying to turn itself into a bank, but before retail bankers breathe a sigh of relief, they ought to look over their shoulders at Square and other mobile-wallet initiatives. Amid a reeling real-estate market, new players like Trulia and Zillow are gobbling up customers. Even the law business is under siege from companies like LegalZoom, an online DIY document service. "All these industries are being revolutionized," observes Pete Cashmore, the 26-year-old founder of social-news site Mashable, which has exploded overnight to reach more than 20 million users a month. "It's come to technology first, but it will reach every industry. You're going to have businesses rise and fall faster than ever."

You Don't Know What You Don't Know "In a big company, you never feel you're fast enough." Beth Comstock, the chief marketing officer of GE

Within GE, she says, "our traditional teams are too slow. We're not innovating fast enough. We need to systematize change." Comstock connected me with Susan Peters, who oversees GE's executive-development effort. "The pace of change is pretty amazing," Peters says. "There's a need to be less hierarchical and to rely more on teams. This has all increased dramatically in the last couple of years."

Executives at GE are bracing for a new future. The challenge they face is the same one staring down wide swaths of corporate America, not to mention government, schools, and other institutions that have defined how we've lived: These organizations have structures and processes built for an industrial age, where efficiency is paramount but adaptability is terribly difficult. We are finely tuned at taking a successful idea or product and replicating it on a large scale. But inside these legacy institutions, changing direction is rough.

" The true challenge lies elsewhere, he explains: "In an increasingly turbulent and interconnected world, ambiguity is rising to unprecedented levels. That's something our current systems can't handle.

"There's a difference between the kind of problems that companies, institutions, and governments are able to solve and the ones that they need to solve," Patnaik continues. "Most big organizations are good at solving clear but complicated problems. They're absolutely horrible at solving ambiguous problems--when you don't know what you don't know. Faced with ambiguity, their gears grind to a halt.

The security of the 40-year career of the man in the gray-flannel suit may have been overstated, but at least he had a path, a ladder. The new reality is multiple gigs, some of them supershort (see "The Four-Year Career"), with constant pressure to learn new things and adapt to new work situations, and no guarantee that you'll stay in a single industry.

"So many people tell me, 'I don't know what you do,'" Kumra says. It's an admission echoed by many in Generation Flux, but it doesn't bother her at all. "I'm a collection of many things. I'm not one thing."

The point here is not that Kumra's tool kit of skills allows her to cut through the ambiguity of this era. Rather, it is that the variety of her experiences--and her passion for new ones--leaves her well prepared for whatever the future brings. "I had to try something entrepreneurial. I had to try social enterprise. I needed to understand government," she says of her various career moves. "I just needed to know all this."

You do not have to be a jack-of-all-trades to flourish in the age of flux, but you do need to be open-minded.

Nuke Nostalgia If ambiguity is high and adaptability is required, then you simply can't afford to be sentimental about the past. Future-focus is a signature trait of Generation Flux. It is also an imperative for businesses: Trying to replicate what worked yesterday only leaves you vulnerable.

"We now recognize that external focus is more multifaceted than simply serving 'the customer,'" says Peters, "that other stakeholders have to be considered. We talk about how to get and apply external knowledge, how to lead in ambiguous situations, how to listen actively, and the whole idea of collaboration."

For example, Square will be adding in-depth merchant analytics to its iPad experience, allowing merchants to access information about which inventory is selling well, and what they can do to help make more money. Rabois tells me it’s about providing data insights from transactions and interactions, and giving these small businesses the tools that big businesses and retailers can afford. As for focusing just on the iPad, he says that if there is an Android tablet that has traction, Square will invest in a comparable Android tablet offering.

Another product area where Square will be continuing to focus its efforts is on Card Case, which is a virtual card case (via a mobile app) that consumers fill with ‘cards’ of all the merchants they visit and buy from who accept Square. These mobile cards include locations, merchant contact info, coupons, order and purchase history and more. Users can also use Card Case to ‘pay with their name’ and even enable hands-free payments.

Rabois explains that Card Case has seen major traction amongst consumers, and is on the same growth trajectory (in terms of usage and engagement) as Square was when it first launched to the public in 2009. One area where the startup will be innovating is personalization, and helping merchants to provide a more individual, personalized experience based on interactions to each customer.

As for transaction volumes, Rabois declined to give us any exact numbers but did say that transactions have hit way north of $11 million per day on a number of days in the past few months.

Armed with over $100 million in new funding, Square is also preparing for international expansion within the year, which was revealed at the time of Branson’s investment.

With the major product innovations set to take place this year, Rabois tells me that Square is also looking to triple its employee count in 2012. Currently, Square has a staff of 200 employees, up from around 40 at the same time in 2011. Most of the hiring will be of engineers, specializing in a variety of areas including iOS, Android, Ruby, back-end infrastructure and more.

In the end, Square’s 2012 goals are still aligned to the startup’s core principle: to help small businesses everywhere accept credit cards. Rabois says that there are still 26 million businesses in the U.S. that don’t accept credit cards, and he expects to convert a “huge fraction of them” this year. Stay tuned.

Currently the majority of Square’s users are small businesses, so no transaction charge will surely be a big draw for users who aren’t raking in millions in revenue. And there is no cost for the actual Square device. Intuit, which just extended the offer of a free version of its Square competitor GoPayment indefinitely, still charges $0.15 per transaction. And VeriFone’s offering still charges $0.17 per transaction.

Rabois says that Square wants to be as transparent as possible with users, adding that the fee elimination won’t be last thing that is simplified with the service. Check out the video below, in which Square randomly interviewed a number of San Francisco business owners to determine if they knew how much they were paying in credit card payments fees.

According to the joint press release, the initial focus of the MasterCard and Intel partnership will be on MasterCard's PayPass payments hardware and Intel's Identity Protection Technology (IPT). The idea will be to make a faster, more secure transaction with a just a click or a tap of a card or smartphone through the NFC capabilities of PayPass.

There are larger currents in motion here than just creating better transactions hardware. According to MasterCard, 85% of transactions are still done in cash. The company's goal is to make a dent in that number. Even a half a percentage point change towards digital purchases could mean hundreds of millions of extra dollars flowing towards the payment processing industry. This is why MasterCard is repositioning itself not just as a payments firm, but as a technology company.

Convergence Of Tech & Payments

In 2011 there have been a multitude of partnerships made between tech and financial companies. A lot of the movement has to do with the emerging model of mobile payments, especially into the physical (not Web-based) world. The biggest one is probably the Google Wallet initiative, that has a wide group of companies in its early rolls (and more to come), including Google, Citi, MasterCard, Sprint and various NFC makers. There is also the Isis project that brings the other three carriers, AT&T, Verizon and T-Mobile to bear with NFC capabilities. Last week American Express announced a $100 million fund to help fund e-commerce projects. While mobile will be a huge focus for this convergence between tech and financial, it is not the only push.

Square is pushing itself into the mainstream with deals with Wal-Mart, the carriers and Apple while Intuit has made partnerships with both Verizon and AT&T with an eye towards pushing its GoPayment dongle and QuickBooks infrastructure at small businesses. PayPal wants to be two things at once, both a technology leader and a payments company and has been making a lot of horizontal movements in the sector as well.

This is not just about the financial industry moving towards technology, the way MasterCard is trying to do it. The technology industry is equally as fervent to moves towards payments. Jack Dorsey, one the founders of Twitter, is probably the best example of this. He saw earlier than most that mobile was changing the entire tech industry and that payments would be a huge part of that. Hence, he started Square, one of the first pillars of the bridge that is being built between the two industries.

Both Apple and Google have been making pushes into payments. Apple has hundreds of millions of credit cards on file to support its iTunes model where as Google Checkouts has been positioned to be the de facto purchasing solution for Android apps.

Branson joins a long list of investors in the company which recently closed a $100 million round of Series-C financing. It should also be noted that credit card company VISA is also an investor in the mobile credit card processing company.

Even with a diverse group of investors the start-up still has an uphill battle ahead of itself, seeing as Google is also trying to enter the mobile payment segment. Even though Square’s services do not completely overlap with Google’s Wallet service, they are pretty similar. Square has an early head start seeing as Google Wallet is still in the testing phase.

The top 10 strategic technologies for 2012 include:

Media Tablets and Beyond.

Mobile-Centric Applications and Interfaces.

Contextual and Social User Experience.

Internet of Things.

App Stores and Marketplaces.

Next-Generation Analytics.

Big Data.

In-Memory Computing

Extreme Low-Energy Servers.

Cloud Computing.

Levelup is a mobile payments system at its core. It currently has 100,000 users across four cities (Boston, New York, Philadelphia and San Francisco) with 600 merchants signed up.

The basic payment structure is that LevelUp provides the merchants with an Android smartphone with a QR code reader and consumers with the LevelUp app that has a personalized QR code that effectively acts as the interface to their wallet

Users tie their debit/credit cards to the QR code in LevelUp's app. The security behind that is what could be considered a triple-blind token system. No actual payment information is being stored on the device (unlike the Google Wallet, for instance) and there are three steps from the phone to the bank to obfuscate where the payment is actually coming from.

Then there are the deals and game mechanics. When merchants sign up, they are prompted to give buyers a credit.

The more times that people pay with LevelUp, the more opportunities for credit to be accumulated (hence, the notion of leveling up to a new offer).

About 45% of users return to pay full price at the merchant and users on average use LevelUp about twice per week. The location system comes in by seeing on a map in the app what merchants close to you are using the service and what kind of deals they have.

"With LevelUp being transactional, we wanted to make it as fundamentally simple as humanely possible," Priebatsch said. "Frankly you should never have to do anything other than just pay with it and good things should happen to you and that should make you want to keep using it."

LevelUp has a certain type of groundswell that other local mobile payments options do not. In that way, LevelUp's closest kindred spirit is more likely to be Dwolla than it is something like Square or Google Wallet

There has been talk of SCVNGR being acquired but it is more likely that the company will eventually make partnerships with other ground-swell mobile payments companies like Dwolla.

What LevelUp and Dwolla have done is created a local ecosystem of merchants willing to use mobile payments in their communities. This is the bottom-up approach and, as of yet, is proving to be as effective than the top-down approach taken by companies like Google and PayPal.

What are the pain points for mobile payments? For the consumer, it is having the app and the ability to tie it to a payments process. LevelUp cuts down on the pain points by having the ability to tie the wallet to a debit/credit card through its triple-blind token system and using QR codes.

According to Priebatsch, QR codes are not necessary to the process. Any interface (like NFC) will do but the QR code is working for now and LevelUp can work with any device that can project a black and white image

This is where Priebatsch starts to get deep into the nature of payments and the notion that money is nothing but a form of information that transfers from one point to another. Priebatsch's grand plan, that translates well to a five to 10 years down the road for the company, is to bring the payments process down to "interchange zero" where the cost of moving that information from Point A to Point B is next to nothing.

Here is the philosophy, according to Priebatsch:

People will eventually make the flow of money more and more efficient, and the cost of transferring information, or money as information, will eventually converge to zero. This concept is something that we describe as "interchange zero". And as money flows frictionless-ly, all sorts of great things happen around that. You get to pay less at the store because the business does not have to pay interchange on top of their prices.

The really fascinating thing with that, is that a new monetization model needs to be found for the payments industry because somebody needs to make the $50 billion dollars a year to actually support the whole thing. And I believe, and I have a game mechanics background, that the way that that money is going to be replaced, as the idea of me paying you to just move money back and forth goes away, the way that people are going to make money on payments is taking the information inherent in payments and applying a series of game mechanics.

To create a series of actions which get consumers to spend more and come back more often. And this help the business make more money off of each transaction. So the payment, as a utility, will be frictionless, and the money will flow to the company, enterprise, person, organization who can add the most value to the transaction."

this appeared to have happened to only four users, he said.

“We contacted Google and they promptly removed the 4 credit card numbers from their cache,  so they are no longer visible.”

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Jessie Burke, owner of Posies Cafe in Oregon, first told her story in September 2010. According to Burke, Groupon pushed her to offer a deal that would let users buy $13 of product for $6. Groupon originally wanted 100 percent of the money (what it usually takes when consumers pay less than $10 on a deal), but relented, revising their percentage cut of the deal price to 50 percen

To make matters worse, the Groupon resulted in several administrative nightmares. Tracking 900 deals proved extremely difficult, and ended up in multiple instances of fraud with users redeeming the same Groupon more than once. The deal, scheduled by Groupon, ended up occurring at the same time as another business boosting event, so that huge lines formed out the door, an unideal situation for a cafe

“What was the saddest part of it for me was that this had had happened to a lot of businesses but because no one had ever said anything we all just assumed (and myself included) we just assumed we were bad business people. That we just didn’t know what we were doing. If everyone loves Groupon so much, we must be wrong," she told TechCrunch

But Burke is not alone. The Wall Street Journal picked up the story of U.S. Toy Co this January, a family toy store that ended up with 2,800 customers on a retail deal, but ended up losing money on 75 percent of the deals. Like Burke, Groupon took 50 percent of the deal profit, which had offered $20 of toys for $10, leaving U.S. Toy with $5 on each deal. Customers ended up spending less than the normal average per sale. And, owners estimated that 90 percent of the deal users were already regulars--not new custome