Editors note: This is the free edition of Payments Insider, a newsletter on all things payments produced by BI Intelligence.
EXCLUSIVE: PAYPAL’S SURPRISING TURNAROUND ON NFC. In a sharp reversal, PayPal may be on the verge of embracing near-field communication (NFC) technology, which just months ago PayPal CEO David Marcus dismissed as “technology for the sake of technology.” Anuj Nayar, PayPal’s senior director of global initiatives, tells us that host card emulation (HCE), which stores payment information in the cloud, opens up exciting new possibilities for the once-ailing NFC. “We basically had discounted NFC completely, and now we’re taking a look at it,” he told Payments Insider in an interview on Thursday.
In an official blog post, Marcus also wrote that he was “cautiously optimistic on NFC HCE.” PayPal’s change of tune comes hot on the heels of several major developments for NFC, including Google Wallet’s switch to HCE for all transactions, and rumours of an NFC-compatible iPhone from Apple. The real benefit of HCE is that it allows mobile wallet providers to bypass the proprietary “secure element” hardware on smartphones, where payment information would otherwise be stored, and which is heavily restricted by mobile carriers.
Nayar tells us that although PayPal remains focused on Bluetooth and Wi-Fi solutions, a pivot to include NFC wouldn’t be difficult. “If it gains traction, we could turn it on pretty easily.” (Keith Griffith, BI Intelligence)
WAL-MART DISSES MONEYGRAM, CONTINUES PAYMENTS PUSH. Wal-Mart will begin offering money-transfer services from its 4,000 domestic retail locations, in direct competition with the retail giant’s own contract with MoneyGram. Called “Walmart-2-Walmart,” the new initiative joins a string of other payments and banking offerings from the nation’s largest retailer. Earlier this month, Wal-Mart partnered with MasterCard to issue store-branded credit cards, ending a nine-year relationship with Discover. In 2012, the company began offering Bluebird pre-paid debit cards in partnership with American Express. Wal-Mart’s in-store sales lean heavily toward cash and cash-equivalent transactions, with only 15% of transactions paid by credit card, the company has said.
Nevertheless, Wal-Mart is gunning hard at the payment card networks on interchange fees. Last month, it slapped Visa with a civil antitrust suit claiming $US5 billion in damages, which could triple under federal law in the event of a verdict in Wal-Mart’s favour. Industry experts have speculated that the suit is part of a broader payments bid from Wal-Mart, in the form of a mysterious mobile wallet from the Merchant Customer Exchange (MCX). But Morningstar analyst Kenneth Perkins isn’t convinced that Wal-Mart is straying fundamentally from retail. “If you have those consumers who don’t go to traditional banks, giving them access to capital through services within stores may encourage them to spend in those stores,” he told us. “It makes sense.” (Keith Griffith, BI Intelligence)
QUOTE OF THE DAY: “Apple is a great educator in the market. In the same way Apple educated the apps market, I think it will educate consumers about m-commerce. The wider mobile contactless market stands to benefit quite significantly even if Apple chooses a non-NFC solution.” — Dr. William Holden of Juniper Research, speaking to Mobile Payments Today
WORLDPAY LAUNCHES A SALES OFFICE IN CHINA. Global payments processor Worldpay announced the opening of its first sales office in China. “Our intention is to build a strong sales presence in China. We have an aggressive recruitment and expansion plan,” says vice chairman Ron Kalifa in a press release. Worldpay focuses on e-commerce and mobile commerce payments, and there is a huge opportunity for online payment companies who offer those services in China right now. At around $US300 billion annually, e-commerce in China has already passed the U.S. in value. (Worldpay via MarketWatch)
MASTERCARD ACQUIRES LOYALTY AND REWARDS COMPANY. MasterCard yesterday announced an agreement to acquire Australia-based Pinpoint, an Asia-Pacific mobile loyalty and rewards provider. MasterCard will use Pinpoint to build its rewards programs for cardholders in the Asia-Pacific region. Back in 2012, MasterCard acquired another loyalty company, U.S.-based Truaxis. (MasterCard via MarketWatch)
TXTNATION ADDS CARRIER BILLING IN IRELAND. Carrier billing company txtNation announced that it would provide “single-click” payments for mobile Web users in Ireland. With this feature, mobile users will be able to make purchases on their phone by adding the cost of the purchase to their mobile bill with one click. To learn more about the market for carrier billing, check out our recent report. (txtNation)
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