1. Mobile Commerce &
Alternative Payments:
S P E C I AL EDITION A supplement to the Navigator, published
by First Annapolis Consulting, Inc.
Overview of Our Mobile Commerce & Alternative Payments Practice
First Annapolis has been advising clients on emerging payment products and technologies since the late 1990s when prepaid, P2P, and Internet payments were
in vogue. In the last three years the Mobile Commerce & Alternative Payments Practice has been focused almost exclusively on the impact of mobile across
the payments landscape. The team’s client experience spans most of the major constituents in the mobile value chain including: issuers, processors, payment
networks, acquirers, MNOs, TSMs, and other specialized providers of mobile technology. Our clients are primarily based in North America and Western Europe,
but our research efforts extend around the globe to capture important mobile developments in Asia and emerging markets. Given the nascent stage of the
development of mobile, First Annapolis’s project work is focused in areas such as... More
Will 2012 Be the Breakout Year for Mobile Payments?
2011 was an exciting year in the development of mobile payments. Among others, the year will likely be
remembered by events such as:
• The launch of the Google mobile wallet;
• Isis’s continuing development, including forging relationships with all of the major US payment
networks;
• The rapid growth of Square and support... More
The Mobile Wallet Landscape
Digital wallets have been around for several years in the form of online payment tools for e-commerce.
Smartphones are shaking up this space, though, by driving intense competition to develop and own the
next killer app: the mobile wallet.
There is a lot of debate about what the mobile wallet... More
Mobile Fuels M&A Activity
First Annapolis has been tracking deal activity in the mobile commerce and alternative payments spaces
over the last two years. In that period of time, over 60 transactions, totaling over $25 billion in disclosed
Top 100 Remote mergers, acquisitions, and investments, were completed. Specifically, mobile payments, banking, and
Commerce Payments commerce deals totaled... More
Acceptance & Mobile Retailer Alternative Payments Acceptance: Online and Mobile
Functionality Study
First Annapolis regularly tracks the acceptance of payments products at the leading e-commerce retailers.
Coming in late These merchants represent a significant portion of overall e-commerce and therefore provide an important
February perspective on the opportunity for new payment products. This year, the mobile channel and... More
Tracking alternative payments acceptance,
mobile app/wallet deployment, & mobile The Other Guys in Mobile POS
commerce activity at leading
e-/m-commerce retailers
Much has been written about Square’s mobile POS offering and Intuit’s Go Payment offering and for good
For more information & reason as these two pioneers continue to generate an impressive ramp in users and processed volume.
purchase options please contact However, the focus on these two organizations raises the question – where are other mainline acquirers
paul.grill@firstannapolis.com on the... More
Mobile Commerce & Alternative Payments: Special Edition Navigator 1 of 7 © 2012 First Annapolis Consulting, Inc.

2. Overview of Our Mobile Commerce & Alternative Payments Practice
By Paul Grill services industry. Paul is a noted expert on the adoption of new technologies
in payments, and has been featured in the media and events in the past year
First Annapolis has been advising clients on emerging payment products and
such as American Public Media’s Marketplace, the Chicago Federal Reserve’s
technologies since the late 1990s when prepaid, P2P, and Internet payments
Symposium on Immediate Funds Transfer for General Purpose Payments, the
were in vogue. In the last three years our Mobile Commerce & Alternative
ETA’s Inaugural Mobile Payments Summit, and the American Banker. Paul
Payments Practice has been focused almost exclusively on the impact of
manages a dedicated team of consultants and analysts that track the growth,
mobile across the payments landscape. Our client experience spans most of
adoption, technologies, competitors, economics, regulations, and other trends
the major constituents in the mobile value chain including: issuers, processors,
impacting mobile payments.
payment networks, acquirers, MNOs, TSMs, and other specialized providers
of mobile technology. Our clients are primarily based in North America and In addition to completing customized engagements, the Mobile Commerce &
Western Europe, but our research efforts extend around the globe to capture Alternative Payments team develops data-driven reports on several important
important mobile developments in Asia and emerging markets. Given the mobile and emerging payments topics. Past reports have included:
nascent stage of the development of mobile, First Annapolis’s project work is
1. Top 500 e-Commerce Alternative Payments Acceptance Payments
focused in areas such as:
Study (tracking acceptance and promotion of various emerging payment
1. Defining the value chains for the enablement of mobile commerce and products at leading e-tailers)
payments 2. Top 100 Mobile Banking Study (analyzing the mobile banking functionality
2. Estimating the revenue potential/business case for mobile offerings offered by the largest US financial institutions)
3. Researching and evaluating the potential impacts of emerging mobile 3. Mobile P2P Study (reviewing the functionality, pricing, and consumer
technologies and competitors experience associated with the emerging mobile person-to-person
4. Prioritizing and describing likely mobile consumer/merchant use cases, payments products)
and identifying the key capabilities required to fulfill these
The team’s tentative report release schedule for 2012 is as follows:
5. Forming partnership and service provider relationships between suppliers
and buyers of mobile infrastructure services 1. Late Winter: Top 100 Remote Commerce Payments Acceptance &
Mobile Functionality Study (tracking alternative payments acceptance,
Importantly, payments is only one component of the mobile subject matter
mobile app/wallet deployment, & mobile commerce activity at leading
expertise provided by First Annapolis. Since the consumer mobile experience
e-/m-commerce retailers)
comprises a broad set of use cases that surround payments, First Annapolis
2. Late Spring: Mobile P2P Study (updated from 2011)
has expanded its capabilities to include many aspects of the commerce
3. Late Summer: Top 100 Mobile Banking Study (updated from 2010 &
(e.g., advertising, offers, coupons, location-based services, loyalty program
2011, and including any in-market mobile payments functionality from
support) and account management (e.g., banking, bill payment, fraud
leading FIs)
warnings) services being enhanced by mobile. In particular, much of our recent
4. Late Fall: Mobile Payments Study (review and comparison of NFC and
project work has focused on evaluating the revenue opportunity associated
cloud-based payments solutions in-pilot/launched by mid-2012)
with enabling commerce transactions, understanding the key capabilities
and relationships required to profit from targeted mobile marketing, and Additionally, First Annapolis will create sponsored or syndicated reports on
conceptualizing integrated offers and payments solutions. specific topics not listed above.
The Mobile Commerce & Alternative Payments practice is headed by Paul Please contact paul.grill@firstannapolis.com to inquire about these reports or
Grill, a partner with 15 years of payments industry consulting experience, and any of our Mobile Commerce & Alternative Payments advisory services.
a background in authentication and encryption technology in the financial
Will 2012 Be the Breakout Year for Mobile Payments?
By Paul Grill
2011 was an exciting year in the development of mobile payments. Among development of this vision, several trends are having a strong impact on how
others, the year will likely be remembered by events such as: mobile is evolving.
• The launch of the Google mobile wallet; • Commerce (marketing, advertising, coupons, offers, etc.), rather than
• Isis’s continuing development, including forging relationships with all of payments, is driving mobile business cases for new entrants and
the major US payment networks; established payments competitors. Many companies view commerce
• The rapid growth of Square and support the company has attracted from transactions as having several times the economic potential of payments
investors such as Visa; transactions, but few organizations have in-house expertise to be
• PayPal’s significant growth in mobile transaction volume ($4.0 billion), successful in the segments of the commerce value chain that drive the
acquisition of Zong, and announcement of plans to expand mobile greatest revenues (i.e., sourcing offers from merchants and leveraging
functionality beyond payments; unique data to target offers).
• Many banks aren’t prepared to enable mobile payments. Mobile requires
Despite progress that’s been made, the industry still has a lot of work to do new technologies, processing capabilities, and servicing approaches
to realize the full vision of mobile commerce, where consumers can efficiently that differ from established practices. While providers are quickly
use their mobile devices to find what they are looking for, redeem targeted deploying Trusted Service Manager (TSM) and other solutions to enable
offers, and pay for their goods. While no single roadblock is holding up the mobile, committing resources to implementation in the current market
Mobile Commerce & Alternative Payments: Special Edition Navigator 2 of 7 © 2012 First Annapolis Consulting, Inc.

3. environment is challenging for many banks without a clear business case. • Whether emerging, cloud-based solutions can provide a mobile payment
Furthermore, banks that may be concerned about potential customer data experience that rivals NFC;
or relationship impacts need to evaluate the range of economic, data use, • If mobile can transform offers and other promotional tactics to the “surgical
handset access, and other value propositions being offered by mobile strike” vehicles they are envisioned to be (or whether consumers and
payments enablers. merchants grow fatigued of “carpet bombing” approaches); and,
• Merchants haven’t yet embraced NFC. Perhaps only 5% of US terminals • If banks are willing to begin making the investments in mobile
have been enabled for NFC. However, shipments of NFC-capable payments and commerce that are necessary to head-off the long-term
terminals are increasing, and the upcoming ISIS trials and Visa EMV disintermediation of their payments products.
requirements may spur more deployment. More important, most leading
These learnings, while they may be slow and sporadic to realize, will provide
retailers are enabling other forms of mobile functionality (e.g., shopping
valuable insights into how mobile will eventually transform the payments
apps, store locators, loyalty programs) that will provide a foundation for
landscape. Despite that some (maybe many) approaches to mobile commerce
future mobile payments functionality.
not will flourish, it is not too soon for banks, merchants, acquirers, and other
Despite expectations that 2012 will deliver a wave of NFC-enabled handsets established payments players to take action to develop their own mobile
in the US market, viewing 2012 as the breakout year for mobile payments knowledge base and capabilities. The mobile payments growth “hockey
is probably wishful thinking. Rather, 2012 will be a year of learning. Among stick” is inevitable; at this point, it’s just a question of when and with what
others, we expect to find out: technologies.
• If merchants are willing to embrace NFC-based mobile technology (and For more information, please contact Paul Grill, Partner specializing in
as a by-product whether the currently envisioned Google and Isis models the Mobile Commerce & Alternative Payments Practice Area, paul.grill@
will be the driving platforms for NFC development); firstannapolis.com
The Mobile Wallet Landscape
By Ben Brown for e-commerce, another for mobile content, and a third for brick-and-
mortar will be less convenient for consumers and will prevent marketers
Digital wallets have been around for several years in the form of online
from seeing a comprehensive picture of the consumer’s preferences and
payment tools for e-commerce. Smartphones are shaking up this space,
behavior. Many offerings seem to be evolving in this direction; services
though, by driving intense competition to develop and own the next killer app:
that are built and managed separately by sales channel will face some
the mobile wallet.
challenges.
There is a lot of debate about what the mobile wallet should do and how it
• Most initial mobile wallet offerings are being developed by payments
should work. Some think narrowly, categorizing only multi-issuer, multi-service,
industry outsiders. Aside from Visa’s and American Express’s proprietary
NFC-based solutions as true mobile wallets. Some think broadly, scoping any
wallet solutions (V.me and Serve, respectively), most other major players
mobile payment service – or app with payment capability – as a mobile wallet.
– including payment schemes, issuers, and acquiring processors –
In our view, the answer lies between both extremes. A mobile wallet provides
are largely taking a secondary role in supporting wallets from Internet
secure digital storage for account credentials (and other personal data) for the
brands and mobile networks. Mobile is a big opportunity that incumbents
purpose of enabling open-loop payments from a mobile device.
shouldn’t fight, but insiders need to evaluate which wallet offerings
Much of the discussion from pundits in 2011 looked at mobile wallets in are better suited to deepening, rather than disintermediating existing
terms of how they worked – how are funds loaded, where is data stored, how customer relationships.
credentials are transmitted to the merchant, and so on – but overlooked the
• Retailers are a critical partner, and for mobile wallets. Merchants must
most important question: what is the value proposition of the wallet? In the
be willing to make changes to their POS systems and processes to
chart below, we look at select offerings along two dimensions: the functions
enable wallets’ value-added services. At the same time, many retailers
the wallet supports and the sales environments in which the wallet works. This
are investing in their own mobile apps that integrate shopping, offers
perspective highlights a few important themes, in our view.
discovery, loyalty account management, and a card vault for “on-us”
• Payments are a core function for mobile wallets, but value-added payments. Co-opting the merchant community will be an important part
services create the strongest proposition for consumers and providers. of building tomorrow’s leading wallet scheme.
Bundling payments, offers, loyalty, and more in a “one-tap” or “one-click”
• Banks are likely to face challenges from the rise of new and innovative
experience is supremely simple for consumers. Doing so may also let
mobile wallets. Issuers want today’s mobile card management (and
mobile wallet providers earn a piece of the highly lucrative revenues likely
mobile banking) tools to evolve into tomorrow’s mobile wallets, but
to be enabled by mobile marketing.
it’s hard to see how these services effectively deliver the value-added
• Mobile wallets are likely to act as a catalyst in bringing together today’s services that consumers will demand. And regardless of which solutions
different sales channels. These tools will let brick-and-mortar retailers win, digital wallets are likely to shake up conventional wisdom about
add some magic to the offline shopping experience. At the same time, the what it means to be “top of wallet” and how to get there. Banks need to
technology is likely to act as a bridge for e-commerce schemes to enter seriously consider how to enhance their offerings or develop strategic
the physical world. This creates serious new competitive considerations partnerships with other wallets to ensure their payment products stay
for merchants, acquirers, and issuers alike. relevant.
• Winning wallets will work for all shopping channels. Maintaining one wallet Consumers will have a lot of options in mobile wallets and these options will
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4. The Mobile Wallet Landscape in 2012: Based on Organizational Capabilities of Selected Providers
Notes: Provider logos reflect current or announced capabilities and are not indicative of the adoption, penetration, or usage of the wallet among merchants or consumers.
Wallet placement considers services offered by the the wallet provider, but not necessarily directly within the wallet.
Source: Provider websites and press releases, TechCrunch, NFC Times, CNN Money, VentureBeat, GigaOM, and others.
be offered by innovative companies. Mobile commerce is likely to be a highly presumably announce issuers and merchants leading up to the launch.
competitive space and notable initiatives have emerged around the world.
• PayPal, for years the largest e-wallet for online payments, reported over
• In the United States, Google Wallet earned the distinction in 2011 of $4 billion in mobile payments volume in 2011. It expects this figure to grow
being the first mainstream NFC offering to launch. Google Wallet bundles to $7 billion in 2012 (but it’s likely to be even higher, considering PayPal
support for payments, offers discovery and redemption, and merchant revised its 2011 estimate upwards two or three times last year). In the
loyalty accounts in one NFC-enabled package. As Google integrates last year or two, PayPal and its parent eBay have invested aggressively
its various payment services, consumers will be able to use their Wallet in mobile commerce assets. We count more than a half-dozen relevant
account for one-click online payments (via Checkout), mobile content transactions from RedLaser (barcode scanning) to Zong (mobile billing)
(via Android Market), digital subscriptions (via OnePass), in-app billing, to WHERE (local search) and more. PayPal has laid out an innovative
and more. It’s clear that Google is leading the market in delivering an vision of how payments can happen at the future POS – with PayPal
integrated, multi-channel experience. It’s not clear, however, how Google payments enabled by plastic cards, NFC, and mobile phone numbers –
can overcome the distribution challenge posed by mobile networks’ and a significant number of the top-200 U.S. retailers have signed up to
control of the secure element (a necessary component to make mobile bring that vision to life in 2012. PayPal is just now launching early trials
wallets work at the POS via NFC). of its technology but we expect they will be a deep well of innovation in
the future.
• Isis, the mobile commerce joint venture between AT&T Mobility, T-Mobile
USA, and Verizon Wireless, announced its intention to launch its first two • In Europe, the Euro 5 – the five largest mobile telecom conglomerates –
markets, Austin, Texas and Salt Lake City, Utah in the summer of 2012. are aggressively driving forward a number of mobile payment schemes.
Like Google Wallet, the Isis offering will integrate payments, merchant They are taking NFC national in France after the successful Cityzi trial
loyalty, and offer discovery and redemption. Isis also announced support in Nice. In Germany, plans are in place to extend the mpass system
from six leading global handset OEMs including HTC, LG, Motorola, to the physical point of sale. And operators in the United Kingdom are
RIM, Samsung, and Sony Ericsson, indicating the potential for wide planning to launch an Isis-style coalition once they receive approval
scale distribution of NFC devices compatible with the Isis system. Isis from competition regulators. Taken in combination with another half-
has also formed relationships with the major payment networks and will dozen initiatives across Europe, it is clear that European consumers will
Mobile Commerce & Alternative Payments: Special Edition Navigator 4 of 7 © 2012 First Annapolis Consulting, Inc.

5. soon be rich in mobile commerce options. European initiatives have an the go-it-alone player or anyone who views the mobile wallet as a short-
opportunity to grab market share today if they move quickly; if they wait term investment.
too long, they’ll face intense competition from American exports such as
Companies across industries see lucrative opportunities in the mobile wallet.
Google Wallet, which may land in the UK as soon as this year.
Mobile networks see it as a way to build deep relevance with consumers.
• In Japan, NTT DoCoMo released its Osaifu-Keitai offering in 2004. NTT, by Search firms see mobile as the linchpin in bringing together search, social,
far the largest mobile network in Japan with 50% market share, developed and local. Payment schemes from Visa to PayPal see it as a way to build new,
its own mobile wallet – an approach that might not gain critical mass in high-margin marketing businesses. But the opportunities don’t end at owning
less concentrated markets. NTT has since invested billions of dollars in the wallet. Players across the marketing, loyalty, and payments businesses
mobile commerce through merchant incentives and equity stakes in the can and should proactively engage with these initiatives to discover new
bank, transaction processor, and technology assets necessary to make revenue streams and ways to differentiate themselves in a crowded market.
it all work. As a result, there are about 70 million compatible phones,
For more information, please contact Ben Brown, Associate specializing in
and about half as many active users of the service, in Japan today.
Mobile Payments and Merchant Acquiring, ben.brown@firstannapolis.com
But Japanese telcos, which leveraged NTT’s wallet, expected adoption
to come much sooner and the market still faces challenges in driving
adoption and usage. We view NTT’s experience as a cautionary tale for
Mobile Fuels M&A Activity
By Dara Khan and Mike Hutton mobile payments startups, and are driven by factors such as:
First Annapolis has been tracking deal activity in the mobile commerce 1. Companies’ desire to build competency in mobile by acquiring the right
and alternative payments spaces over the last two years. In that period of talent, technology, and experience;
time, over 60 transactions, totaling over $25 billion in disclosed mergers, 2. The vertical and horizontal integration of mobile capabilities to gain control
acquisitions, and investments, were completed. Specifically, mobile payments, over the broad mobile value chain or offer a broader product suite; and,
banking, and commerce deals totaled over $1.5 billion, not including Google’s 3. Established players investing in potential leading technologies, value
$12.5 billion acquisition of Motorola Mobility. These deals span virtually every propositions, and new segments of growth within payments and
payments category, from market-leading e/m-commerce platforms to small commerce.
Figure 1: Example Mobile Commerce Mergers, Acquisitions, and Strategic Investments
Note: Dates on horizontal axis not to scale.
Source: Company reports, and First Annapolis research and analysis.
Mobile Commerce & Alternative Payments: Special Edition Navigator 5 of 7 © 2012 First Annapolis Consulting, Inc.

6. Several of these transactions were focused on acquiring talent, technology, or also purchased Zappedy, which helps businesses track the activity of their
other assets, and often involve mobile startups with fewer than 20 employees. customers. Along the same vein, AT&T subsidiary YP.com acquired Livedeal,
For instance, Boku, a provider of carrier billing solutions and startup itself, an offers platform, to compliment its merchant search and suggestion
purchased Paymo and MobilCash, two smaller rivals that had success forming capabilities. Amazon recently invested $175 million in LivingSocial, Groupon’s
partnerships with carriers in several countries in which Boku wished to expand. largest daily deals competitor. Verizon recently invested in Geodelic, a
Google has purchased several small companies that specialize in offers, location-based targeting platform. Perhaps most interesting in this series of
loyalty, and mobile acquiring, including Daily Deal, Punch’d, and Corduro, investments are those being made in virtual goods, which are summarized
respectively. All three companies were mainly comprised of founders that below:
launched unique mobile commerce offerings. Google also acquired Zetawire,
1. Visa and PlaySpan: micropayments platform that helps publishers
a small technology company that holds patents for identity management and
monetize games by offering a range of payment methods, including
mobile payments processing. PayPal bought a small provider of alternative
carrier billing, a mobile wallet, or a proprietary PlaySpan prepaid card.
POS enablement technology, FigCard, as part of its strategy to enable its
100 million accountholders to pay at the face-to-face point of sale. PayPal 2. Google and Jambool (SocialGold): enables game publishers to create
(via eBay) also acquired Milo, a local inventory search service, for $75 million and manage their own virtual currencies; Jambool’s tech also underpins
and RedLaser, a barcode-based price comparison tool. These companies Google’s new in-app billing API.
were acquired before they made a significant impact in the market and they
3. American Express and Sometrics: enables game publishers to access a
will likely help PayPal with its overall strategy to expand beyond SMEs and
proprietary virtual currency that can be used in multiple games for digital
e-commerce.
goods purchases; may be integrated with Serve, which has a carrier
Many mobile payments acquisitions have enabled the buyer to integrate billing and remote payments component.
for better market positioning. These transactions often involve one of two
There are various reasons for the increase in deal activity, but one thing is
rationales: vertical integration to control more aspects of the mobile value
clear: mobile acquisitions are likely to continue through 2012. We expect
chain, or horizontal integration to offer multiple m-commerce products. In
both established and new constituents to make acquisitions and investments,
either case, the payments players making these acquisitions seek to move
particularly payment networks and processors that are seeking to expand their
mobile commerce adoption forward by creating a broader product set and
portfolio of mobile capabilities. Other potential buyers in 2012 may include
having more influence over its delivery to the market. The potential logic
wireless carriers, social networks, and handset and terminal manufacturers
behind these transactions is summarized below:
who all seek to further establish themselves in the mobile payments value
1. Google and Motorola Mobility: provides Google some control over the chain. This year was characterized by deals in the remote mobile commerce
hardware components that are key to mobile payments, including NFC space, as well as mobile banking and offers or deal platforms. Next year, NFC
and the secure element necessary to store credentials, as well as a technology players may become targets for acquisition, as national mobile
robust patent portfolio. payments initiatives at the point of sale ramp up. Offers platforms, as well
as mobile data targeting and analytics services, will garner more interest
2. Fiserv and M-Com: enables cross-sell mobile banking services to banks
as leading players recognize that an important portion of the overall mobile
that utilize Fiserv for processing and servicing functions.
payments value proposition is the integration of m-commerce services. Of
3. PayPal and WHERE: integrates offers with PayPal’s initiatives at the course, the ongoing challenge with making investments in a fast moving
POS, providing a mobile commerce strategy within the wallet. environment like mobile will be picking the targets that can both take advantage
of near-term mobile use cases and provide platform flexibility to address the
Some deals can be characterized by a buyer’s or investor’s desire to align
inevitable shifts in mobile opportunities.
with leaders in mobile commerce technologies, value propositions, or those
with access to new or high-growth segments of the market within payments. For more information, please contact Dara Khan, Associate specializing in
Groupon has realized the importance of recommendations in purchase tthe Mobile Commerce & Alternative Payments Practice Area, dara.khan@
decisions and has acquired two local location-based suggestion services firstannapolis.com, or Mike Hutton, Analyst, mike.hutton@firstannapolis.com
for restaurants and activities in cities: Mob.ly and Whrrl. The daily deal site
Retailer Alternative Payments Acceptance: Online and Mobile
By Jeff Crawford Online Acceptance
First Annapolis regularly tracks the acceptance of payments products at the 1. Seven out of ten leading retailers accept at least one alternative payment
leading e-commerce retailers. These merchants represent a significant portion (including PayPal, BillMeLater, Google Checkout, eBillme, Amazon
of overall e-commerce and therefore provide an important perspective on the Payments, and e-Check/ACH products). The dominant products are
opportunity for new payment products. This year, the mobile channel and PayPal and Bill Me Later (both owned by eBay). Only two leading
mobile commerce will be added the Top 100 Remote Commerce Payments retailers, Walmart and Sears, offer more than one of these methods,
Acceptance & Mobile Functionality Study due out in late Winter. which is relatively unchanged from 2009 and may indicate limited desire
or capacity among retailers to have a broad alternative payments strategy.
In the meantime, First Annapolis completed a first look at the online acceptance
2. Of the nine retailers that utilize plastic gift cards, only two also offer eGift
of payment products and the use of mobile payments at ten leading retailers
cards, a newer, virtual-only, product.
including Amazon, Staples, Apple, Office Depot, Walmart, Sears, Office Max,
3. All retailers also offer consumers the ability to store payment credentials
Best Buy, Costco and Macy’s. Highlights from this first look include:
for purchasing. This functionality, while not groundbreaking, is an
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7. important component of migrating to the mobile channel Figure 1: Top Retailer Payment Practices: Online vs. Mobile (2011)
and other device interfaces (see Figure 1).
4. Eight out of 10 retailers advertise either their co-brand or
private label credit card on their home pages, and a similar
number of the retailers studied attempt to steer consumers
towards these products by making specific offers related
to their co-brand or private label credit cards.
Mobile Acceptance
1. All 10 retailers offer a mobile solution through an
application, a tablet solution, and a mobile web offering
indicating a high level of interest in mobile. Only Costco
does not have the complete set of channels, offering only
mobile web.
2. Similarly all 10 of the retailers enable shopping and
purchasing via mobile. The consumer experience and
look and feel of the process varies widely. Some mobile
web sites are streamlined versions of the online site, while
other apps offer more advanced commerce and account
management capability.
3. All of the retailers enable mobile purchasing through
credit cards, while only one of the ten offers an alternative
payment option (Sears with PayPal). Nine of the ten also
enable stored credentials, reflecting the importance of Source: Retailer websites, and First Annapolis Consulting research and analysis.
reducing steps and minimizing keystrokes in the mobile
channel and key strokes on mobile phones and tablets.
Also, the storage of payment credentials that are accessible via a mobile in particular, with the creation of the @WalmartLabs group, the acquisition of
app represents a form of a mobile mobile wallet. These cloud-based, mobile development companies, and the roll out two new mobile apps in 2011
retailer-driven wallets that are integrated with the mobile shopping flow confirms the importance of mobile. However, the unique features of mobile
will be credible alternatives to the multi-account wallets that are currently including a smaller device, the potential for 1:1 marketing with location-based
grabbing the industry spotlight. services, and possible integration with the point of sale presents retailers with
4. Promotion of specific payments products is more limited than in the an interesting set of challenges and opportunities. The upcoming full Top 100
on-line channel, with only one retailer, Sears, making payment specific Remote Commerce Payments Acceptance & Mobile Functionality Study will
promotions via mobile. This is likely due to the newness of the channel expand deeper into the retailer group and explore these issues more in-depth.
and also the limited space on the mobile device to make such offers. For more information, please contact Jeff Crawford, Senior Consultant
This first look indicates that most top retailers are fully bought into the mobile specializing in the Mobile Commerce & Alternative Payments Practice Area,
channel, but that the payments functionality is still evolving. Moves by Walmart, jeff.crawford@firstannapolis.com
The Other Guys in Mobile POS
By Marc Abbey fees that range from $5 to $20, pricing that, though there are parallels at Intuit
and Square, is generally higher than at the two market leaders.
Much has been written about Square’s mobile POS offering and Intuit’s Go
Payment offering, and for good reason as these two pioneers continue to Intuit and Square appear to be positioning with simpler and more transparent
generate an impressive ramp in users and processed volume. However, the pricing than other acquirers frequently use, but they also appear to be price
focus on these two organizations raises the question – where are other mainline competing in contrast to most other acquirers. Intuit and Square also tend to
acquirers on the mobile POS offering? In our most recent acquirer research, be innovating in terms of sales, boarding, risk and other business processes,
69% of acquirers across the full range of non-banks and banks report offering perhaps giving Intuit and Square a cost structure targeted to the mobile POS
a mobile POS solution. It is not a scarce product. These same acquirers, niche, whereas there is much less evidence such innovation is occurring yet
though, estimate a penetration rate of less than 5% of their merchant bases, at other acquirers. There are many open economic questions regarding the
a figure that contrasts with the hundreds of thousands of merchants that Intuit mobile POS in its various use-cases, but the proliferation in the offering and
and Square cite when talking about their mobile POS user bases. the differences in approach between acquirers is already noteworthy.
Thus far, Square and Intuit have provided free applications and a free card For more information, please contact Marc Abbey, Partner specializing in
reader, but the acquirers in our research describe sign up fees that average Merchant Acquiring, marc.abbey@firstannapolis.com
nearly $60 and card reader pricing that ranges between $30 and $300.
Acquirers also utilized transaction fees averaging $0.20 - $0.22 and monthly
Mobile Commerce & Alternative Payments: Special Edition Navigator 7 of 7 © 2012 First Annapolis Consulting, Inc.