If you have been following along with my comments on transparency you might think the only big prize is owning the phone market or the tablet market or both. There’s another prize that’s very big. To understand it you need to take a look at PayPal. When I am online I like it when PayPal is a payment option. I don’t have to pull out my credit card. I just have to remember my PayPal login and I can complete my desired purchase. What if every transaction in the US went through two or three companies? This would be like a super PayPal. It wouldn’t just be online transactions but local purchases such as groceries, gas, clothes and dining.
It’s time for some simple math fun. April 2011 retail sales in the US were approximately $390B. One percent of that is $3.9B. If a company could get a third of this it would be $1.3B. That’s per month or $3.9B per quarter. This is only for the US. How do you get 1% of every transaction? You make them flow through your device. With NFC, the phone is the gateway to your credit card. When watching TV, think GoogleTV or Apple TV. What if all you needed was one account with Google or Apple and you could cover all of your bills using your phone or your TV? This makes iTunes look puny. Don’t kid yourself, both Google and Apple are eyeing this. I suspect Microsoft is too but they are a bit late.
Amazon, a company I haven’t mentioned till now, sees this too. Their solution has been to be the central online shopping site. However, remember how the Germans went around the Maginot Line? Remember how I said Apple and Google were doing a similar end around on the Wintel alliance? We could have another end around play here. Imagine your phone being your main device for purchases i.e. replacing your credit card. Apple and Google could move in on Visa and Mastercard. Now that they have you funneling your purchases through them it’s a small step to begin guiding those purchases. Think Apple App Store on a huge scale. Think of the Google Market Place but selling more than apps. Both of these companies are sitting on large amounts of cash and looking for ways to turn that into even larger revenue and profits. What can Amazon do? They can take a clue from their Kindle line. I don’t own a Kindle. However, there are Kindle apps on my laptop, my desktop, my phone and my tablet. When I buy ebooks my first choice is through Amazon. I don’t buy through iBooks because iBooks isn’t as broadly cross platform as Kindle. It’s that old transparency of data thing again. By buying through Kindle (Amazon) I can read the book on all of my devices. I read them where I want, when I want, and on the device I want to use. Amazon needs to be the one company that will allow both your Apple device and your Android device to use the same account. At all cost they need to make sure the various platforms are open enough to allow them to be the central clearinghouse for your purchases. The same can be said for Mastercard and Visa. Those two companies dominate the landscape right now. However, fundamental changes are afoot and that always spells opportunity for others. For the first time Visa and Mastercard are vulnerable.
When will this take place? No time in the near future as far as the general public will see. However, the initial steps are being taken now. At first you will just place your credit card information in your phone and use it instead of the physical card. This is only slightly different from having Amazon store your credit card information with your account. From there it’s a small step to add extras to the Apple and Google app stores. Finally, Apple or Google issue you the credit line and push Visa and Mastercard out. They will be able to do this by offering incentives from the savings generated by not shipping Mastercard or Visa 2%.
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I have to say that reading this article I am getting big red security flags. All of this would be very nice but would make life a bit easier. I realize many folks use PayPal but the experiences I have had with them have been horrible and scary. They are known for high rate of Identity Thief but in reading your blog it seems that this isn’t a problem with you at all. Personal security is a large issue and should be guarded with great care. Once your ID is stolen you are then a target for a long time. As for using my phone as a CC, well I don’t think so. Sure I have an iPhone but the apps I use on it are for navigation and emergencies purposes, not for purchasing, playing, etc. I guess I wonder what on earth did we ever do in the pass without the modern conveniences that we have today. As for online purchases, again I have to say, you put your CC number there – RED LIGHT!!!!!! Nope I find the store, a number and I call and talk them and provide them the information. Online just goes through too many air waves for your personal info to be given, even if you have a lock on your computer doesn’t mean that someone isn’t tapped in to the air wave. Personal safety is my issue here.
You should be concerned about security. You should be even more concerned about privacy. This system will, in the long run, be less risky than credit cards when it comes to theft. However, privacy is another issue. Google’s advertising revenue stream that they are counting on depends on them knowing what you bought, when you bought it and where you bought it. Beyond that the ultimate goal is to know where you are at all times. Did you stare for 30 minutes at that Panasonic TV in Best Buy? Are you heading for the door without buying it? Maybe a text message with a code for 20% off if purchased in the next hour will change your mind. This is the benign use. The goal of this will be o entice rather than annoy. They want your money and not your anger. The deeper concern is when unscrupulous people have control of this data. I do not mean the equivalent of identity theft. That will be similar or better than the present situation with credit cards. I am talking about political power. What happens when someone knows everything about every member of congress? This is similar to the present issue of geotagging photos. A simple photo posted on Flicker may show a soldier having breakfast. From that the geotagging info will give his location and the date. A look at a patch on his arm might supply the unit identification. This can be very useful to an enemy. We are already in a world where we trade privacy for convenience. Consider the OnStar system in some cars. There you trade privacy for the ability to track a stolen car or to have emergency workers sent in case of an accident. These are very useful advantages and are probably, for most people, worth the loss of privacy. It’s a tough issue.
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