Happy Hour (2 beers) + Happier Hour (s) (4 beers) = Headache, I’m 38, one day I’ll learn that it is ok to stop at 2, one day.
Yeah GOOG and AAPL don’t bring much except the hardware / software in the handset currently. I suspect that Google is hoping to capture some data and get really local when it comes down to it, but that is pure speculation. But let’s stick with the speculation. They want to know what transactions are happening and when. Why? Because that is worth a lot, when they know what was just purchased and where. Apple, I’m never sure about, but they probably have a plan. Of course, it would have to be acknowledged that you are sharing your info for deals. Example, let’s assume that I had some discipline and I was about to call it after 2 beers last night. As, I’m checking out (very easy in this scenario), Google feeds the merchant some info that I’m easily sold on a ½ price beer and burger combo (they sold me on it before). As I’m checking out, I get a coupon for a ½ price beer/burger combo. I stay, get drunk and spend a lot more, everyone gets paid off of my poor judgment. The possibilities are limitless. Instead of just getting chips at the table, Google lets the Bellagio know that “Big Fish Lee” just asked for a stack of black chips at the craps table. They are all over you trying to get you stay in their casino, comping rooms and whatever. Basically a very localized and targeted Groupon/Loyalty program combo. Grocery stores have been trying to do this for years with the coupons printed on the back of the receipts using your loyalty card for ID – not real-time. These examples are worth a lot, but I just made them up off of the top of my head, I guarantee there are much smarter people figuring out all kinds of innovative advertising systems. Effective local advertising is the Holy Grail for SMB’s and Google knows this, which is why they tried to snatch Groupon up and why Groupon was smart in giving them the Heisman.
I think that eventually the 2% fee that you pay will be eaten away. Acknowledging that I’m no expert on the subject, I’d guess that number was originally the cost of a guaranteed transaction for the merchant (V/MA take the fraud risk), but I have no clue. In addition, processing costs had to be higher in the days that they had a credit card machine which took a physical imprint of the card, requiring the them to process a bunch of paper on the backend, however this does not cost as much to do when it is an all-IT solution at scale. Probably why MA has 50% operating margins? I know that PayPal even charges more, starting at 2.9% + $0.30. Why? It is an all-IT solution! But a sketchy one. It is pretty sketchy sending money online with not much more than an email account, a password and a link to a bank/card. A question that I have is the following: If you fill your PayPal account with a credit card, I guess they are being charged 2% and then charging you (the merchant) 2.9%? I don’t know, not worth figuring out. In any event, PayPal is a legit player now and will compete for transactions with MA and V, especially in the connected world. Why I think the charges go down is as a result more competition, but the but the enabling technology allowing this competition to compete will be that is that it is possible to have a lot more factors of authentication and thus allowing for smaller players to get involved without the risk. It is possible to have your ID embedded in your phone so that the payment and ID are intertwined, and then you could enter a pin to complete the transaction, furthermore it would be possible to have other stuff like GPS data as well etc (so that they know you are actually there). In other words it could be a VERY secure transaction and one that doesn’t require a 2% surcharge.
My secret service buddy was headed to bust some MoneyGram fraud scheme last night. I asked him why they (MoneyGram / Western Union) even still exist and he said basically for sketchy practices (fraud or to get around something). So there will also probably be those who create systems for these sketchy practices and charge higher fees. Will drug dealers be bumping phones?
Lee, you will not replace your card with a phone, I’m certain of that. But I’d bet Jake and Mike will and they’ll call you “old fashioned” …
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