Commuters account for 14% of UK online spending – research

A new report into commuters’ spending habits reckons they drop £23 billion per year of stuff via their mobile devices while on the move.

The research was conducted by media agency Kinetic and media owner Exterion, who both apparently specialise in OOH. Disappointingly this doesn’t mean they spend all their time exclaiming in amazement at stuff. Instead OOH stands for out-of-home and refers to the kind of advertising you get hit with when, you guessed it, you’re away from your house.

Across the whole country commuters apparently blow £89 per week on their phones one average, which seems remarkably high. London commuters spend £153 per week, we’re told which is bordering on mania and we can only assume this average is skewed by city types buying Lamborghinis on their phones or something. Across the board clothes seem to be the most popular purchase, which tallies with another recent report on this sort of thing.

“Our research shows that in today’s age of time-poor consumers, the everyday commute is fast becoming a valuable opportunity to make purchases,” said Stuart Taylor, CEO of Kinetic. “At a time when footfall is declining on our high streets, these findings confirm that retailers can nevertheless reach a valuable urban audience in a physical environment.”

“Commuters are the lifeblood of the UK, and hugely important to the economy, businesses and advertisers; they keep our nation moving and growing, as they travel,” said Nigel Clarkson, Chief Revenue Officer at Exterion. “Our research proves the commercial impact of the Commuter Economy, through the billions contributed to online retail annually.”

Both of them banged on about OOH advertising but laboured the point far too much for us to burden you with their unvarnished propaganda. That doesn’t mean they’re wrong, however. It stands to reason that people would use the dead time taken up by commuting to get other stuff done and it’s worryingly easy to buy stuff on your phone these days.

Giesecke+Devrient lands Swatch contactless payment gig

Mobile security company Giesecke+Devrient is helping Swiss watch company Swatch with its own contactless payment technology.

Rather annoyingly called SwatchPAY!, the contactless platform was launched in China back in 2017 and is now available in Switzerland. It involves sticking an NFC chip in a watch, which you can then sync with your credit card. In that respect it’s pretty much a contactless card embedded in a watch.

Whether it functions just as easily is unclear, but Swatch seems to have partnered with all the right companies, including Mastercard, Credis Suisse, UBS and G+D. The latter is doing what it does best in providing the secure element for these watches, which also enables the activation of the contactless payment function in-store, when you buy one. Here’s how it works.

Swatchpay chart

“Continuous innovation is a key strand of the Swatch DNA,” said Carlo Giordanetti, Swatch Creative Director. “This latest advance, with the introduction of the fastest and simplest tokenization, makes it easier than ever to pay ‘forever’ – token up your Swatch, swipe it and you’re done. SwatchPAY! is simple, stylish and swatchy.”

“We are thrilled to be Swatch’s partner for this payment-enabled watch, which has been a huge success in China,” said Carsten Ahrens, CEO of Giesecke+Devrient Mobile Security. “The unique mix of iconic Swatch design and a payment functionality makes this a very appealing product, and we are proud to have contributed our extensive expertise in security, mobile payment and wearables technology.”

The Swiss watch industry has been in a flap about smart watches for a while, so it’s sensible to see one of them develop its own contactless payment platform. They’re fortunate that the killer use-case for smart watches hasn’t been found yet, but it presumably will be eventually. The key to this alternative being a success will be its ease of setup and use and it looks like they might have got that right.

UK mobile commerce is exploding – research

New research from price comparison site uSwitch.com reveals that the use of mobile devices to go shopping in the UK is growing rapidly.

They got market research firm Opinium to chat to 2,000 adult Brits about their mobile commerce habits and intentions. The survey concluded that we will blow £25 billion buying stuff with our phones and tablets this year, up from £15 billion last year. Furthermore they reckon 30 million of us will use our phone to shop this year, which will represent a 66% annual increase.

“With smartphone and tablet shopping now a £25 billion industry, it’s hardly surprising that  major retailers have long adopted a mobile-first approach to their websites and have even introduced their own apps to make the user experience as easy as possible,” said Ru Bhikha. “Cleaner user journeys and the ease of one-click purchasing will only add to the number of people shopping on their phones and tablets.”

The main appeal, unsurprisingly, is simple convenience, with the ability to shop at any time coming in a close second. Other prominent reasons given for shopping over your phone seem to apply to all e-commerce, including the ability to compare prices, greater choice and better prices.

The survey also asked questions about e-commerce habits in general. As you can see in the table below Amazon and eBay have a clear lead over the online manifestations of bricks-and-mortar retailers, although the latter seem to be doing a decent job of trying to keep up. Somewhat surprisingly clothes are by far the most bought type of product online, followed by books, groceries and cinema/theatre tickets. The living room is by far the most popular location for blowing all this cash.

Website % of shoppers to have used website last year
Amazon 89%
eBay 63%
Argos 41%
Tesco 35%
Marks and Spencer 25%
Asda 25%
Sainsbury’s 22%
John Lewis 20%
Currys PC World 17%

Source: uSwitch.com

Brits can’t be bothered with Black Friday

Americans like to spend a whole day giving thanks for stuff and then spend the next day buying loads more if it. Over here, not so much.

Thanksgiving is a national holiday in the US that seems to be some kind of harvest festival, complete with traditional feast. For some reason they like to spend the next day engaged in a retail frenzy that has become known as Black Friday due, apparently, to the fact that this is the first time retailer’s balance sheets move into positive territory (in the black, as opposed to the red).

Because retailers like nothing more than calendar imperatives to buy stuff, such as Christmas, Valentine’s Day, etc, UK ones have been keen to import this compulsion over here. But according to new research from Genesys 80% of UK consumers won’t bother to hit the high streets this Friday, with the majority of them paradoxically saying they’ll stay away because things get too busy.

“This year, the vast majority of British consumers are planning to stay away from stores on Black Friday because it’s not worth the bother,” said Richard McCrossan, digital lead for Genesys. “They prefer shopping online in the comfort of their own home – or whatever location is convenient –  to the chaos of dealing with crowded high-street stores.

“Shopping has become as much about the experience as the purchase – and during the holidays, that means speed is of the essence and convenience is king. Only 5% of respondents said a low standard of customer service is a reason to avoid physical stores, so it’s other aspects that put consumers off.

“With an estimated 14 stores per day closing in the UK, retailers must meet consumers’ expectations for hassle-free experiences at every touchpoint – from making payments to finding answers to questions, to getting personalised, friendly service. It’s not just about the purchase – it’s about making the experience great.”

So it remains possible that we will buy loads of stuff on Friday, but over the internet. US etail giant Amazon tends to go big on Black Friday and the internet arms of UK companies may be tempted to follow suit. In semi-related news it looks like the use of smartphones to make contactless payments is exploding in the UK, with recent research revealing they now account for 7% of all such transactions.

Amazon Pay acquires app aggregator platform Tapzo

Amazon has acquired Indian app company Tapzo in a deal to bolster its digital payments offering.

According to the Economic Times, the deal will be valued between $40-45 million, while co-founders Ankur Singla and Vishal Pal Chaudhary will be brought onto the Amazon team to continue development of the offering. While the acquisition is yet to be confirmed by either party, sources state Amazon is after a shortcut to get in on the mobile money bonanza.

“It would have taken Amazon Pay up to two years to build an entire stack of service offerings to enable efficient use-cases for its payment platform,” one source familiar with the deal stated. “So this acquisition helps them save time and also enables them to spread their cashback offers across a host of services immediately.”

Tapzo is an aggregator platform that allows users to access over 35 apps including Amazon, Flipkart, Ola and Uber through a single screen, but also allows for mobile payments, to pay bills, order cabs and food and book flights and hotels. The most popular service for users to date has been bill payments and recharges, with about 15,000 transactions per month across the two services.

Integrating the Tapzo capabilities into the Amazon Pay business will offer the team plenty of ammunition as the battle for domination in the Indian payments market warms up. While there are several local firms are controlling market share for the moment, PhonePe and Paytm for example, the continued digital revolution in India is attracting the interest on the international scene.

Aside from Amazon, Google has also been carving itself a new revenue stream in India. Its Tez offering has recently been rebranded to Google Pay, and will start offering new services such as pre-approved loans.

Google rebrands payments app ahead of international assault

Google has announced it will rebrand its Indian digital payments app, Tez, to Google Pay as the team readies a launch into new international markets.

Only two years ago many would have considered India a distant, slow-follower of the digital revolution, with the economy still largely being governed by cash (imagine that) and smartphone penetration exceptionally low for its stature. The inspiration of Reliance Jio seems to have tempted the country into the virtual society, and the digital appetite of consumers has been almost insatiable. Not only have data consumption rates sky rocketed, the craving for digital services is clearly apparent.

Google is one of the companies which has benefited considerably with the desire to be digital. Having launched last September, Tez has been adopted by 22 million people in 300,000 cities, towns and villages across the country. During this period, Tez users have made more than 750 million transactions, worth more than $30 billion. The app currently supports 2,000 apps and websites, though this number is set to be supercharged, tying up with digital services such as Uber as well as offline channels including the likes of Big Bazaar, e-Zone, and FBB.

Aside from retail and partner push, the team will also expand to cover micro-loans. Partnerships with banks such as HDFC Bank, ICICI Bank, Federal Bank, and Kotak Mahindra Bank will enable customers to have pre-approved loans paid directly into Google Pay.

While these might seem like incredible numbers, the Telecom Regulatory Authority of India released figures recently suggesting there are 1.14 billion, with Android holding more than 80% of the market share. With only 22 million users currently, the potential for Google’s digital payment app here is massive. And this is only one country. Admittedly it is the second largest in the world by population, and one of the most lucrative when you look at mobile payment adoption, but the decision to rebrand the payment solution is with expansion in mind.

“We have learnt that when we build for India, we build for the world, and we believe that many of the innovations and features we have pioneered with Tez will work globally,” said Caesar Sengupta GM of the Payments business and Next Billion Users Initiative at Google.

“The world has certainly taken notice of India’s digital payments success and our deep investments here with Tez. Many governments are asking us to work with them to bring similar digital payments innovations to their countries.”

Google Payments already exists in 20 markets, though Tez is designed for the Indian market, and this seems to be what has interested the currently un-named governments. To launch a business on the international scene, it makes sense to have a single brand, and it would also be a smart bet to leverage one of the most powerful and influential brands worldwide; Google. According to Brand Finance, Google has the third most valuable brand worldwide, only falling behind Amazon and Apple, explaining the decision.

There might be some stories regarding misinformation and suspect privacy settings, but the Google brand is still one of the most recognisable and trusted worldwide. Ditching the Tez tag is a sensible idea.

Payments challenger Adyen post strong growth following June IPO

In its first earnings release since going public in June, payments firm Adyen is proving it can live up to the hype.

After pricing its shares at €240 each ahead of the launch, it opened for trading on June 13 on Amsterdam’s Euronext exchange at €400 a share. With such a leap, a lot would have been expected from the firm, and it certainly delivered.

For the first six months of 2018, Adyen generated €156 million in total revenue, up 67.3% year-on-year, processing more than €70 billion of transactions, and collecting €48.2 million in net income up 74.6% year-on-year. Investors will certainly be pleased with growth at the company which counts the likes of Uber, Spotify and Cathay Pacific as customers.

Europe is still the major earner for the company, accounting for more than half of the processed transactions and roughly 65% of net revenue, though growth in other regions was incredibly healthy. Asia Pacific was a significant boost for the business, 147.5%, though the North American region was also incredibly positive, 142.9%.

“In the first half of the year we saw a continuation of the transformation of commerce, leading to an increased merchant focus on accepting payments across channels and geographies,” the firm said in a letter to shareholders. “This trend, coupled with changing shopper behaviour, the rise of mobile payment methods, and the increasing pressure on retailers’ operations, highlighted the benefits of our single platform, and consequently driven significant growth in the first half of 2018.”

The success has been attributed not only to doing what it does traditionally very well, but also branching out into new verticals such as hospitality, restaurant chains and supermarkets. While these might be different environments, all are experiencing the same increase in demand for mobile payment from customers.

Another key aspect of growth here seems to be the single platform. Many businesses around the world will use different payment solutions dependent on the environment, some of which will be legacy systems. The complications come with marrying the data to customers across the different platforms when trying to generate some sort of business insight from the data. A single platform, encompassing both online and offline transactions, allows the formation of data sets which can be used to inform future business decisions.

“Through our single platform, we provide a holistic view of payments, regardless of sales channel, delivering unique shopper insights while combating fraud and improving payment authorization rates,” the firm states.

While it all looks positive right now, another statistic which will keep investors happy is the recruitment efforts. Over the first six months, staff head count went up almost 40%, with 47.3% of these recruits taking up tech roles. While bolstering the sales team is certainly a positive move, such a focus on continuing the development of the platform will certainly add to the generated momentum.

Softbank and Yahoo team up to crack mobile money in Japan

Softbank and Yahoo Japan have announced the formation of a new joint venture, PayPay, to launch a QR-based smartphone payment services in Japan by November.

The joint venture will lean on the experience of Paytm, India’s largest digital payment brand and a SoftBank Vision Fund portfolio company, for technology and expertise in mobile payments in the latest efforts to move Japan away from a cash-based society. As it stands, less than 20% of payments across the country are cashless, one of the lowest worldwide for a ‘developed’ economy.

“The Japanese government is taking measures to raise the cashless payment ratio to 40% by 2025, with a long-term goal of 80%, the highest level globally,” Softbank said in a statement. “To aid these efforts, SoftBank and Yahoo Japan established PayPay Corporation in June 2018 and will launch its user-oriented payments platform in the fall 2018.”

With the experience of Paytm, the brand has 300 million customers and 8 million merchants, combined with the presence of SoftBank and Yahoo Japan, the PayPay business certainly has a promising to start to disruption. The Yahoo! Wallet which has approximately 40 million accounts, will act as the foundation, with Softbank leading the sales strategy, while also developing a localised service leveraging Paytm’s technology. Once the new service has been launched, Yahoo Wallet will cease to exist, though a time-frame has not been laid out.

While the adoption of this technology is far from given, the venture does demonstrate the power of the Softbank ecosystem. While it might have looked like a side-project to keep billionaire CEO Masayoshi Son busy, the Softbank Vision Fund offers a wealth of technology expertise for family members to lean on and launch new services. Of course, Vision Fund employees will be looking to find investments which will make money in the long-run, but complementary businesses and technology to aid the progression of current new services would certainly play some role in the decision making.

WhatsApp forced to enter India mobile money market early

The WhatsApp online payments trial received rave reviews in February, however the team is being forced to launch the market-ready version ahead of schedule for fear of being left behind by competitors.

WhatsApp first announced its intentions in the mobile money space back in February, trialling the feature with one million Indian users, though with more than 200 million users of the messenger app in the country there is certainly room to grow. According to Bloomberg, WhatsApp is readying the launch ahead of schedule, with only three partners instead of four, due to fears competitors are streaming too far ahead. HDFC Bank, ICICI Bank and Axis Bank are currently signed up, with the State Bank of India set to join as soon as the systems and processes are ready.

The potential for mobile and online payments in the country is massive. Aside from the rapid digital revolution which has been thrust on users following the democratization of data by Reliance Jio, the Indian Government is keen to take the country away from a cash-society. This focus on the digital world has certainly benefited certainly companies, some of which are less keen about sharing the profits around.

Vijay Shekhar Sharma, founder of Paytm Payments Bank, one of the two dominant players in the Indian online payments space as it stands, has been highly critical. Sharma was one of the beneficiaries of the government’s drive towards digital, and has not welcomed competition in the space. His Twitter feed regularly criticises the decision to grant WhatsApp a license, while also retweeting conspiracy theories about Facebook reading messages and stories questioning the security capabilities of the app.

The other dominant player currently in the market is Google Tez, though the WhatsApp team might be keeping a closer eye on WeChat. The Tencent-owned messenger and social media app has been making moves in the India space, and while it is yet to topple the dominance of Paytm, it arguably presents more of a threat. This is the reason Sharma is doing his best to limit the incursion of social media apps into the Indian payments market, he probably knows they will steal a lot of market share.

When WeChat launched its payment feature in the Chinese market as an alternative to Alibaba’s, it quickly captured market share because it already had an engaged user-base. Users could pay for a variety of products and services through a trusted and secure application, which was already being used for a variety of other features. WeChat kept users inside its walled-garden, and offered the opportunity to remove clutter and redundant apps from valuable real-estate on the home screen.

WhatsApp can replicate this strategy with its 200 million users in the Indian market. Ideally, WhatsApp would have launched on its own terms, but it does still pose a very serious threat to the incumbent players in the Indian market.

Aside from the upcoming conflict, this is one of the first examples of genuine diversification from Facebook, parent company of WhatsApp. To date, all the ‘alternative’ strategies Facebook has used to build the bottom line have ultimately led back to bleeding the same assets through digital advertising. Video does, news does, promotional ads do, everything Facebook does is about monetizing the user while they are on the platform. It is successful for the moment, but there will be a glass ceiling; only so much advertising can be presented to the user before the experience deteriorates.

When you look at the companies who are set to dominate the world for decades, there is genuine diversification. Google has a separate video platform in YouTube, doubling the real-estate for advertising, and also has a burgeoning cloud computing business. Amazon has the world leading cloud IaaS business, while also successfully entered the content subscription market with its Prime service.

Of course this is not a new idea. Coca Cola is a business which also diversifies by acquiring brands and products which allow it to target a different demographic; it owns Innocent Smoothies for example, as well as Powerade. Successful and healthy diversification is about seeking new revenue opportunities, not simply adding addition means to bolster the same advertising machine.

A successful launch into the online payments market could prove to be very lucrative move for the Facebook business.

Square stands up for small retailers in the mobile era

US mobile payment processing outfit Square reckons its new stand will empower small businesses in a way that traditional financial services have failed to do.

Square was launched to much fanfare, thanks to being founded by the bloke who also founded Twitter – Jack Dorsey, in the US in 2009. The first product was a little dongle that you plug into the headphone jack of your phone that allows you to take card payments on it by swiping the magnetic strip.

None of that made it over here for a while though, with Square making its first appearance in the UK via a contactless card reader last year. We met Jesse Dorogusker, Hardware Lead for Square, and he explained that’s because they didn’t support Chip and PIN until then, with the US still reliant on the magnetic strip or even (shudder) those anachronistic carbon paper counterfoil things.

Now Square is adding a stand to its UK offerings, which is designed to support a tablet and turn it into an instant point-of-sale terminal. Before Square Dorogusker spent years heading up the accessories division at Apple and that influence is clear in the design of the stand and the card reader, both of which go hard on the smooth white plastic theme.

The whole bright idea from day one was to utilise all the powerful technology that was being put in people’s hands thanks to Apple and Android, to help smaller businesses get access to the latest, mobile-powered, financial services.

Dorogusker SquareThe barriers to entry for SMEs to get into modern financial services are too high and I would say that’s on purpose,” Dorogusker (pictured) told Telecoms.com. “The mainstream industry sees too much risk in serving small business owners and as a result they’re very underserved, especially in technology transitions where the introduction of additional ways to pay like contactless.

“The smartphone industry has done an amazing job of making incredibly powerful devices widely available at shockingly low prices for how technologically packed they are. We’ve built complementary pieces of technology that connect to these amazing devices and give consumer-grade experiences to small businesses.”

It’s hard to argue with the premise. Imagine the amount of sales lost by, say, stallholders at a music festival because potential customers have run out of cash. The Stand product also comes with point-of-sale software to use on the tablet and even a swivel base so the retailer can present the sale to the customer for approval. As advertised it give small businesses the point-of-sale power of much larger setups and that seems pretty compelling.

Dorogusker also thinks this is something the telecoms industry needs to be aware of. People have challenges with connectivity and we’re now in a world that requires an online connection to make a payment, verify it and issue a digital receipt,” he said. “A lot of networks are focused on peak speeds and not as focused on coverage. 75% of Square’s customers in the UK are outside of London, maybe not near a bunch of cell towers, and they need coverage – not ten bars, one bar will do.

The Stand product launched in the UK today and is on a half price promotion for a month. We’re now off to the street market on Tottenham Court Road where you can buy a delicious Thai green curry and rice with just a tap of a phone. Now that’s progress.