When the blogosphere recently lit up with posts raving about PayPal's latest promotional video, I was mystified. The video shows a smiley family making payments from their mobile phones: Dad paying daughter her $10 allowance using Bump technology, the daughter buying an jacket by scanning a barcode on the garment tag, Dad purchasing a barbecue grill using a quick response (QR) code, and Mom buying barbecue sauce and toothpicks at the grocery store, again using a barcode.
The video is largely fiction. The Bump, barcode and QR technologies do exist and have for years. But with the exception of Starbucks's barcode scanning mobile app, merchant acceptance and adoption do not.
Telecom consortium ISIS, which is also building mobile payment capability, has a very similar video showing a woman making purchases by pointing her phone at a poster, a subway turnstile and a coffee shop POS terminal. There are literally hundreds of videos just like these on the Internet, with high production values but little truth.
Shortly after PayPal's video post, Google published its own video, showing the Google Wallet being used with MasterCard PayPass terminals in a taxi and in an American Eagle store. This one is more reality-based, as Google has already integrated its mobile payment app with MasterCard's PayPass technology (and licensed Visa's payWave technology) and American Eagle and other merchants have signed on to accept Google Wallet payments.
The mobile payment mechanisms that win will be those that match true consumer demand, which will follow merchant adoption (or vice versa). In both cases, a standard format and ease of use will be key. Near-field communication technology, which lets devices communicate wirelessly at short range and works with PayPass and payWave, seems the surest bet. The missing link for Google is cooperation from telecom network providers and handset manufacturers — so far, only Sprint has signed on as a network provider and Samsung as a device maker. However, Google's purchase of Motorola takes care of the handset side, and when and if Google can sign on more large retailers, the telecom providers are sure to follow.
There's no marketing fluff or vaporware in our FinTech 100 rankings, the eagerly awaited annual list of the top 100 vendors (by year-end 2010 revenue) that focuses on the financial services industry and the top 25 enterprise technology vendors that have banks as clients. This year's list and our profiles of the top 10 vendors show these companies are not just surviving the recession, but building their businesses in spite of it.
Our cover story on Sergio Fidalgo, CIO of BBVA Compass, exemplifies the finer principles of financial technology in practice — a true interest in building long-term customer relationships and executing customers' transactions in real time, regardless of what channel they use.
Speaking of practical implementation of technology, don't miss two important stories in our Hot Topics section this month — one on how vendor audits need to change in the era of cloud computing and extreme outsourcing; the other on how banks are working to achieve single sign-on to multiple channels, so their customers don't have to remember a long list of passwords.
