Updated 15 June

WSJ Friday: Payfone and Verizon

I’m trying to imagine life as a Verizon customer. From a customer experience perspective, I have to register my credit card in the Google Android Marketplace for app purchases.. but now I also have to register it again at Payfone if I want to pay for physical goods on a mobile phone.. and again for the mobile NFC wallet (to give the TSM access to the card for registration in SE), I also need to register for Bill to Mobile. Thats 4 different payment types on one carrier.

• ISIS – Physical Goods at POS through NFC
• Bill to Mobile – Digital Goods
• Payfone – Physical Goods in mobile browser
• Android Marketplace – Android Apps

I doubt if there is much of a payment strategy behind all this.. It looks to me as if Payfone strategy has morphed just in last 2 months, from digital goods to physical goods. Payfone has completely underestimated the merchant integration challenge.  Competing in this mobile browser physical purchase space:

• PayPal
• CYBS/Visa Wallet
• Google Checkout
• ?Amazon (they have the capability and the user base..)
• Moneybookers
• payforit (UK consortium), Belgacom’s BICS, Bharti’s pre-paid card, …

What is the value prop that Payfone will offer merchants? Do merchants really want the digital ecommerce payment process to be completely differently than a digital mcommerce payment process? HECK NO.. little things like fraud, settlement, reconciliation, customer support, returns, … Payfone has no clue on what it will take to run the merchant side (which is why they probably don’t have a reference customer here). Payfone’s team has offered me a chat to set me straight on all of this… which I will take them up on at end of June… I told Rodger that I’ve been wrong before.. and not afraid to admit it. On this merchant piece… perhaps Amex will do the merchant acquisition for them. If this is true then there is a real strategy issue… merchants love for Amex is at the same level as their fondness for the IRS or tax regulations…

Payfone looks great on paper and I’m sure Verizon wanted to get something moving they could control and gain leverage with. Little Sprint is now 12 months ahead of Verizon.. and ISIS. It must be frustrating.

Message to Verizon: the real challenge for you is managing customer behavior.. and creating a well designed payment product that works across all of these areas. You are not a payment organization.. Apple will win this design war on iPhone.. and Google will win it on Android…. Win means delivering real consumer value (and retailer value) in an integrated cross channel experience.  This Payfone partnership will create a real headache for ISIS in merchant integration…. You will have ISIS working with top retailers to integrate NFC … then your Payfone (and bill to mobile) partners requesting another integration for mCommerce… each with separate settlement processes.  I can’t imagine how you will manage the customer communication and marketing…

Message to MNOs. Start with a value proposition to a customer.. NOT with a product. If you can’t deliver the product (which is very likely), then focus on taking a role in orchestrating the value delivery (examples: service discovery, authentication, merchant mobile enablement, community ratings, ) . Verizon’s strategy is product focused… when they loose in products their brand deteriorates and they start to become a dumb (fast) network.

As a side note. I just heard today (need to find the source) that 40% of all mobile purchase transactions were done via wi-fi. This would intuitively make sense as its hard to do this while you are walking around.. and given network coverage of AT&T/ iPhone in NYC alone no one would have the patience to complete multiple screens.