eReciepts – The Politics and Economics of SKU Data

An update to my Data Games – 2021

© Starpoint LLP, 2025. No part of this site, blog.starpointllp.com, may be reproduced or retransmitted in whole or in part in any manner without the permission of the copyright owner.

Electronic receipts (eReceipts) COULD transform the retail landscape by offering numerous benefits to consumers and businesses. With the potential to enhance digital wallets, improve customer experiences, empower AI agents, and increase advertising effectiveness. However, the widespread adoption and sharing SKU-level data face several challenges, most of which are NOT technical. Today, I’m providing an overview of key business and economic challenges of unlocking SKU data.

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Scenario – Agentic Wallets and Federated Data

Keeping up with the latest in agentic commerce, artificial intelligence (AI), payments, and data privacy is an ongoing challenge. Data and LLM are the key ingredients fueling the rapid advancements in AI and machine learning innovations. As a privacy advocate, I remain deeply concerned about the centralization of data. Once AI models are built to understand “you,” they no longer need continuous access to your data—just ongoing observation (see blogs on Data Centralization and Payments and the Observer Effect).

Do I think wallets will become “Agents”? No, but they will be the most important interface to all Agents, as they broker identity, authentication, authorization, permissions and highly secure data in the handset. My view is that Wallets enable many agents. This view of the the world is called the Agentic Mesh where specialized agents work together to achieve a result.

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Wallets and Privacy

I’m on a brief vacation celebrating my 28th anniversary and deep in thought (pic below). What am I thinking of here on the beach? Wallets, Networks, Trust and Privacy.

The Case for Separating Wallets from Identity Providers

As digital identities continue to evolve, one of the most important debates centers around who controls and operates the wallet that holds these identities. Specifically, should wallets be separated from authorities that legally issue “identity”—commonly known as Identity Providers (IdPs)? This issue is particularly relevant in countries like India and Europe, where digital identity initiatives have made significant strides, yet their approaches raise important questions about privacy and control.

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Digital Wallets – Core Functions and Competitive Strategies

What are the core functions of a digital wallet and what will the future bring now that Apple has opened up their Secure Element (see blog)?

I’ve been writing about wallets for over 12 yrs. Let me recap some history

  1. In 2006, mobile operators had control of what “apps” could operate on a phone. In the US Qualcom bought Firethorne in an effort to create a single bank application, where banks had to pay $1 for every balance request. I’m not joking.. Open app stores destroyed this model quickly, but so the MNOs pivoted to the SE and SIM card. 
  2. In 2010, Mobile Network Operators (MNOs) had control of the encryption keys for secure elements. Their pitch to Google was, “Give us a billion dollars, and we’ll give you the keys”. The absurdity here was only surpassed by Doug Bergeron (CEO of Verifone) marching into Google the next year and asking for a “Billion dollars” for Verifone to support contactless (I was just outside the meeting room).  Of course there was no economic model for Google to make a single penny off of payments back then. Even worse, there were 12 parties in the NFC ecosystem, all looking for economics, yet there wasn’t a dime to share between all of them (blog). Now wrap all this silliness into a MNO consortium with the name ISIS.. yep.. What a great brand!
  3. From 2008-2014 the GSMA had a global vision for managing the phone’s secure storage (see blog) and monetizing it for the MNOs. MNOs could control either the secure storage within the SIM card with Single Wire Protocol (SWP) or within the secure element.
  4. ApplePay’s 2014 launch did several things that changed the game. 1) Ripped away control of the SE from MNOs and OEMs, 2) integrated payments and security into the OS (Card in SE, biometrics in Secure Enclave), 3) required a card to activate a new phone, 4) Created economics with the networks for payment (see blog).
  5. From 2007-2014, US Issuers wanted to only enable credit cards for contactless (a premium experience). 27 Issuers (led by Citi’s Paul Galant) were working on their own wallet, to “own” mobile payments (see Civil War). In 2014 launch of ApplePay, Apple forced the Issuers to enable debit at parity to Credit, and also gave Issuers a take it or leave it revenue share (15bps in US, 7bps in EU and ROW). Charlie Sharff (then CEO of Visa) also established a fundamental network rule in “no wrapping”. You can’t wrap a Visa card with another number and let it operate. A rule that was ahead of its time and also more formerly established with Durbin regulations.
  6. The 27 bank project thus floundered for 16 yrs until last year when saw  the light of day in PAZE. Paze is Gen 5 of this effort, and really a white label version of SRC. A wallet that abandons the POS and focuses on eCom with Visa given the reigns as the lead architect only last year (see eCom Politics and Scenarios)
  7. Today, Issuers classify Apple as “enemy number 1” because of the 15bps fee that the Issuers voluntarily signed up for. Their renewed complaint is that merchant discounts (ie 45 bps and Costco, Walmart and Target) puts them upside down on transaction economics. Apple’s position (anecdotally)  is “you knew what my fee was when you gave the discounts.. You voluntarily signed the agreement.. And now its successful you want a discount”? (see 2022 US Payments Environment)
  8. Visa and Mastercard have become the identity infrastructure for the internet because of the binding of identity to payment. India’s UIDAI and UPI have shown the power of separating identity from payment. Europe is working to build a new digital identity infrastructure (and wallet) in eIDAS. Commerccially, Fast Identity Online (FIDO) is at the heart of new eCommerce experiences that will massively disrupt investments in risk and fraud infrastructure. These services are in Card Networks Payment Passkeys, PayPal’s Fastlane and others. These first generation identity services will be surpassed by 2nd generation identity solutions with hardware bound credentials. Google’s Seccure Payment Authentication (SPA) is the best in class authentication solution globally. (also see Adios 3DS hello FIDO2). 
  9. While the tech changing eCom is amazing, there are only 3 options for organizing it into a successful platform: 1) Government Led, 2) Standards Led, 3) Commercial (payment) Network. Of the 3 only V/MA have established an economic model where participants can invest (see Identity Models and my new blog this week on topic)
  10. Wallets have grown substantially from “payments” to the consumer interaction point for “everything” between the virtual and physical world. Door keys, concert tickets, boarding passes, DLs, loyalty cards, student IDs (see Apple’s list of UC’s it will support). 

     

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Apple Wallet “2.0” in iOS18 – What’s In It?

Winners: Consumers, Merchants, Banks, Networks and Affirm

Losers: Branded PayPal and Venmo

Apple’s WWDC is on Day 2. Today we will see significant enhancements to ApplePay and Wallet in forthcoming iOS18 (to be released this fall). Here are the highlights in order of impact. 

1 – ApplePay in eCom

ApplePay will be supported in every browser. This will be a game changer and dramatically increase payment volume flowing through Apple wallet (and their platform). Just last week, the WSJ published a great piece on why retailers hate that consumers make large purchases on their computers. Apple will expand ApplePay to support all browsers AND provide a major upgrade in experience, security and fraud. 

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PayPal Innovation Opportunity – “All In” on the Consumer

I’m usually just a cynic. Today, I’m constructive with specific suggestions for PayPal’s new executive team. Note that about 80% of your large institutional investors will read this.. 

Exec Summary

  • Wallets are a core battlefield for Issuers, BigTech, marketplaces, and governments.
  • PayPal’s previous “super app” strategy failed because there was no clear consumer value proposition.
  • The most significant consumer value proposition to be unlocked is the unbundling of financial services, with the wallet providing the common UI to manage the complexity. In this future state, a “super wallet” would enable bank competition for every account and every transaction.
  • PayPal is well positioned to execute on a super wallet, but it must go ALL IN on a consumer-focused value proposition without regard for issuer relationships. 
  • For example, Curve is the best-in-class Wallet providing aggregation, transaction, loyalty and analytics across all account types, networks, POS, eCom, P2P and banking services. 

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Visa Launches Visa+ with PayPal as Anchor

Short Blog

https://usa.visa.com/about-visa/newsroom/press-releases.releaseId.19621.html

Today Visa announced a major expansion of Visa Direct called Visa +, with PayPal as the anchor launch partner. “help individuals move money quickly and securely between different person-to-person (P2P) digital payment apps” without requiring the recipient to have a Visa card.

Visa+ expands Visa’s role as the meta-directory of payments connecting consumers, wallets and accounts with a master “payname”. If I were to write the marketing one-liner for Visa+ it would be “pay people in the way they want to be paid”

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SRC – Why Now and What is the Opportunity?

Short blog. What opportunity are top US issuers chasing with an SRC wallet?

During my talks with top acquirers, I gained new insight into eCommerce volumes. As a committed ApplePay user I was shocked to hear that ApplePay use in browser is significantly under 5% (even in iOS/Mac devices). Per my blog on intersections, the dynamic is due to both Chrome vs Safari and merchant adoption.

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Banks Launch “Wallet” (again)

Short Blog

Per the WSJ Article this AM, US banks have launched a new wallet (again). For frequent readers of my blog, very little new news. Also, I’m just wrapping up a 15-page part 4 “Innovation in Networks” that will be out very soon. 

Quick Summary

  • TCH Banks have been contemplating a mobile wallet and a new network for 13 yrs (I have over 20 blogs on topic, see overview here). 
  • Today we gain clarity that Banks gave up on their latest Authentify Wallet launch and jumped on board a “white label” SRC wallet led by Visa (See 23Jan2023 WSJ). I outlined this in my SRC blog (Sept 2022) and TCH RTP Update.  
  • Inital pitch for this wallet was not well received by big retailers at Money 2020. It entailed a liability shift if wallet was offered and all COF were tokenized (see blog)
  • The wallet is not owned by EWS, but a new payment network led by James Anderson. The ownership of this new network is the same at EWS (see blog ). Lets call this wallet EWS SRC to shorten the name. 
  • Competitor is Apple.. the banks want to own the mobile payment experience. Google is working with the TCH banks and is also working with FedNow (long blog coming on this one). It is likely that Apple is not involved in any of these activities, yet Google is working to pilot both FedNow and TCH RTP to leverage their India UPI success.
  • Now that the largest TCH banks have jumped on board SRC, the TCH RTP effort focus has shifted to commercial flows and bill payment.
  • i provided a detailed strategic discussion on the reasoning behind this move in Part 2 – The Power of Bank Networks.

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TCH Phase 1 – eCom Wallet

Short blog – 80% confidence

© Starpoint LLP, 2022. No part of this site, blog.starpointllp.com, may be reproduced in whole or in part in any manner without the permission of the copyright owner.

Phase 1 of TCH’s token efforts will be in SRC model. A bank branded “wallet” acting in the DCF role for TCH PIs . Just as VAC has enabled the elimination of physical hardware for acceptance, issuers see a plastic-less future for cards. They want to own the issuance of cards and want much more than a token, they want the entire “wallet”.

Go to market is either as:

  1. TCH as SRC System, or
  2. Visa as the SRC System for all TCH banks (V and MA) with TCH is a “unique role” managing all consumer data, registration, payment tokenization, …
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