02 September 2014

James Richards

James Richards - 80-30

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PayTag: payments pioneer or a step short of a mobile wallet?

25 April 2012  |  2849 views  |  3

Off the back of Pingit, Barclaycard is continuing its assault on the mobile payments world with the launch of its recent ‘mobile’ contactless offering PayTag. Positioned as the low-tech alternative to investing in an NFC-enabled handset, the contactless sticker from Barclaycard enables any of its credit card customers to turn their mobile phone into a contactless payment device.

Yet another contactless service from Barclaycard, yes, but can this be dubbed a groundbreaking development in the mobile payments space? On the surface of it, no. For a start, this is not a new technology.

In fact, can this even be labelled a ‘mobile’ payments offering? The mobile phone isn’t actually a necessity during the transaction, with any hard surface being sufficient enough to get the contactless sticker working. Theoretically, that could be a Kit Kat bar, or for the women out there, a compact vanity mirror!

Delve a little deeper and where PayTag may not be pushing the boundaries of innovation, it does overcome a key challenge in enabling broader consumer uptake of contactless and mobile payments. The solution is affordable and takes away the need to have a smartphone, let alone an NFC capable phone. This has the potential to take contactless, and indeed mobile payments, to the masses. At the very least, this will get the average consumer very familiar with swiping their mobile phone to pay for low value transactions.

For Barclaycard, PayTag also facilitates an ingenious way to collate customer data by simply looking at their transactional behaviour. If harnessed into the business, it will enable them to better understand their customers and offer more targeted and relevant products and services. Indeed, they will generate valuable insight into which segments of their customer base start using this sticker, how their spending behaviour has changed, and the most common places it gets used. Such data should be viewed as proverbial gold dust to the bank!!

More importantly for Barclaycard, if PayTag can attract sufficient volumes of business, Barclaycard could have a significant amount of leveraging power to put pressure on mobile network operators to play according to their rules. One could argue that this is the sole reason for a bank to offer this service...

However, while PayTag may increase rates of adoption and provide a vital stepping stone to NFC payments over time, it crucially lacks the innovation required to convert the doubters and the cynics now. For that, consumers need a ‘real’ mobile wallet offering that pushes the boundaries of how they can use and manage money with their phone.

More importantly, these services need to combine so much more, giving consumers loyalty rewards and vouchers, banking and transfer services, account information, as well as payment options like PayTag and Pingit, all in one place, to make a real difference to consumers’ lives.

 

TagsMobile & onlinePayments

Comments: (3)

John Dring - Intel Network Services - Swindon | 25 April, 2012, 17:20

Yet another 'stick my credit card to a mobile' scheme.  We need proper mWallets, digital cash and virtual cards.

Antti Larvala - CAL360 Degrees - Brussels | 26 April, 2012, 08:58

Idea of payment card is always plastic but idea of having all relevant data on sticker or any other format is new. Same way as mobile payment idea of using mobile phone is confusing when it can be any portable device (iPad, watch, key ring or some other device we in the future carry with us). 

I think Barcleys goes to right direction when brining afforable short term solution for consumers instead of first investing huge amount of money for a specific device (case Google money and one telephone type) and restricting to one specific bank and one specific payment type (BoA in states and credit card payment). I would like to see other banks to offer similar standard payment stickers, which creates volume for mobile payments and then when there are huge amount of masses to use basic services, create more high value added services.

Similar idea of creating services for masses can be seen in online banks who first offered only payment part in online bank but when it brought mass of consumers in, then banks started to offer higher end niche services to meet solution for specific groups. All those banks who took this bath have succeed but banks who first offered only high end niche products for selected customers never got critical mass to use their services. 

Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 27 April, 2012, 07:45

Until there are viable alternatives to banking and card network rails - none have been found in the past 50 years, not sure if one will be found in the next 5-10 years - mWallets merely replace the plastic form factor of cards or cheque / Internet Banking form factor of bank accounts. The underlying funding sources for mWallets remain card or bank account. With their tepid response to NFC terminals, merchants have gotten this long ago. By launching PayTag, Barclays seems to have astutely recognized that a cheap, low-tech, sticker is enough to serve the basic purpose of mobile payments, namely, to pay. Since each phone can likely support only one sticker, the bank can guarantee lock-in with PayTag. On the other hand, since one mWallet can hold credit cards of Barclays and its competitors, it might make sense to leave mWallets to VC-funded startups. For a bank, PayTag is perhaps the end state.

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