With the release of Square, you will soon be able to take payments from your iPhone and eventually other phones will follow. Imagine you are at an off-site event, art festival, concert, fundraiser, or farmer’s market. People don’t carry cash like they used to so, too often opportunities are lost for the budding merchant, small business, or non-profit. The device is so inexpensive to manufacture that we can expect it being virtually free since the revenue will come from transaction fees. I do think the greatest hurdle is not technology integration, ease of use, marketing, or pricing but rather overcoming consumer fears about swiping their credit card data to a stranger’s phone. The fear of fraud, stolen identities, access to bank accounts will slow the adoption of Square and other forthcoming solutions that allow micropayments. Our cost-conscious, $.99, I-want-it-for-free culture has forced the industry to come up with a solution for micropayments since so much content that was previously considered a premium has become devalued and commoditized. Square and micropayments are an eventuality but I won’t be handing my Visa over to anyone for quite some time.
Several companies at the 2009 PayPal Developer’s conference said that giving consumers the option to make a donation to the charity of their choice at the point of online checkout, increased sales. There are several reasons why I believe this happens. 1) People want to give but they do not want to be put on a never-ending mailing list. The company acts a buffer between the consumer and the charity. 2) People want to give to causes that are relevant to them or people they know. 3) People want to do something positive but don’t want to make a time commitment 4) People perceive the company they are buying from as more trustworthy and legitimate because they are charity-minded and not 100% profit-minded. Who doesn’t want to do business with companies that socially responsible and care about worthy causes?
The ecommerce challenge is to make the charitable donation process easy. If it takes more than 1-click, consumers will bypass the step in the interest of time. Think of how many times you abandoned a shopping cart because the process was more involved than you expected. On the web, every small marketing advantage helps. As more companies increase sales by even small percentages, eventually charitable giving at checkout will become common practice. Further, we could see shopping carts adding charitable donation capabilities as an add-on module.
After attending PayPal’s Developer Conference this week, I left with some conclusions as it relates to commerce on the web. First, PayPal will continue to dominate the online payment market because: 1) It has more years of experience in dealing with fraud, security, international, and regulatory challenges than any other provider; 2) By opening up the PayPal platform to developers, they have effectively expanded their available market by enabling “new uses and new users”; 3) The added benefit of opening the platform is that PayPal learns more from the real-world applications which enables them to improve their products more quickly; 4) Virtual currency, micropayments, recurring billing are all growing and enabling new business models that are more viable than “traditional” online commerce (E.g. physical goods); 5) Social commerce will also expand businesses and consumers go to “trusted” marketplaces such as Facebook and PayPal’s Adaptive Payments will enable commerce applications within these applications.
PayPal’s CTO outlined a few key objectives one of which is to make PayPal a reliable online provider of personal identity. The problem they are attempting to solve is that we can have dozens of online accounts, each with a different username and password and this is unnecessary. With personal credentials already verified within one’s PayPal account, we can anticipate companies relying on those credentials, and users condensing or consolidating their online account information. This is similar to the goal of OpenID.
In a recent article about annual loss of $300,000,000 in online sales, we are reminded that User Interaction with your site is imperative. Regardless of whether the number is in the hundreds or millions, the problem is that customers do not want to be stalled or inconvenienced during their shopping experience. In the online world, shopping cart abandonment is all too easy. Think about it - how many often do you say “no thank you” at a Borders or Barnes & Noble bookstore or other retailer when asked if you want to open an account (”it only takes 5 minutes and you’ll save 20% today”) at the point of checkout? How about other retailers, supermarkets? Consumers value their time more than their money - sometimes. Account registration should be optional otherwise, the email addresses you gather from those who do register are canceled out by the revenue loss from those who “walk” away.