EBay Spins Off PayPal Into Fast-Changing World Of Mobile Payments (ideastream.org)

EBay announced it will split from the payments service PayPal, forming two independently traded companies beginning in 2015. Joe Raedle

John Donahoe, CEO of eBay, calls the payments business fast-moving. Brian Ach

Commerce and payments are splitting up. Ebay is breaking away from PayPal and its payments operation will turn into a separate, publicly traded company.

A big breakup is happening in the business world. Online retailing giant eBay is splitting up with its payments operation, PayPal, sometime in 2015. The move comes at a prime opportunity for PayPal, as the future of online payments is still being charted.

When PayPal first came on the scene in the late 1990s, it simplified making online purchases in a way that users adopted, fast.

"PayPal made it possible for people to pay on the Internet," recalls Betsy Page Sigman, a business professor at Georgetown University. "So they didn't have to bring out their cards ... every time they wanted to buy something on the Internet. And that was particularly important for eBay, because eBay merchants and customers engage in a lot of transactions."

EBay purchased PayPal in 2002 and since then, the two have enjoyed a marriage of commerce and payments. But eBay has come under increasing pressure — notably from activist investor Carl Icahn — to split up, so PayPal and eBay could grow separately. For most of 2014, eBay resisted. But on Tuesday came the announcement that the single company would become two.

"I think an independent PayPal unequivocally will have the focus and agility to play across the board in this fast-moving payment space," CEO John Donahoe said on an investor conference call.

Fast-moving is right. Several tech companies — and startups — are rushing to solve the elusive problem of how to simplify payments, and included in the mix is Apple.

"It's all about the wallet," Apple CEO Tim Cook said when unveiling the company's entry into mobile payments, which could be a rival to PayPal. The service, called Apple Pay, turns the iPhone into a mobile wallet that pays for things by simply waving a phone at a checkout terminal.

The way things stand now, the companies could be competitors — or collaborators. On an investor call Tuesday, Donahoe suggested he's willing to have PayPal work with Apple Pay and other tech companies.

"The opportunity for strategic relationships I think has never been higher. There's payments companies, technology companies, and I think some very interesting combinations of how we can work together," he said.

But Donahoe won't have the last say. When PayPal splits from eBay next year, a veteran from American Express will be taking over as PayPal CEO.

Will PayPal lose its mobile stronghold as NFC payments gain? (mobilecommercedaily.com)

EBay’s decision to spin-off PayPal – something company executives insisted was not in the works just months ago – reflects just how quickly mobile payments are heating up following Apple Pay’s launch, renewing enthusiasm for near-field communications technology.

PayPal is one of the early success stories in mobile payments, with strong consumer adoption enabling it to process approximately $20 billion in mobile payments volume last year. However, more recently the focus and excitement around mobile payments has shifted to Apple Pay, near-field communications technology and Stripe, with PayPal appearing to lose some of its headwind as a result.

“PayPal has a bit of catching up to do on industry buzz; this void has been filled by Stripe recently,” said Sam Maule, management consultant at Carlisle & Gallagher Consulting Group, Charlotte, NC.

“PayPal has talent on staff; now the question is how fast can they iterate and pivot product wise,” he said. “Offline commerce is still the Achilles heel for PayPal.

“Can they pivot and make inroads in offline while continuing to innovate in online payments?”

Shifting winds
Earlier this year, activist investor Carl Icahn called for eBay and PayPal to split, something the company said at the time that it was not ready to do.

Several things changed in months since then to cause eBay’s leadership to decide in favor of breaking apart the company.

Mobile is a key part of the picture. While the expectation that mobile will play a significant role in payments going forward is not new, the market’s growth has been slower than expected over the past few.

However, with Apple’s announcement of its NFC-enabled payments scheme, this is driving a new flurry of activity in mobile payments as Apple is expected to be able to shore up a significant portion of the market while also spurring consumer adoption.

The challenge for PayPal will be that since it does not manufacture handsets, as Apple does, it does not have the same access to NFC chipsets.

“PayPal’s acquisition of Venmo is positioning the company well when it comes to P2P-based mobile initiated transactions,” said Drew Sievers, former CEO at mFoundry and now founding partner at fintech investor Operative Capital.

“However, PayPal will face challenges when pushing to expand into the new world of retail NFC since they won’t have unfettered access to the chipset like Apple,” he said.

Independence day
For PayPal, operating as an independent company could help it better compete in this space if it is able to refocus on innovating payments.

Dan Schulman has been appointed president of PayPal and CEO-designee of the standalone PayPal company following separation. Mr. Schulman joins PayPal from American Express, where he was president of the company’s Enterprise Growth Group.

Devin Wenig, currently president of eBay Marketplaces, will become CEO of the new eBay company.

“The move today allows both eBay and PayPal to focus on their core business models,” Mr. Maule said. “PayPal’s new CEO has a strong background and successful track record in alternative payments and mobile strategy; combine this with the brain trust PayPal has from Braintree and you have a strong area of focus for PayPal.”

Another reason the spin off could benefit PayPal is that while in the past, most of PayPal’s transactional volume occurred through eBay, increasingly this is no longer the case.

For example, last year PayPal acquired Braintree, enabling it to handle mobile payments for popular app-based companies such as Uber, the car-ride sharing service, and Airbnb, the room rental service.

“As a global leader in payments, PayPal has outgrown eBay:  PayPal has 80 percent penetration on eBay, but eBay is a rapidly decreasing share of PayPal transactions – eBay is currently 30 percent of PayPal’s volume and expected to fall quickly to just 15 percent (down from 50% just a few years ago),” said Denée Carrington, senior analyst at Forrester Research, Cambridge, MA.

“PayPal needs speed and flexibility to effectively defend and grow its business without worrying about whether it is helping a competitor to eBay,” she said.

Key partnerships
Not only is eBay’s share of PayPal transactions shrinking, but increasingly eBay is also standing in the way of the payment company making necessary partnerships.

Partnerships are critical in the complex mobile payments space. For example, getting retailers to embrace a payment system can help spur adoption. However, because PayPal has been intricately linked with eBay, a merchant that some retailers view as a competitor, the company has been hampered here.

“Partnerships will be critical for PayPal moving forward, and without the connections to eBay, those partnerships might be more forthcoming,” Mr. Sievers said.

“Losing the link to eBay should allow PayPal to accelerate and grow their business even faster,” he said. “EBay, on the other hand, may struggle a bit since PayPal was one of the brightest spots in the eBay business.”

Mobile Apps 2015: 5 Predictions of How Apps Will Change (venturebeat.com)

Mobile apps have become tablestakes both for B2B and B2C. Yet, just because apps are now seen as essential to any digital strategy, it doesn’t mean we can get comfortable. Change is constant. Brands will need to continually adapt as both technology and the marketplace suggest new directions.

As we head into 2015, we spoke with Mike Haney, Chief Creative Officer at Mag+, to get his sense on what to watch for and keep in mind both for brands and the development community. Here are his five predictions.

1. Apps will get more and more targeted

When companies first began developing apps, they were multipurpose. If an extra feature or functionality could be fit into an app, it was. That’s changing. We’re going to see people going back to the idea of apps as tools, meaning apps will be created to address very targeted needs. On the B2C side, the app world is getting more and more crowded, so the more specific you can make an app, the easier it is for someone to get the value out of that app. What’s driving this in the B2E (business to employee) space is the consumerization of IT. Technology managers charged with mobile strategies are trying to create natural interactions for business-focused tools based on what people do daily with their phones. Facebook is a great example. After breaking out photo and chat from what was once an all-in app, it’s training people to think differently about how they use their devices. We’ll see more specificity going forward.

2. Apps will get more disposable

Along with apps targeting very specific purposes, businesses will  get more comfortable with a shorter app shelf life. In the early days  this was unheard of because of the amount of money invested in  apps. Now with third-party app platforms like Mag+ and others  making it easier and easier to build apps, organizations can bring  apps to market quickly that are intended to meet short-term  objectives.

Take fashion brands, for example. A sales app that is devoted to  this season’s catalogue is then archived, or even thrown away, and  a new one is built for the next season, allowing the brand to always  stay current. The same holds true for “versioning,” which is picking up a lot of  steam. A large global brand can build a base sales app at  headquarters, but then that app becomes localized so each region  around the world has its own app. This enables sales teams in  different geographies to add and subtract relevant material.

3. Apps will be used more for marketing

As people get over the idea that an app is permanent, apps will be seen routinely as another tool in the marketing toolbox. While the web and social media serve important functions, mobile brings unique qualities to a marketing campaign. Targeting a device that’s with a consumer all the time, marketers are seeing the huge potential to leverage things like location, photo-sharing and messaging to build more engagement.

4 .Apps will get more plentiful in B2E

EMC Interactive distributes a sales presentation app to sales employees to improve sales efficiency.

Today, IT departments  have directives to build  more apps and increase  the mobile app  presence for their  companies, particularly  for B2E and internal applications. More and more, mobile apps are  being seen as a tool of the enterprise. This represents a shift away  from seeing them only as a broadcast mechanism aimed at a  public audience, to having specific purposes targeting a particular  group of people, such as members of an organization, university  alumni, etc.

5. App communication — and 2-way communication — will become more frequent

To maintain user engagement, all apps are working hard now to find the right communication frequency. This is true whether you’re trying to reach a million consumers or five sales people. For example, with internal sales apps, updates will become more regular as a means to communicate regularly with sales teams and share up-to-the-minute information whether it be product-related, an HR message or to explain changes in policy.

On the consumer side, a trend that’s already happening and will become more practiced, is personalizing messaging based on users’ location, actions taken or opt-ins. Along with this, apps will incorporate feedback mechanisms more and more, providing ways for users to participate in two-way communication. This could include anything from a survey to tap-here-to-send-a-comment. The app only as a one-way broadcast mechanism won’t be enough going forward.

Appmakers Try to Game a Crowded Market (businessweek.com)

Photo Illustration by 731; Photos: Apple; FLPA/Alamy

The app market used to be a happy-go-lucky place. Startups, or a couple of guys in a dorm room, could fling their apps into the mobile stores of Apple (AAPL) andGoogle (GOOG), and if they didn’t hit big, move on to the next idea. With more than a million apps on the market, and four out of five in the Apple Store receiving so little attention that they aren’t ranked on the download charts, the odds of success have gotten much longer. Even tiny companies go to great lengths to make sure their products are near perfect at launch, and they’re using all kind of gimmicks to break through the noise once their apps hit the market. “It’s become like the movie business,” says Michael Mace, a former Apple and Palm executive. “If the first weekend is good, you have a chance. If not, you’re toast.”

Mace now works at UserTesting, a Mountain View (Calif.) company that charges $49 to test apps on real people. Developers can watch a video of testers trying to navigate their app and pinpoint which aspects of the app are hard to use. “I was a little confused on the map screen,” says one guinea pig trying a retailer’s shopping app. “I would improve this by maybe making the icons a bit more clear.” The feedback mostly consists of comments like that—or swearing, which can also be instructive.

Companies test multiple versions before the app launches, with 5 to 10 people evaluating each. UserTesting has about 30,000 customers, and 3,000 people a week apply to become paid testers, earning $10 for 15 minutes of work. “There are 20 or 40 of us that look at this app every day and get so used to it that we miss its issues,” says Renato Iwersen, chief business officer at file-sharing app startup Cynny. “On the test video you see someone say, ‘Oh, this is horrible,’ and you fix it quickly.”

STORY: These Pixar Veterans Want Your Kids to Talk to Their Apps

Prelaunch testing was just one piece of Cynny’s survival strategy when it unveiled its app in mid-September. The service lets people group together images, videos, and text with their friends on Facebook (FB), WhatsApp, and similar sites under a single tag, such as “Camping 2014.” The tag’s creator can choose at any time—say, once family and friends have seen the camping photos—to make the collection private. While hopeful that the idea will catch on, the company’s executives are realistic about the market’s saturation. “People are burnt out,” says Iwersen. “They don’t want to hear about the next iteration on a social app. But you need to get attention and thousands upon thousands of downloads per day right away.”

Iwersen says appmakers, including Cynny, spend big money on mobile ad networks such as Facebook and InMobi trying to ensure they get a flood of downloads at launch. In essence, they’re trying to lure customers to make an app look popular. About five years ago, it took about 40¢ in marketing costs to get one person to download an app. Now it costs $2 to $50 per download, says Iwersen, depending on user demographics. Cynny and other app developers will spend days tuning ads in the field, changing the way they look and the people they target in a bid to find an audience. Cynny has also gone to extremes to keep costs down and give itself more time to tempt users. It’s building its own servers with smartphone chips instead of standard Intel chips to lower the price of the computers and its energy bills.

Bangkok developer HotNow is using old-fashioned sex appeal to hawk its food- and services-reviews app. (Think Yelp (YELP) plus Foursquare, except you can filter reviews by who’s posting them, like reviews of “Food” by “Guys.”) The company has recruited some of the more popular product spokesmodels known in Thailand as “pretties” to use it. The idea is that people will see the pretties using the app in trendy bars and restaurants and download it themselves. “They saw HotNow as another platform to promote themselves,” HotNow’s chief executive officer, Nithinan Boonyawattanapisut, says of the Thai spokesmodels, several of whom have almost a million followers on Instagram.

STORY: HBS Alums Say They Worry About Poverty, Then Create Apps for the Rich

HotNow, which has used focus groups and conducts its own tests with Thai college students, has about 50,000 users in Thailand and had hoped to launch in the U.S. in August, around the time college classes were starting. Boonyawattanapisut says the coders couldn’t solve a key technical problem in time, so she’s waiting more than six months for another opportunity stateside. “Spring break looks like the next window,” she says. “The U.S. is a valuable market, and we know you only have one chance there.”

STORY: Blame Cities for the Apps That Let You Sell Your Parking Space

The bottom line: Appmakers that paid about 40¢ per download five years ago in marketing costs now spend $2 to $50.

The new Bitcoin ATM: No cash in, no cash out (mobilepaymentstoday.com)

Australian Bitcoin ATM maker Diamond Circle Pty Ltd. has launched its first live cashless Bitcoin machine in the state of Queensland, Australia. The machine neither accepts nor dispenses banknotes. Instead, the account opening process involves purchasing an NFC-enabled Bitcoin debit card for 5 Australian dollars ($4.36).

While purchasing a Bitcoin card, Diamond Circle ATM users can also purchase bitcoins to put in it using a credit card. Additionally, the machine also allows returning customers to top up a card or check their currency balance in less than 5 seconds, according to a company news release.

The Diamond Circle Bitcoin Debit Cards are linked to a credit card at local exchange rates for instant purchases everywhere, and the process is convenient for both the general public and thrifty travelers who want to exchange currency only once, Diamond Circle said.

For the operator, the fact that the machine only supports Visa and MasterCard for Bitcoin purchases means reduced security threats and cash holding costs — thus increasing margins and ongoing residual payments to distributors and owner-operators, the company said.

Depending on the quantity purchased, Diamond Circle Bitcoin ATMs sell for $10,168-$11,748 in Australian dollars ($8,848–$10,245).

The operator earns income for every fiat-to-Bitcoin and Bitcoin-to-fiat transaction conducted at the machine, at a merchant POS, or at the Diamond Circle online exchange. 

An additional feature for money transfers is in the works, which will allow ATM users to send bitcoins to any recipient via SMS.

According to the release, DC now plans to begin work on point-of-sale applications that will allow purchases, as well as Bitcoin buying, selling and balance-checking via a range of NFC-enabled devices such as Android phones, online gateways and corporate wallets.

For Fitness Bands, Slick Marketing but Suspect Results (bits.blogs.nytimes.com)

My Nike FuelBand read lazy. My friend’s read fit.

From left, the Fitbit Force, Jawbone Up, Fitbug Orb and Nike FuelBand SE. The latest crop of fitness devices will record much more than how many steps are taken on any given day.Credit Richard Drew/Associated Press

But we had done essentially the same thing. We spent the day walking around San Francisco together — the same number of miles, same number of hills — but for whatever reason, our FuelBands were out of step. His registered thousands of steps more than mine did.

That’s the uncomfortable truth about many of the fitness wristbands you see people wearing. They don’t really work — or at least not as well as their manufacturers would have you believe.

So maybe it is no surprise that Nike laid off a big part of its FuelBand team this month. As other companies dive into wearable devices, Nike is pulling back. Why? Nike told me the FuelBand would remain an important part of its business, but the company would be focusing on apps, not hardware.

The reality is that many devices claiming to monitor fitness and health probably overpromise and underdeliver. Jim McDannald, a podiatrist and health and fitness technology writer at The Wirecutter, a technology testing website, said many of these devices are more about marketing than medical understanding.

”People are getting fitness-tracker fatigue,” Mr. McDannald told me. In large part, it’s because many of these devices are simply inaccurate. You may have burned more — or fewer — calories than they say. Or, in my case, walked more steps.

“Even a cheap pedometer is more accurate than these wristband trackers,” Mr. McDannald said, though he acknowledged that wristbands do push people to get up off the couch.

And don’t get him started on sleep trackers. His take on those devices: “ridiculous.” The only one he has found that works well is the Basis B1 band, which has a built-in heart-rate monitor. The rest, he said, rely mostly on guesswork.

Tell me about it.

I’ve tested the Jawbone Up, which can track your movements and your sleep. While the step-counter is one of the best I have seen, after I spent a restless night searching for sheep to count, the band told me I had slept for a blissful eight hours.

WIRED WELL

The Well Guide to Activity Trackers

We tested some of the latest and most popular trackers to compare how they work and the various features they offer. Here’s what we found.

Whatever their accuracy, these monitors have plenty of takers. According to a report by Canalys, the market research firm, more than 17 million wearable devices, including smart watches and fitness bands, are expected to be sold in 2014 alone. The report estimated that hardware makers would sell 23 million by 2015 and over 45 million by 2017.

“Though currently a relatively small market serving fitness enthusiasts, wearable bands represent a massive opportunity in the medical and wellness segment,” the Canalys report predicted.

And yet.

To see if this was a hardware problem with a software solution, I recently tested two apps, Breeze and Moves, that claim to track the number of steps you take using a sensor in an Apple iPhone. One day, Moves said I had walked 3,070 steps, while Breeze said I had taken 3,363. Same iPhone, different results.

Another day, Breeze told me I had hit my daily goal — 3,500 steps — while I was sitting motionless in my cubicle. A different time, I somehow managed to reach my daily goal while I was driving.

Some devices promise more, claiming to monitor vital health signs. Healbe, for instance, says that its GoBe band can read glucose levels through the skin.

I asked the marketing team for the company, which recently raised $1 million in financing, how the wristband could accurately monitor blood sugar without drawing a drop of blood. They acknowledged that the product wasn’t completely precise.

“We’re not touting this as a medical device,” said a spokesman. “We don’t want diabetics using this product.”

Fine. But the company’s sales page makes several promises that espouse the device’s accuracy. Some people have questioned the GoBe, noting that many of its claims appear scientifically impossible.

WIRED WELL

What Your Activity Tracker Sees and Doesn’t See

High-tech fitness and activity trackers all share one thing: an accelerometer. Here’s how they work — and don’t.

One company everyone seems to be waiting for in this field is Apple. It has been working on a wrist device that is expected to integrate health statistics and tracking.

As I reported with my colleague Brian Chen, a group of Apple executives met with directors at the Food and Drug Administration in December to discuss mobile medical applications, according to the F.D.A.’s public calendars, which list meeting participants.

Apple has also hired several people with expertise in medical sensors, including Michael O’Reilly, the former chief medical officer of the Masimo Corporation, which makes medical monitoring devices.

“These technologies will have enormous potential over time, but I think their full potential will take many years to realize,” said Dr. David Blumenthal, a former adviser to President Obama and president of the Commonwealth Fund, a New York-based foundation that focuses on health care. “In pioneer analogies, we’re just landing on Plymouth Rock.”

And for the moment, at least, the accuracy of many health wristbands is not exactly rock solid.

4 reasons why marketers should love the iPhone 6 & iPhone 6 Plus (venturebeat.com)

From left to right: Apple's iPhone 5S, 6, and 6 Plus.Image Credit: Devindra Hardawar/VentureBeat

With 10 million devices sold in just three days, the iPhone 6 and 6 Plus launch is a record-breaking success.
Apple reported four million pre-orders and on top of that,thousands of the Apple Faithful (and those who profit off of Apple’s fans in global grey markets) lined up to purchase the device upon it’s debut on September 19th. There’s no doubt that the tech press and mobile competitors are closely watching the iPhone 6’s adoption but there’s another group of Internet folk who need to pay close attention to Apple’s new device: Marketers.

If there’s one thing that marketers love, it’s a hit.

Got a hit TV show? Marketers will pay top dollar for commercials. Got a hot destination online? Marketers are all over it. They’re in the business of converting those users into consumers and a new hit iPhone means new opportunities to do just that.

1. Larger screens obviously mean more display space

With the advent of the iPhone 6 and its big sister the iPhone 6 Plus, marketers have more screen to get their messages across. Previously, marketing designers had to ready themselves for a single new iPhone resolution every two years. This time around they have more display resolution breaks to code for — one for the iPhone 6 and one for the iPhone 6 Plus.

It’s true that banners, pop-overs and pop-unders may all become more robust with this new real estate, but sophisticated agencies that influence their clients’ app designs will have better uses for the improved screens. They’ll use the new space to show off the burger deluxe and other menu items in that restaurant app, or lay down higher resolution images and video of that vacation condo rental. In order for marketers to take full advantage of these larger screens they’ll need to update the media assets within their rich content in order to dazzle and delight users.

2. Larger screens also mean bigger virtual buttons within app and web pages loaded on mobile devices.

Not only can marketers show off their wares better as we discussed above, they can also drive more types of engagements on screen without cluttering the display or worrying that the user will misfire by pressing the wrong target. Larger thumb and targets allow more latitude for A/B or split testing among consumers. Big and bright are always advantages for marketers. As one time-honored marketing adage goes– When in doubt, make the logo bigger.

Above: Apple’s iPhone 6 and iPhone 6 Plus

Image Credit: Devindra Hardawar/VentureBeat

3. Better targeting

With the iPhone 6 and the iPhone 6 Plus, sophisticated marketers keen on segmenting their audience may have have an new type of opportunity to more easily and properly target their audience.

In addition to the demographic metrics that firms like Conversant and Tapad provide, paying attention to how behavior skews when (a) the user agent shows iOS 8 and (b) the responsive design of their content breaks in the direction of the iPhone 6 Plus’s resolution is the key. While the iPhone 6 fits easily into a pocket and is easier to run or cycle with, the iPhone 6 Plus may be a device that spends its time in a purse or in the hands of an older user, who can see it better.

Building usage profiles over time may help the savvy marketer to anticipate pertinent information about a user, allowing them to load the most appropriate interactive content on each type of device.

4. Big iPhones also say something about changing trends in mobile device usage — especially payments

As we discussed earlier this month, Apple hasn’t exactly been a first mover to this format. It seems that it’s taken time for them to understand the attributes which make the large format phone popular.

It’s no secret that these large mobile phones are less about telephoning and more about reading, writing, playing and sharing. These user activities are the engagements that marketers quantify and assign value to every day. They pay their vendors or get paid by their clients based on how many views, comments, shares, likes, etc. their apps, ads, and social media campaigns generate.

If these types of engagements are the bread and butter that keeps marketers in business, the meat they’re after is driving the user down a path to conversion (AKA payment). That’s where the iPhone 6 and 6 Plus shine. These devices, equipped with Apple Pay functionality, will not only allow users to purchase products in physical retail locations as Apple displayed during their recent product blitz; they will also allow users to purchase items easily and quickly online via their mobile device — if web pages are coded to support the functionality.

Put another way, marketers running online retail presences who take advantage of Apple Pay may be able to significantly reduce occurrences of cart abandonment.To better illustrate, users are already going through the annoying motions of pulling out their credit cards and using the small mobile keyboards to input their credit card numbers; a remarkable barrier to entry for online purchases. The iPhone 6 and 6 Plus will make this hurdle little more than an annoying memory if marketers move to take advantage.

As we approach another holiday season, the importance of Apple Pay’s online retail capability cannot be exaggerated. Mobile-based online retail sales during Black Friday grew 600% during the four years including 2010-2013. With employment on the rise and a holiday season full of new Xboxes, Playstations, tablets and other toys, there’s a lot of online retail money to be made.

But wait — why all the fuss now? The large screen Galaxy Note first came out in 2011! The truth is that while Apple certainly wasn’t first to bring these larger mobile devices to consumers, Cupertino has rarely needed the first mover advantage to succeed. Recall that there were popular MP3 players before the iPod and popular smartphones before the original iPhone. The first movers who launched those product categories couldn’t stop Apple from later defining those very categories.

With analysts expecting Android users who are interested in big-screen devices to move over to the iPhone 6, the savvy marketer is in a great position to positively affect their clients’ bottom lines.