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Mobile Payments are Getting Huge. But It's Just the Tip of the Iceberg.

Mobile moneyIn this week’s podcast, I talked about how e-commerce really isn’t a separate thing anymore. Because of mobile, which makes e-commerce increasingly frictionless, customers transact when and where and how they want, every day.

I was reminded of this while reading the review of SquareCash by AllThingD’s Walt Mossberg:

“Say you want to send $47.12 to your sister. You just compose an email with her email address in the ‘To’ field and, in the ‘CC’ field, you enter ‘’ In the subject field, you enter the amount you’re sending — in this case, ‘$47.12.’ You can leave the message body blank, or add a note explaining you’re sending the money and why. Then, you just press Send.

If this is your first time using the service, Square will email you a link to its service, where you’ll be asked to enter your debit-card information. This is required one time only.”

Oh, and Square charges no fees for this.

Um… wow.

While it takes a minute to read through the process (the receiver has to click a link and provide their debit card info, too, to tell Square where to send the money), the overall experience sounds fast, seamless, and entirely friction-free. Clearly, you’ve got to trust that Square won’t get hacked. But you’ve got to trust almost any payment system, no matter the provider, to conduct most transactions these days—one of the core reasons building trust for your customers matters.

Now, since they’re not charging any fees, clearly Square isn’t looking to make money on this deal. So, what’s their end-game?

It’s pretty simple. And very, very smart.

They’re stealing a page from Google’s playbook.

If you look at Google’s products over the years, it’s amazing how many things the search giant has offered for free. Google recognized that getting people to use the Internet (or mobile, now with Android), ultimately benefited the company’s core advertising business. Despite owning Motorola, selling Chromebooks and Nexus’s (Nexii?), and launching fiber-optic networks, the company still made 85% of its $14 billion in total revenue last quarter from display advertising and paid search.

Google’s problem wasn’t getting customers to click on its ads. It was getting customers to use the web in the first place.

Mobile payment providers have the same problem.

Forrester expects mobile payments to reach $90 billion by 2017. That’s a huge number, by any objective measure. But… when BCG expects total global payments to top $780 trillion, $90 billion, at 1/100th of 1% of the market, seems like a drop in a bucket—and a frickin’ ginormous bucket at that.

Because the web has been around for roughly 18 years as a commercial entity and iOS/Android for about 6, it’s easy to forget how much room there is to grow. Yes, these are sophisticated platforms that do a lot. But customers are only just beginning to exploit how they’re going to use them in the future. In fact, you ain’t seen nothing yet.

Jeff Jarvis argues compellingly about the impact of printing in his new Kindle Single, “Gutenberg the Geek” and extrapolates what that means for us today. The key analogy:

“…columnist John Naughton asks us to imagine we were pollsters seventeen years after the first printed Bibles (we are only about that far from the introduction of the commercial web today) asking citizens… how likely they think it is that Gutenberg’s invention will:

  • Undermine the authority of the Catholic Church?
  • Power the Reformation?
  • Enable the rise of modern science?
  • Create entirely new social classes and professions?
  • Change our conception of “childhood” as a protected early period in a person’s life?”

We use cash and checks and credit cards and debit cards today because that’s what we’ve always done. Adding mobile to the mix is going to take time. But it’s no secret that Apple, Google, Facebook, Amazon, Microsoft (the AGFAM group), along with eBay, Visa, Square, and others are all trying to get in this space. With hundred of trillions of dollars at stake, who could blame them?

I spoke about the future of mobile payments and what it means for marketing and e-commerce at a payment conference earlier this year—and clearly there’s plenty of opportunity (here are the slides):

Of course, none of this happens if consumers don’t play along. And anything that makes mobile payments easier, safer, and less scary for consumers is that much more likely to start one seriously big ball rolling down the hill. Square is giving one push and plenty of others are adding their muscle to the effort. Just be ready for when your customers get on-board.

If you’re interested in learning more about the future of e-commerce and marketing via the social, local, mobile web, register to receive a special report I’ve produced in conjunction with hotel marketing firm Vizergy, “Digital Hotel Marketing in a Multiscreen World.” While it’s targeted specifically at hotel and resort marketers, the lessons apply to just about any business. You can get your free copy of the report here.

You might also enjoy some of our past coverage of the social, local, mobile web and what it means for your business, including:

Tim Peter is the founder and president of Tim Peter & Associates. You can learn more about our company's strategy and digital marketing consulting services here or about Tim here.

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