Each month we round up the most interesting news in payments, the stories that have the potential to change the industry in ways big and small. Tell us what you think in the comments!
Amazon Prepares to Make a Splash
Amazon recently debuted its first smartphone, the Fire Phone, heralding a new direction for the ecommerce site. CNNMoney’s James O’Toole called it a “shopping device that makes calls,” referencing the phone’s Magic Window app, which essentially enables showrooming in the wild. Shortly thereafter, the company dove into the mobile payments fray head-first with a Wallet app for smartphones. Finally, on July 27, 9to5Mac leaked an internal Staples document that reveals Amazon will be launching a point of sale system that will function as a Square competitor sometime in the month of August. Amazon is clearly set to take on the payments establishment, and these three developments are big news for the industry from a company which, until now, has focused far more on the delivery side of the payments equation than on the transaction itself.
Isis, the mobile wallet backed by Verizon, AT&T and T-Mobile, decided to rebrand given that it shares a name with a terrorist organization (the Islamic State of Iraq and the Levant). Although the company has not yet selected a new name, they announced to customers and partners that they, “have no interest in sharing a name with a group whose name has become synonymous with violence and our hearts go out to those who are suffering.” As Shaunt Sarkissian points out, “Given the circumstances, the rebranding of Isis could be considered to be a fundamental opportunity–not only to rebrand their platform–but to reinvent its model by leveraging the current relationships and trust Isis has already earned.” It’s up to Isis to take advantage.
A recent government initiative, known as Operation Choke Point, was created to cut off banking and payments services from companies in “shady industries” like payday lending. The move has many up in arms about what it ultimately means for lawful businesses who may or may not deserve the epithet “shady.” Our own CRSO, Greg Cohen, confirmed to Digital Transactions that, “our sponsors ... have added to the merchant types that they have asked us to de-market.” A petition is now circulating to convey to Congress that Choke Point is cutting off legitimate commerce along with fraud. It remains to be seen exactly how far-reaching these efforts will be, but payments companies of all stripes have already put into place the kind of fraud-prevention services that make it very difficult for “shady businesses” to actually process unlawful transactions. As the ETA’s Jason Oxman pointed out, “Federal law-enforcement officials should understand that we make a better partner than a target in the effort to choke off fraud.”
The Case of the Disappearing Payments
Reports also surfaced last month that Snapchat may be looking to get into the payments game, specifically via peer-to-peer payments. Although it’s unclear exactly what Snapchat might be building, sources indicate they have their eye on Venmo-style transactions between users. While it might seem a bit far-fetched, Snapchat will have to figure out how to make money at some point, and no doubt the app is looking around at its peers for ideas. With Venmo processing $1 billion in payments a year and Facebook adding a “buy” button to business pages, Snapchat may well be looking to get into what it sees as a very lucrative game.
What do you think? Does Amazon’s Fire Phone stand a chance with consumers? Will the Isis rebrand be a good thing for the mobile wallet provider? Is Choke Point a good idea or did Congress overstep? Could Snapchat succeed in the P2P payments space? Tell us in the comments!