Meet the Next-Generation Payments Systems Set to Drive Future Commerce

PayPal, Visa, Square, Zong, Bad Piggy Bank Among Those Set to Revolutionize Shopping, Online and Offline

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Garrick Schmitt
Garrick Schmitt
The holiday shopping season is finally upon us and it's proving to be bountiful. U.S. holiday sales are on the rise both online and off. Not surprisingly, digital is driving a large part of the growth: Cyber Monday broke the billion-dollar mark to become the biggest single online sales day on record and Forrester is expecting US online holiday sales to top out at nearly $52 billion dollars this season.

However, as we marketers feverishly swipe our collective credit and debit cards at the mall and repeatedly key in digits online while searching for the perfect gift, it's fairly safe to say that few of us will ponder the mechanics involved in processing those payments – let alone how those payment services may impact our brands this holiday season or next.

That would be a shame though since some of the biggest innovations in brand marketing and ecommerce this year, and most definitely next, won't involve whiz bang product display applications like Amazon's sleek WindowShop iPad app, but the companies and services that actually make transactions possible – and most importantly, easy.

Familiar players like PayPal, Google and of course Visa and MasterCard are driving lots of the action today, but so too are a host of well-funded start-ups. The most interesting of which – like Square from Twitter-founder Jack Dorsey wire-- are seizing the opportunity to create an alternative for debt-weary consumers, simplify online payments or blaze a trail in mobile or social commerce.

As consumers begin to embrace these services, so too must brand marketers. Apple and Google are rushing in to mobile commerce by providing near-field-communication (NFC) in their next generation devices. And consumers are proving more than ready than ever for new forms of payments and incentives as they "check in" to retail outlets on services like Foursquare and ShopKick in search of coupons or offers.

Here's a look at some of next year's potential payment game changers:

PayPal: No discussion of alternative payment options would be true unless you start with PayPal which has steadily amassed a growing cut of transactions, both online and off. The company is now looking to take even more share as it rolls out a number of mobile services: Mobile Express Checkout for expedited checkout, a Mobile Payments Library targeted for quick commerce and subscriptions and a new iPhone app that capitalizes on location-based services. PayPal may have built itself on the back of eBay, but its future is in making transactions seamless across all mobile devices.

Visa Rightcliq: The virtual wallet has not, until recently, been more than an ecommerce pipedream. But Visa may change all that with its new Rightcliq service. New for the holidays, the service functions as a browser extension/toolbar that stores credit and shipping info. The obvious goal is to speed transactions by eliminating the need for unnecessary or repetitive key strokes or finding one's purse or wallet before hitting "purchase". The service has a strong social element too, a sleek Wishspace that allows users to share desired items with friends via Facebook or email.

Square: A payment processing service built for iPhones, iPads and Android-powered smartphones, Twitter-founder Jack Dorsey's Square is one of the most buzzed-about payment start-ups this past year. Initially targeted at US small business owners, the service aims to fill the gap between the large majority that have no way to accept credit or debit card payments and the small minority who do. Quite simply, Dorsey's Square offers an Apple Store quality payment experience for everyone from mom-and-pop shops to babysitters to major brands hosting events.

iConcessionStand: Every year PayPal hosts its developer conference, X Innovate, that is part gathering of the tribes, part hack-a-thon and part start-up launch party. The highlight is a procession of interesting payment start-ups who vie for attention and prizes. iConcessionStand, an iPhone app that allows consumers to pay for anything, just about anywhere – but most applicably at sporting events – took home the top prize. Other interesting plays include TipTheWeb, a micro-payment service for web content and OnPagePromotions, an online (and on page) customer rewards program.

Zong: In the social, mobile and virtual goods space, Zong has made a name for itself by becoming the mobile payment option for Facebook Credits. The company has created a relatively friction-less form of mobile payment that uses your mobile phone number as a unique identifier for all types of transactions that lets consumers charge payments to their cellphone bills. Zong is now branching out to Android-powered devices in a move to become the defacto payment option for app developers.

Bad Piggy Bank: If none of those options tickle your fancy, perhaps Angry Birds developer Rovio will figure it out. The company is looking to make the most of it's runaway franchise by creating Bad Piggy Bank, an in-app mobile payment system that will bypass Google Checkout for Android-based devices. The service will work much like Zong, integrating with wireless carriers to have purchases appear on your monthly mobile phone bill. By simplifying payments, the Angry Bird developer hopes to start charging for various add-ons like access to different levels. Rupert Murdoch would be well advised to take note.

For brand marketers still wondering how they fit in, these payment platforms offer a novel way to connect with consumers. For the most part brands that are first movers onto emerging platforms like Starbucks on Facebook, Dell on Twitter and the GAP on Foursquare have profited in both sales and publicity -- IBM on SecondLife, not so much.

But above all, consumers are hungry for new experiences and, after slogging through a long credit-induced recession; they are open to exploring new payment options and ways to manage their money. The rewards for savvy brands that build relationships with consumers on these new payment platforms go beyond just publicity and profit – it may just be a way to create meaningful relationships with consumers at the point of purchase and far beyond.

Garrick Schmitt is managing director of experience and platforms at Razorfish, whose clients include Microsoft, Best Buy, Intel, Mattel and Mercedes. He publishes FEED, Razorfish's annual digital brand experience report and in his spare time flails about on Twitter @gschmitt.
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