Boston is on the brink of being the new leader in mobile commerce. No longer a mere blip on the payments radar, our city has made a name for itself as a source of unparalleled innovation and home to major industry players.
This past year was a defining one for Boston’s mCommerce scene. For an expert take on the state of the industry here in The Hub, we sat down with ROAM CEO Ken Paull. Paull shared the evolution of mPOS, “the hoopla about mobile wallets,” and local innovations he calls “exciting.”
Boston hasn’t traditionally been viewed as a payments hub, a reputation usually reserved for Atlanta and San Francisco. But all that is changing, Paull said. Boston is challenging those two cities’ dominance and establishing itself as an industry influencer.
With a wealth of top-notch technical schools like MIT, venture capital firms, and emerging startups, “I would consider Boston a sort of mobile tech hub,” Paull said. The innovation climate has fostered the growth of mCommerce and since ROAM started in 2005, the local payments industry has flourished.
This was a year of evolution for the industry, much of it driven by Boston players. There are two sides to the mobile payments space, Paull indicated: the merchant side and the consumer side. While there have been impressive innovations on the merchant side, the consumer side seems to lag behind.
There has been a tremendous amount advancement when it comes to merchant mCommerce and mPOS, as the focus has shifted from the bottom tier of the market toward new retail spaces.
“This past year has evolved and seen a maturity of that business model where a lot of these companies are starting to question how profitable those bottom tiers of the market are,” Paull said. “People are starting to say ‘wait a second, this technology can benefit mid-tier retailers and larger retailers as well.’”
In 2013, resellers and tech providers not only expanded payment solutions into different size markets, but also into different verticals, such as fast food and quick-serve restaurants.
But, while merchant mobile solutions have evolved and entered new markets, consumer advancements like mobile wallets have seen only limited success. “Through all the hoopla about mobile wallets with Google Wallet and Isis Wallet and Square Wallet and all these different wallets…there’s not been a general adoption or success out in the market,” Paull said.
While the mobile wallet has yet to gain traction, one local player has defied the trend and launched a successful payments program: Cumberland Farms. While the convenience chain might not strike you as cutting-edge, Paull thinks their payment innovations are “pretty exciting.”
“It’s a mobile wallet that actually works at the pump and actually rolls back prices if you’re part of their loyalty program,” Paull said. “Right there, real-time.”
Cumberland Farms isn’t the only local company heating up the payments scene. There are plenty of companies who entered the Boston ecosystem in 2013. Google and Amazon are now here in Boston, and are obviously major players in the local payment scene. But the newer, “smaller companies…like the LevelUps and the Leafs and the Loops of the world” are also ones to watch, Paull said.
But who should you be absolutely sure to pay attention to in 2014? PayPal, Paull said. “There’s a lot of people that speculate they could be one of the challengers to Visa and Mastercard, American Express, Discover.”
PayPal is already well-established in the payment space, and has a sizable portfolio of consumers and merchants. Plus, their alternative payment method utilizing ACH gives them an edge over competitors.
“The challenge for a lot of these payment schemes is balancing the consumer side with the merchant side, it’s like trying to climb two ladders at the same time…” Paull explained. “It’s tough to do both. PayPal has that advantage going for them.”
With new innovations, players, and plenty of potential for growth, 2014 promises to be a transformative year for mCommerce here in Boston. Stay tuned for ROAM CEO Ken Paull’s take on what’s next for the mobile payments industry.