Yay Apple Pay But Retail Mobile Payments Are Still Years Away

This post originally appeared on Streetfightmag.com.

This year has been a turning point in mobile payments, as Square, Paypal, along with Apple and others like SoftCard (formerly ISIS) have all made strides in their digital payment offerings, finally achieving top of mind with tech executives and media coverage.  Yet for all these updates and enhancements, these companies are barely cracking the shell on everyday mobile payments, and most have not built a scalable system to reach the millions of small businesses in the U.S.

In the fall of 2011, I cofounded a mobile payments startup originally targeting local businesses so they could easily accept mobile payments.  Here we are three years later – and after ultimately failing to crack the code myself — I now stare at three big issues that still apply today, and are the main reasons we will not be paying with our phone in everyday retail stores for a long time to come.

Merchant Hardware Challenges
The first issue has to do with the point-of-sale and hardware challenge that the average SMB faces. Mostly running outdated Windows terminals, Verifone or other proprietary card-swiping hardware virtually impossible to integrate with, these local merchants are constantly operating behind the technological curve.  Their machines are difficult to update with new software and are expensive to replace, meaning the update/replacement cycles tend to be measured in decades, not years. And when they do update to new and enhanced hardware, it still ends up being closed and proprietary (Square, et al) meaning it works only with that specific company’s app, but of course no one else’s. Simply put, the current POS market is fragmented, expensive, outdated and local merchants are offered little help in getting things up to date and working together.

Also, once the updated hardware is implemented and mobile payments are available within an SMB’s operations, there is the issue of employee education on how a mobile transaction actually works and how the merchant verifies the payment. Let’s remember, the concept of someone walking in and paying with their smartphone — not cash or physical card — is still foreign and hard to comprehend for most people.

What I found is that merchants just want to get paid, and anything getting in the way of that is discarded — fast.  Their business is not technology, it’s servicing their customers in a timely manner so any employer struggling to educate their staff will simply revert to what they know best, which is cash and credit card swiping.

Until a majority of US local merchants are running 21st century POS systems with mobile payment capabilities, we will not be paying with our mobile device.

OS Compatibility
“I’m sorry, you have an Android phone…. We only accept Apple phones!”

Imagine hearing those words Monday morning when you just want to pay for your latte and get on with your day.  Sounds ridiculous – yes – but it also looks to be a possible result of the ever growing war between Apple and Android operating systems.  Looking at currentglobal mobile shipment numbers reinforces the issue, as Android continues to dominate the global smartphone market, with over 255 million units shipped and nearly 85% of the market share (shipments) in the second quarter of 2014.

iOS experienced a slight drop in market share, down to just 11.7% from 13.0% in the same quarter last year.  As for general marketshare, Android hovers at more than half of all mobile devices operating in the world.

What happens to Apple Pay when that number gets even higher as the years go on?

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Fragmentation and lack of interoperability cuts like a knife in the back of the mobile payments market.  Our mobile payment utopia is being threatened by operating system lock-in, where both Apple and Android hope to give merchants “the best deal possible” for exclusivity and end up elbowing each other for mobile dominance.

More likely, Android will release its own version of Apple Pay and most of the market will be covered with some sort of mobile payment option. Awesome! Yet, aren’t we now back to the issue above, where the merchant must purchase multiple hardware systems so they are compatible with both Apple and Android?

And how are we – the end consumers – supposed to know what to do, what to use, when to use it, where to use it and where it’s accepted within this exclusivity war?

It’s all a big mess right now and it’s getting frustrating for all involved.  Things will not move forward until something or someone finds a way for these separate platforms to work together in some sort of local cloud.

User Experience Issues
Assuming the first two issues can be addressed and both the hardware and OS compatibility issues are taken care of, there’s always the user experience challenge to overcome.

What user experience issue? Well, it takes only a few seconds to pull out a credit card, hand to the cashier, have them swipe it through the reader and hand it back to you.  Simple as 1-2-3.

Humans are lazy. Unless the time it takes to pay using a mobile device in the retail store isequal to or less than the time it takes to pay with cash or credit card, it’s game over. Plain and simple. People will not put up with fumbling on their phone in line, opening an app, needing to input security pins and other codes – all of which take many seconds to complete.  And that’s assuming everything works correctly.

From early research of Apple Pay, it looks like they are really attacking the challenge of minimizing the amount of time from grabbing the phone to completion of transaction – especially with Touch ID – which is encouraging.  But again, since we are only now seeing it live in the wild one can only expect a bumpy road while early bugs are worked out of the system.  Until then, I am not a believer retail mobile payments will save any time for the merchant or the customer.

These issues may seem obvious but they are the exact reasons we are not using our mobile device to pay for everyday things at the register of our local merchants, and should not be overlooked.  Because of these and the slowness at which local merchants adopt new technologies, it will sadly be years before we see any significant uptick in retail mobile transactions.

Here’s to hoping I am wrong!

Great Entrepreneurs Make Tough Decisions

I read a quote recently that said “great investors write checks.”  As much as I agree with the statement, I would like to take a different angle on it.

Great entrepreneurs make tough decisions.

I firmly believe in this statement, have lived it myself, and currently observing it with the CEO of the startup I am working with now.

Although elementary, making and acting on tough decisions can be the difference of life or death for a young company.  Decisions like:

Whom should I hire?

How much monthly burn is appropriate at this stage?

Should we raise money?

If so, how much do we raise now?

Whom should we take investment from?

Should I let that mediocre developer go?

If so, what will we do afterwards and how will we replace them?

Should we stay where we are or move office space?

How much should I pay my employees?  

How do I keep them happy and not lose them to another company?

All these questions – and many more – can haunt leaders of young companies if not acted on in a timely manner.  What the leader ultimately decides – and when – will determine what happens and if it’s a positive or negative outcome.

Most just sit and wait.  Most founders try to not think about or address the tough issues at hand, hoping they will just go away or take care of themselves.  I find most people are risk averse, hate confrontation and don’t like delivering bad news.

Bad mistake.

And that is why most startups fail.  Typically the death of a startup is not lack of product-market fit, buggy app or failure of proper manufacturing.  It’s lack of leadership.  It’s the fault of the leader in not quickly addressing problems when they arise, and not giving the rising challenges mind space when demanded.

What would you rather do: let one troublesome employee go or ultimately lose the entire team?

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Life (and business) is simply a set of decisions.  I view it as a decision tree, or a series of thousands – even millions – of forks in the road.  You approach one, observe and evaluate at the options in front of you, and quickly make a decision.  Upon which you are then presented with another fork in the road – another decision to make.  By doing the same thing over and over again, an entrepreneur evaluates any situation quickly, gets it out of the way and then is free to make another decision.

That’s progress.

What tends to happen is most decisions end up with a positive outcome.  Will some quick decisions lead to negative consequences? Of course.  But then again, now the entrepreneur is presented with another opportunity to choose a better outcome this time around.

Where I see entrepreneurs go wrong is when they freeze, taking too long to evaluate and act on the decision.  Sitting and thoroughly evaluating a specific scenario may make sense in certain circumstances and help entrepreneurs make the right decision but generally speaking, entrepreneurs who act quickly and make decisions are highly rewarded.  Interestingly, when asked what they regret about their startup experience, former founders most frequently say they took too long to make highly important decisions like hiring, firing and shutting down or exiting the company.

Why do I agree?

Well, by definition the more decisions (opportunities) one has the more chances (opportunities) they have of finding success.  It’s called increasing your luck surface area.  Making quicker decisions will lead you to making even more decisions, increasing your opportunity to get lucky and moving yourself and your company forward towards success.

Most of the time, sitting and waiting for something to happen – for the challenging issue to take care of itself – will only result in…. nothing!  

Image courtesy of Flckr user Eric Vondy

Should Founders Advise Other Founders?

I have recently found myself in the advisory role with a number of other early stage founders.  As I spend my time hearing about their story, their pitch, their business plan and their go to market strategy as well as their challenges, it usually occurs to me I am in a unique position and greatly appreciative of the opportunity to help another entrepreneur.

Mentoring and advising other founders gives me a chance to look at different markets and separate businesses – how they are modeled and structured.  It allows one to peel away the layers and look at what makes the market work, who’s involved and where the areas of innovation may lie.  It also gives me a lens into how another person approaches their entrepreneurial craft – which although I am the mentor and they are the mentee I still learn a lot!

No one is cut from the same cloth – especially entrepreneurs – so these experiences are vital to you (as a founder) as well as a person and friend.  I would encourage you to take the time to help others through mentoring and advising.  Like working out, it stretches you in ways you wouldn’t otherwise stretch, and strengthens “muscles” usually left dormant.

Advising allows you to jump into someone else’s business and wrestle with problems, only to be able to jump back out and not have to fully deal with them.  You then get to watch from the sidelines as the entrepreneur goes on and makes their own decisions.  You simply observe the outcomes.

In this way, you become a more well rounded entrepreneur and business person since there are constantly new things to learn about technology, innovation, markets, customers segments and the art of entrepreneurship in general.

I look forward to advising more founders and would encourage you to as well.

Jumping (Back) Into The Water Is Tough

After an extended break from writing this summer I now find myself having a hard time getting back in the groove.

Why?

Well, for one thing I rolled out a new company called Coinme, which is in the bitcoin industry.  It’s going well but it had most of my attention in the late spring and early summer.  I also jumped onboard this summer as Director of Business Development with a new startup called Knotis that is developing really cool tech for the local commerce space (steady paychecks are where it’s at!)  Things are going well and I intend to write about Knotis as well.

So I’m a busy guy helping to build a few different companies at the same time.

Also, not to be lost in it all this is the beating my MacBook took this spring.  After an event I organized I walked over to my laptop only to discover a beer had been spilled directly onto my machine.  When I found it, I picked it up and beer was dripping out of the bottom of it!

Needless to say I was very upset.

The next day all I got was a black screen when I tried to turn it on.  Turns out, after letting it dry everything was alright, except the esc, tab and shift keys don’t work.   Try typing and capitalizing words (shift key) with your right hand when you have done it with your left your entire life… not fun.  And so I stayed away from long form writing because it felt weird and I needed to learn how to do it the other way.

Well, I’m back.


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I want to get back into the habit of writing a few times each week.  It’s like exercise, we all need it and it does wonders for our health.

So look for new posts as I plan on picking back up on my writing about entrepreneurship, tech, life as a founder, and other things that catch my eye.

Kyle Kesterson Answers The Question: What Is Creativity?

This short piece comes from one of my founder friends here in Seattle, Kyle Kersterson of Freak’n Genius.  Kyle – one of the most creative and nicest people I know  – has been growing his startup for a few years now and from what he has told me of late they are destined for great things.

In this video he talks about Creativity and how anyone can be creative with anything in the world they find around them, all it takes is a little imagination.

“We should be MAKING FUN of everything in the world.”  

Take a look….

This Is One Of The Best Commencement Speeches EVER

Well, this is an insta-classic.

U.S. Navy admiral and University of Texas, Austin, alumnus William H. McRaven returned to his alma mater last week to give seniors 10 lessons from basic SEAL training when he spoke at the school’s commencement.

McRaven, the commander of the U.S. Special Operations Command who organized the raid that killed Osama bin Laden, stressed the importance of making your bed every morning, taking on obstacles headfirst, and realizing that it’s OK to be a “sugar cookie.”

All of his lessons were supported by personal stories from McRaven’s many years as a Navy SEAL.  You need to watch the 20 minute video to grasp the magnitude of his words, but here’s the list of his 10 lessons.

If you want to change the world, start off by making your bed.

If you want to change the world, find someone to help you paddle.

If you want to change the world, measure a person by the size of their heart, not the size of their flippers.

If you want to change the world get over being a sugar cookie and keep moving forward.

If you want to change the world, don’t be afraid of the circuses.

If you want to change the world sometimes you have to slide down the obstacle head first.

If you want to change the world, don’t back down from the sharks.

If you want to change the world, you must be your very best in the darkest moment.

If you want to change the world, start singing when you’re up to your neck in mud.

If you want to change the world don’t ever, ever ring the bell.