April 19th, 2012



P2P Mobile Payments and the Dinner Table Challenge

Did you hear the one about how Paypal started as a P2P (peer-to-peer) mobile payments company for Palm Pilots? The central concept was the same as most P2P mobile payments companies: you’re sitting at a restaurant with a group and the check comes and HOW do you split it, so stressful, OMG.

Yet when Paypal realized (circa 1998) that everyone sitting at the table needed a Palm Pilot to participate in their mobile payment revolution, and that scenario would happen probably almost never (only ballers had Palm Pilots back then, remember), they scrapped the idea.

But it is now 2012, and P2P mobile payments are BACK with a vengeance. But who will be the big winner? I think it’s still anyone’s game.

Let’s return to the dinner scenario. I had some people over for dinner a few weeks ago, and a friend was going to take a cab home but had no cash. Not to worry, says me! I whipped out my Square. And this girl looked at me stupefied as I took out the dongle, swiped her card, and handed her $20. I figured Square was like so 2010, but I am realizing now that although Square definitely owns it at Flea Markets, it hasn’t *really* penetrated the Dinner Table yet.

I then showed my friends Venmo, and the reaction was similar. Because SMS is the delivery mechanism, Venmo prompts even more disbelief – there’s no tangible action whatsoever.

While Paypal is big enough now to have penetrated the mainstream, I wonder who will be the real winner of P2P mobile payments – that holy grail of dinner-table-transactions.

Here are the main contenders:

1. Square: Beautiful and seamless experience, emailed receipts are amazing and you only need one and not everyone at the table needs an account, just a credit card. But a dongle can’t fit in your wallet. To me that’s a dealbreaker.

2. Venmo: Uses extremely popular existing platform (SMS). Though I think the mental chasm of “sending money through text message” is going to be tough to tackle. If they can get past that, it’s a great product.

3. Dwolla: The wildcard. They don’t have a P2P mobile app that I know about, though I am sure there’s likely one in the works. They do an excellent job of branding and user education, which is why I think they are the sleeper contender here.

4. Bump/Paypal: Everyone knows Bump and everyone knows Paypal. But there’s serious, serious rage (both on the web and IRL) centered around Paypal, so much so that I bet negative paypal-related domains (paypalblows.com, etc.) are fetching some pretty serious coin on the domain message boards these days. If Bump made their own payments app, I think it would be pretty sweet. Here’s hoping.

5. Bitcoin: JK.
Imagine trying to explain Bitcoin to _________ (fill in the name of anyone you know who isn’t an uber-nerd).

The winner of the Dinner Table Challenge will take a sizable slice of a likely many-billion-dollar market. But the real prize is a chance to penetrate the $$$-related zeitgeist. Can you imagine – a Square in a rap video? Beyonce and her Blackberry Venmo-ing?

Soon.

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  • http://www.twitter.com/sugdaddy Michael Shafrir

    If you believe that America is a late-adopter in this realm (as they were with SMS in general), the mobile banking activity in Africa suggests that SMS may be the ultimate winner here:

    http://www.afdb.org/fileadmin/... 

    Unless Bump has improved their technology, their service is a bit too wonky to be trusted with payments (unscientifically — their “bump” was actually both phones pinging the satellite then the satellite makes a best guess based on phones in proximity — not too reliable or scalable for payments).

  • http://amandapeyton.com amanda peyton

    That is a super interesting point – and I do think that generally technologies that closest to what people already know are the first ones to be mainstream-i-fied.

    I had no idea that was how the original Bump technology worked, though it has always been hit-or-miss for me. Thanks for the info/link!

  • http://www.thisisgoingtobebig.com ceonyc

    Or the fact that every bank is adding this functionality to their mobile apps…   The question is whether or not they do it in an assbackwards way like only allowing you to pay other Chase or Citibank people.

  • http://www.twitter.com/sugdaddy Michael Shafrir

    Assbackwards and banks is a pretty fair bet, at least initially.

  • http://amandapeyton.com amanda peyton

    The banks are an interesting wild card here. While everyone will certainly watch what they are doing I am not super optimistic.

  • Cora

    Venmo actually has iPhone and Android apps. Also works via sms but the majority of usage is through the apps. 

  • Cora

    Venmo actually has iPhone and Android apps. Also works via sms but the majority of usage is through the apps.