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Mobile Wallet Media is a news media, analyst, marketing and consulting firm focused on the future of mobile: payments, marketing, loyalty commerce, security, prepaid, virtual currency, daily deals and the convergence of them all with social and local. The Chief Editor, Randy Smith, was the primary founder, inventor and former CEO of MobilePayUSA, a TechCrunch Disrupt Startup Alley Winner.
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Quick Summary of Mobile Payment Card Tech
1) On the phone the mobile app uses GPS to pull up store to pay, 2) User enters a register or terminal ID code manually or by scanning a bar code (could eliminate step 1) on terminal or register (in future NFC in terminals could replace merchants need to swipe card), 3) The user hits the pay now button, 4) A 'green screen' on the mobile app now displays the words "Show phone to cashier," 5) The cashier is trained to swipe the 'mobile payment card' upon seeing this message on phone, 6) The terminal transaction is routed to a switch in the cloud and matches up with the phone side to approve the next transaction at the terminal, 7) The transaction is routed to a 'Secure Cloud' where actual card credentials are stored, 8) Upon receiving confirmation of approval or decline, the message is relayed back to phone and POS terminal. Read original article about this tech.
Even if this mobile payment card enabling tech does not come to market, there is also the next gen tech I've yet to elaborate on from Apple (Bluetooth, Airdrop), etc., etc.. So the point I'm trying to make is that if their tech is not adopted in mass by merchants, their goals will not be achieved as they will be out innovated and bogged down by trying to figure out the vast universe of mobile/digital payments/wallets, as well as trying to build their wallet to capture it. Plus all this takes signing merchants. Don't get me wrong. I do see success on the horizon for Clinkle. It might mirror that of Square.
Clinkle tech's disruptive capabilities to enable mobile payments with a peripheral into POS (this is the best I can discern as to how the tech works). Unlike NFC, It seems to remove the phone end of the equation. Now, even more scalable tech as previously mentioned and alluded to, delivered at a fraction of the cost and speed, will now have impetus to finally be embraced by incumbents, over legacy tech such as NFC. Industry incumbents, cannot allow Clinkle to scale and demand/garner fees and tolls that processors, banks and networks are used to receiving. The way to beat them is to introduce more scalable tech under their ownership and control or to buy Clinkle. Right the now price tag is likely 50-100 million to acquire, but if Clinkle gains significant ground the acquisition number may be 10X to 100X.
These Stanfordians and their VC investors have their work cut out for them. All they need to do is execute, as cash and the reach of their all-star party round of investors should be a strong enough gust for a safe and profitable exit. In the end though, it is my opinion that Clinkle will face stiff opposition from tier 1 merchants, as fully integrated solutions, requiring no new hardware at POS, or perhaps only an upgrade to their POS tech to adopt, may very much limit Clinkle's success, which may mirror that of Square, which is not too shabby.
One more possible point of contention with Clinkle's tech is that of denial of service attacks. What if a 'Mega Boom Box' broadcasted inaudible signals throughout stores using Clinkle. This could literally happen or hackers could broadcast using the stores intercom.
Let's now fly from the Bay to Harvard and examine to see if the Winklevoss's are building "Credit-Default Swap/Tulip market" or not.
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By Randy Smith,
Mobile Wallet Media
July 8, 2013
