So your mobile phone is your new wallet?

Congratulations to Boku.com, going live today with the (old, yet renewed?) promise to turn your mobile into your new credit card. Looking at the site an judging by what I know, I wonder what's the biggest challenge lurking at their door: is it merely traction? Is it going beyond micropayments, while managing merchant vetting and credit risks with the mobile provider? I think it's a combination. But that's not my question here. My question is - are mobile phones the next "thing" in payments?

Payment services are fighting to increase share of wallet, and remove as many boundaries as possible between the merchant and the customers' money. Obviously, the mobile phone is always there, available to use, it's really a gadget, you know, it's not really as serious as a credit card. We all know credit cards are dangerous to use on the web. But taking a closer look reveals that a mobile phone isn't a step closer to the customer's money, it's actually the same distance. You don't own the "stash", only another funnel for getting some of it.

This, by the way, doesn't mean that mobile payments isn't a good idea or that it's going to fail (it might, though, but not because it's not the biggest funnel), and I wish Boku and friends all the luck; but fact of the matter is that your phone is pretty much the same as your bank account, debit card, credit or any other payment method - it's a key to the treasure chest. Get a hold of the chest (in other words - become the bank) - and you've REALLY got an advantage. Until then, I'll continue buying my Mafia dollars the same way, be my proxy what it may.

Here comes the scary part

It is a dark night in Tel Aviv, the kind in which bad things lurk in dark corners. Sitting in a small cafe with the security expert, I hear the wind blowing between the trees. The waitress looks worried as well. A dark night indeed. I look across the table to my partner, a serious person with thick eye glasses that add to his already grim demeanor. Then, to accent his last sentence, he leans towards me - his glasses almost opaque in the dim light - and barely whispers: "but you know, man, you know what the real problem is, right? the real problem is BOTS!".

Oh, is it really?

I didn't go to the MRC conference this year. Somehow, boogieman stories from interested third parties (over early morning session, in Vegas!) sounded less appealing for someone who needed to fly 18 hours for the experience. I did, however, read excerpts and ideas. Boy, I have to admit that the set up was a lot more successful than a Tel-Aviv cafe. Because here's the thing with 3rd party vendors - they are looking to sell, and if you're looking for the real gap in your system (rather than the perceived one), you probably shouldn't be looking at that direction. Let's see what's hot this year: it sppears that Malware and Botnets are attacking everyone, and that Machine ID and phone verification might be the only way of stopping this.

Now's probably the right moment to wonder what's my case. True. Here's my case: buying flashy new technologies when you haven't exploited the old ones is pricy, redundant, plain dumb sometimes. Most of the merchants that will purchase anti-malware and machine id solutions do not, I bet, have a decent user-location system in place, and are instead declining multiple good buyers who live in a set of black-listed locations; most of the merchants that will purchase phone verification products will double their fraud operation costs before they realize that calling alarge percentage of the transaction volume only slows them down instead of bringing that solution to loss mitigation. My case is - proper analysis of what you're dealing with, rather than going with the nifty, trendy new fraud filter, will bring you much higher ROI and a method for solving your own problem. It does, however, require some extra effort that cannot be bought off the shelf: training the right kind of people to do the right kind of work. More on that in future posts.