Business at risk: Credit cards use isn’t growing fast in the U.S. In fact, the number of payments on cards has declined as consumers move to debit and prepaid cards or Internet banking. Mobile payment methods could accelerate the shift.
You recently opened an office in China. What’s the strategy there?
We just announced we are partnering with a Chinese company, Lianlian. The idea behind that partnership is to take our digital platform, to take Serve, and to license that and embed that in Lianlian’s infrastructure.
The vast majority of mobile phones over in China are prepaid. So a Chinese consumer goes to a merchant and gives them cash, and that cash is translated into minutes in their mobile phone. Our partnership plans to enable digital wallets for those merchants, and from that digital wallet, the consumer can allocate a percentage to minutes on their cell phone. Lianlian, with the benefit of Serve’s technology, will enable online purchasing, digital payments, and getting offers and deals loaded into their wallet. It can now open to the Chinese consumer the ability to do a wide array of digital activities that they might never have been able to do before.
Near-field communication chips are now coming to phones. These could allow us to pay with just a tap on a terminal. Will this technology catch on?
If you’re just using your phone instead of a plastic card, I think that will take quite some time to come about for making payments. It may be this technology finds other uses first—it allows you to unlock your house and not have to worry about your keys anymore.
I think the real breakthrough occurs when you can tap your phone on the doorway of a retailer and selectively expose your commerce identity to that retailer. You tell them, “I’m a first-time customer, or a loyal customer. I’ve got this shopping list that I’m going after, or I’m brand-loyal to these products. I’ve got this kind of budget.” Then you, as a retailer, can segment to an individual—complete personalization around the offers and deals and information the consumer may want. So then there’s a real reason for you to tap your phone. That’s what a lot of us are thinking about now.
Is social networking changing your business?
Social networks are becoming this great form of discovery. What do my friends like? The second thing that they’ve really started to do is create this whole idea around virtual currencies. These virtual currencies are very real. For a certain demographic, giving a virtual flower versus a real flower is actually very meaningful.
We bought a company called Sometrics, which last year did 3.3 trillion units of virtual currency on their platform. You can buy virtual goods such as gold coins or whatever it may be. That acquisition lets us tap into the massively growing space of online gaming and to develop capabilities to manage virtual currencies, a business that is projected to nearly double by 2014. The acquisition isn’t just about gaming, though. It’s about getting the capabilities and talent we need to expand the Serve platform into new features and applications.