myTaxi – Base – Targobank, or: The Quiet Integration of Payment Functions

• myTaxi expands its app to include a payment function
• Base and Targobank present mobile payment solutions via NFC sticker
• Base X launched as innovations platform
• Integration of payment solutions continues to advance
• New functions allow seamless transition to payment transactions

Source: heise.de

Progress continues in regard to the integration of payment functions into existing services. Without making much of a fuss, various providers, sometimes in the context of new alliances, are presenting new payment solutions and combining them with their existing services. They are paying particular attention to the solutions’ benefits and user friendliness for clients by significantly reducing technology thresholds, thereby providing a seamless transition to payment functions for clients.

myTaxi, a service that originated in Hamburg, launched an app in 2009 that allows clients to locate and order taxis within their vicinity using the GPS function of their smartphones, thereby circumventing the taxi call center. This service is now available in 30 German cities, has been downloaded over 1.7 million times, and is currently supported by 15,000 taxi drivers. Drivers pay a fixed rate of €0.79 per trip for the service.

Recently, myTaxi integrated a payment function into its app so that clients can pay for their trip directly from the app. This requires that they save their PayPal or credit card data in the app a single time. myTaxi does not use other hardware, QR codes or the new technology of Near Field Communication (NFC) for the payment process, rather, its app makes use of the data connectivity of smartphones. In order for the payment transaction to be carried out entirely without cash, clients can also include a tip of 5, 10 or 15 percent when paying for the trip. Drivers are charged €0.21 plus 3.9 percent of the total sum by myTaxi for the use of the payment service. myTaxi plans to expand the payment function of the app to additional European cities throughout the rest of this year.

Several investors are involved in myTaxi, namely Deutsche Telekom’s T-Venture, Car2Go from Daimler, and the KfW bank group. myTaxi does not rely on payment transaction offers of larger banks for the implementation of its payment solution, instead working together with Wirecard, a Munich-based company. This company ensures the secure storage of customer data and secure payment processing.

With over 400 million trips per year and revenue of € 3.7 billion, the taxi market is very lucrative and ever more competitors are forging onto the app market. Taxi.eu, Taxi.de and Colexio are all trying to conquer different shares of the market with different business models. However, at this point, none of these services provides an integrated payment function.

In the wireless communications market, E-Plus is now also getting into the payment transaction business with its Base brand and in collaboration with Targobank. In addition to a physical MasterCard, customers also receive an NFC sticker that they can attach to their mobile phone or smartphone. The sticker contains a chip on which credit card and banking data are stored. In order to make a payment at a store, customers hold their smartphone up to a device that reads the information on the chip. This allows them to make purchases of up to €25 without authorization and larger purchases with the use of a PIN.

In contrast to Hanover’s Girogo service, for which 1.4 million debit cards with NFC function were distributed, and which is currently being promoted by the savings banks in particular, Base/Targobank customers are not bound to a prepaid system and therefore are not required to load the payment chip with funds before making a purchase. Instead, the sum is deducted from their bank account, as with any card payment, meaning that Base/Targobank’s NFC sticker system has a fundamentally different set-up from Girogo’s “NFC money card”.

While Base and Targobank only recently started their service, first results on usage and acceptance are already available for Girogo, which was launched in April. According to these results, the pilot project is performing far below expectations. Only a tiny fraction of transactions are being conducted with this service. While the banks involved in the project point to retailers and urge them to promote Girogo among their customers, retailers see it as the banks’ responsibility to popularize the service among their customers.

Several retail chains, including Douglas and Thalia, already provide the option of paying via NFC in all of their branches around the country. Other retailers, such as Edeka, familia and McDonald’s as well as gas station chains, have begun to introduce this option. At the moment, over 5,000 stores in Germany accept payment via NFC. First tests have shown that some uncertainty remains regarding the use of this technology. Depending on which retailers customers choose, they can leave both their credit cards and their cash at home when going shopping.

What’s new about this option is that added value in terms of convenience is created for customers through the reduction of technological thresholds, and the fact that the solution functions independently of individual financial institutes. Customers use their own bank accounts without having to create a new account purely for this payment service. Particular attention is paid to security and data protection issues with regard to such services.

In this context, E-Plus has launched a new platform called Base X, currently in the test phase. This platform offers a selection of different, pre-packaged mobile communications options. The idea behind this platform, however, goes far beyond that. By enabling customers to participate early on through various channels (social media), Base X allows them to play a central role in designing the products. The products are flexible, with customers able to choose from different options and with different prices available depending on the region, sometimes even with discounts. Several comments made by the creators of this innovative platform allow us to conclude that the topic of mobile payment solutions will also find a home in Base X.

The services presented by myTaxi, Base and Targobank are characteristic of the advanced state of development of mobile payment solutions. The providers are now far beyond the point of simply making announcements; instead they are presenting payment options that are seamlessly integrated into their services and thereby providing customers with a better user experience, as customers no longer need to switch from one type of media to another in order to make a payment.

The question of which service will assert itself on the market is of waning significance to customers. The way in which the services integrate the payment functions means that customers save their data just one time and are then able to carry out a purchase including payment without ever switching to another medium. What will be decisive for providers in this field is how quickly they are able to build up a network of retailers for the integration of their payment functions into individual services, such as apps. While customers no longer care which payment service is carrying out the transactions in the background, the payment services cannot gain market share by directly catering to customers.

myTaxi
http://www.bloomberg.com/article/2012-07-19/aobp2Sf8eZAg.html
http://www.gruenderszene.de/allgemein/taxi-apps
http://mobilbranche.de/2012/07/mytaxi-startet-mobile-payment-fur-taxifahrten/19271
http://www.heise.de/download/mytaxi-120378665.html

E-Plus, Base, Targobank
https://www.targobank.de/de/ueber-uns/presse/pressemitteilung/mobiles-bezahlen.html
http://www.presseportal.de/pm/78980/2298915/targobank_ag_co_kgaa
http://www.bild.de/geld/wirtschaft/zahlungsmittel/handy-wird-zur-kreditkarte-test-25428390.bild.html

Girogo
http://www.girogo.de/
http://www.welt.de/print/die_welt/finanzen/article108392942/Kunden-verschmaehen-neues-Funk-Geld.html

E-Plus, Base X
http://eplus-gruppe.de/base-x-paket/
http://www.heise.de/newsticker/meldung/E-Plus-will-mit-Base-X-neue-Zielgruppen-erschliessen-1659297.html