Is tap-and-pay transit the key to m-commerce adoption?

Digital marketplace eBay reported its third quarter earnings on Wednesday, trumpeting revenues of $3 billion–a 32 percent year-over-year increase. eBay CEO John Donahoe credited the jump to the company’s fast-growing mobile commerce efforts: “We expect eBay mobile commerce to generate almost $5 billion in merchandise volume this year and PayPal mobile to exceed $3.5 billion in payment volume,” Donahoe saidin a prepared statement. “Mobile is one way online and offline shopping are blending into a single commerce environment. We are focused on enabling commerce, helping consumers shop anytime, anywhere, and being the commerce partner of choice for retailers of all sizes.”

But mobile commerce is about more than just buying stuff. That was the central theme of American Express group president of enterprise growth Dan Schulman’s keynote speech at last week’s CTIA Enterprise & Applications 2011 conference. Schulman outlined an m-commerce model encompassing retail transactions as well as mobile coupons, offers, loyalty programs and related marketing tools. “There’s no longer a difference between online commerce and offline–with my smartphone, I can have exactly the same information overlay in front of me as on the desktop,” he said, noting that consumers can now access product information, pricing comparison data, recommendations and special offers. At the same time, Schulman said, merchants and marketers can leverage mobile devices to deliver and track more customized offers to consumers who opt in for in-store promotions.

“Mobile payments are not about tapping phones at the point of sale,” Schulman said, plainly referring to nascent tap-and-pay initiatives like Google (NASDAQ:GOOG) Wallet and Isis. “That’s interesting, and it may be good for consumers, but it’s going to take some time to be compelling if that’s all mobile payments are about.”

As if in response, Google significantly expanded its Google Wallet initiative this week, making it clear that retail purchases are just one facet of much larger ambitions. In addition to using their Nexus S Android smartphones to make purchases at 300,000-plus MasterCard PayPass-enabled merchant terminals, consumers may now redeem coupons and/or earn rewards points at select U.S. retailer partners including American Eagle Outfitters, The Container Store, Foot Locker, Guess, Jamba Juice, Macy’s, OfficeMax and Toys”R”Us, with no paper coupons or loyalty cards necessary. In addition, Google Wallet’s Featured Offers tab now boasts exclusive discounts from American Eagle, The Container Store, Macy’s and Jamba Juice. Google is also working with Chevron, D’Agostino, Faber News Now, Gristedes Supermarkets and Pinkberry to equip their stores to accept Google Wallet transactions as well.

No less significant, Google Wallet is moving beyond the retail segment altogether: Google is partnering with the state of New Jersey to enable tap-and-pay rail and bus transit purchases at select locations. NJ Transit is the first public transportation agency to announce support for Google Wallet–commuters may leverage the application to buy tickets at New York Penn Station ticket vending machines and ticket windows as well as Newark Liberty International Airport Rail Station (AirTrain). NJ Transit will also offer Google Wallet ticketing on bus routes 6, 43, 80, 81, 87 and 120, and on some buses on the 126 line. (NJ Transit adds that its public-private partnership with Google was developed at no cost to the agency.)

If you live in a large metropolitan area, chances are you rely on public transit at least a few times each month, if not more often–it’s easy to envision how much simpler life could be knowing you could hop on a subway or train and pay your way via smartphone regardless of whether there’s cash or an active fare card in your wallet. Google knows it, too: “Transit is the fastest way to accelerate adoption and reach usage density in major urban centers by habituating the behavior of tapping and paying with phones,” said Google vice president of commerce Stephanie Tilenius in a statement. eBay may be the first prominent company singing the praises of m-commerce in its quarterly earnings, but it won’t be the last.



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