Now that 21st century digital behemoths such as Facebook and Google have discovered how to make personal information the most valuable resource in the history of humanity, they are strip-mining mountains of it into completely unrecognizable states.

Conversely, we tend to ignore this process because the most magnificent, technologically advanced and socially connected digital city is being built from it.

You are living in this growing digital city, and I’m guessing that you really like it here. Unfortunately, you can’t live in this city for free. Your rent is due in the form of your personal information, and you have to accept a certain loss of your privacy.

There’s no credit check to move in. You just need to share your name, birth date, where you’re from, your alma mater and a few more personal details. It’s effortless to hand over your information, and will only take you about 60 seconds to sign a lease.

But if you don’t read the fine print of your lease, you’ll gloss over the fact that surveillance cameras and microphones have been installed to cover every square inch of the city and that you have consented to being watched at all hours.

Meanwhile, marketers and advertisers will eavesdrop on your conversations and abruptly interrupt when you bring up any topics related to their products. (Bizarrely, you are also required to eat a complimentary cookie every time you enter a building.)

Real estate metaphors notwithstanding, losing your privacy is not such a bad thing. You pay into the new digital economy with your demographic and behavioral information.

Some people raise legitimate concerns, but claims of an Orwellian dystopia are alarmist hyperbole. There is a level of discomfort that comes with voluntarily divulging private information, and, understandably, greater anxiety results from being watched at all times.

As a society, we need to define the rules under which our personal information can be mined. Our collective unease is largely the result of not having clear parameters to create an equilibrium between privacy and personalization.

These parameters will help shift our focus from the negatives to the positives, because in return for your personal information, you realize a net benefit with tremendous value.

Access to Your Data From Anywhere, at Any Time, Using Any Device

I don’t want access to my data being constrained by the time of day, where I am or what digital device I have access to. I shouldn’t have to go to work to grab an Excel file off my computer and I shouldn’t need my personal device to show a photo of my dog to coworkers.

The solution is adopting a cloud service like Dropbox, Google or Facebook. They become the stewards of your data, responsible for keeping it secure and accessible at all times. In exchange, you grant them full visibility of your data and permit them to monetize it.

I don’t know about you, but I don’t like carrying a USB stick around and I definitely loathe the pain of a hard drive failure corrupting three years of photos and memories. I’m sticking with the cloud.

Personalized Experience

A personalized experience is why companies like American Express, Brooks Brothers and USAA consistently rank at the top of consumer surveys. These are giant corporations, but they make you feel special by focusing on you. They also happen to know a lot about you and your spending habits.

The sheer volume of information online is overwhelming and often leads to decision paralysis. You need help cutting through the noise; the best companies personalize your digital experience, only presenting information that is relevant to you.

I don’t want to dig through the iTunes or Netflix libraries. I want to choose from recommendations based upon what I’ve watched in the past and what my friends are watching. If I’m buying something on Amazon, or planning a vacation on TripAdvisor, I’d like to see reviews and recommendations from my friends. I’m far more likely to make a better and more informed choice with the trusted validation of my social circle.

Proactive Digital Assistant

Google knows where I live, where I work and the typical route I take to commute between them. I find it extremely valuable when I am alerted about an accident before I’m already stuck in the horrific traffic jam for over an hour.

Facebook pings me with a push notification about my friend’s birthday so I don’t forget yet again. I can see from Instagram photos that my friend went to the Nationals game and I can ask him how it was. Foursquare will let me know if one of my friends has checked in near me and we can now meet for a serendipitous drink.

Our 21st century digital economy makes my life better. I have access to what I need, when I need it. My online experience is largely customized to suit my needs. And, I have better ambient awareness of what’s happening in my social circles.

The cost to improve my life is sharing my personal information. A barter economy is based on the exchange of goods and services of perceived equal value. In my mind, I’m receiving far more than I’m giving up.

There is a zero-sum relationship between personalization and privacy. To get the personalized digital experience you want and have grown accustomed to, you have to accept the loss of your privacy.

Tom Cochran is CTO at Atlantic Media, publisher of the Atlantic, Quartz, National Journal and Government Executive. Prior to that, he was at the White House as the Director of New Media Technologies. Follow him on Twitter at @tommer.

Card companies such as Visa, MasterCard and American Express fear their access to information generated when a consumer swipes a credit or debit card is being blocked by some of the digital applications.

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High-profile Silicon Valley entrepreneur Max Levchin is launching a new mobile payments startup today called Affirm.

It’s the first project emerging from Levchin’s San Francisco tech incubator Hard, Valuable, Fun (HVF), which he started after selling his last company — Slide — to Google and then eventually leaving the search giant. Previous to that, Levchin and investor Peter Thiel had sold PayPal to eBay.

While it might seem at first as if Affirm is in direct competition with other mobile payments-focused companies such as Square and Stripe, it seems to be aimed at another layer of the value chain in an effort to improve conversion for mobile payments.

In fact, Stripe — in which Levchin is an investor, too — will be processing credit card payments on the back end.

But it will be an uphill battle for Levchin in the current payments arena, with a range of challenges from a multitude of rivals to regulatory scrutiny to the risks associated with credit in general.

Its most similar competitor, for example, is Klarna, a hugely funded company based in Sweden that offers payment solutions for a wide range of online storefronts across Europe that did $200 million in revenue last year. Klarna, which means “clear” in Swedish, is likely to be eying the U.S. market and has well-regard VC Mike Moritz of Sequoia Capital on its board.

As part of its effort, Affirm will use Facebook for authentication of consumers, and also use a number of other social and data signals to assess risk. It will then guarantee payment to merchants — who will pay Affirm a fee — after this check.

“We are trying to get as close as possible to one-click, which has always been the case on the desktop,” said Levchin in an interview today. “In mobile, it has become an imperative to be able to buy it now or you lose a customer quickly.”

Levchin described Affirm as a digital charge card rather than a credit card, trying to be valuable to merchants by lowering the abandonment rate of mobile transactions. Affirm’s beta launch retail partner is 1-800-Flowers.

“You will essentially be putting a purchase on a digital tab, and we are going to make it work for us by looking at all available data to determine if you are someone who will pay it back,” said Levchin.

Like an American Express or other charge card, consumers will have about 30 days to settle bills, although Affirm will not be making any money from them.

As to why he decided to enter the increasingly competitive online payment space — which is also rife with regulatory and fraud issues — Levchin said that his efforts at PayPal did not go far enough.

“Payments online are still too hard — we started the revolution with PayPal and democratized payments for small businesses, but we stopped short of changing the system,” he said. “The world is now awash in data and we can see consumers in a lot clearer ways.”

In addition, he added, the “overwhelming transformation of everything toward mobile changes all the fundamentals.”

Relying on Facebook could be an issue, of course, opening up a thicket of privacy issues and also worrisome reliance on the social networking giant. But Levchin said that Affirm’s system depends on the company for confirming identity more than anything else and there will eventually be a number of ways to do that.

Other data Affirm will be using, he said, range from incomes per zip code and even a user’s mobile device ID.

Affirm has been funded by Levchin and a group of friends in the “low-digit millions,” he said, with only a few dozen employees compared to bigger mobile payments efforts from others.

He said he knows the risk of entering the space, especially given that there are only so many solutions and a limited retailer attention.

Still, Levchin noted: “I just think there is so much more to do. Technology has come a long way since PayPal.”

The program builds on Foursquare’s partnership with American Express, which launched just under two years ago, which allows Foursquare users to redeem special discounts and deals by checking in to local businesses after linking their Foursquare accounts to their credit card. The idea was, according to Foursquare, to make the experience less awkward than pulling out a paper coupon or waving your phone in front of the cashier (a la some daily deals services).

So in theory, the easier and less clumsy the process, the more folks will want to do it. And that makes everyone happy — including Foursquare’s bottom line.

“When users are having a great experience and merchants earn more money, we earn more money in the process,” Foursquare product manager Noah Weiss told AllThingsD.

Which is something Foursquare needs to take more seriously as it begins to mature and think of itself as a growing, viable business. The company of course has its previously announced paid promoted updates pilot program to offer businesses more ways to lure in customers, but that’s still being fleshed out, and needs time before it scales widely.

That, combined with Foursquare’s added analytics dashboard that can help business owners see more information about the types of people spending money at their stores, could prove to be a fairly powerful tool set for understanding their customers.

For now, with any luck, the number of people using Visa, Mastercard and debit cards — which is pretty much everyone in the U.S. — will beef up Foursquare’s deals revenue. That is, if folks continue to check in.

1.) Salesforce CEO Benioff Invites Laid Off Yammer Employees to Work for Him

2.) Microsoft Could Make Billions From Office for iPad

3.) Apple Working on Fix for iOS 6.1 Passcode Hack

4.) American Express Cardholders Can Now Tweet to Buy

5.) HBO to Finally Let Subscribers Stream HBO Go to TV Over AirPlay

6.) A Big Year for Apple’s iPhone in India

7.) Bill Gates on Philanthropy, Steve Jobs and the Microsoft Product That Never Was

8.) Yes, Intel Is Building a Web TV Service (A Box, Too)

9.) The Cloud’s Dirty Little Secret

10.) Apple MacBook Pros With Retina Display Get Faster, Cheaper

For more of the week in review, you should follow us on Facebook and Twitter.

Over the past couple of years, American Express has been actively working on ways for its members to interact with merchants online.

As a result, Amex cardholders can link their account to a number of social networks, like Foursquare, Facebook and Xbox Live, for the chance to unlock discounts.

This announcement today, however, marks the first time American Express is allowing consumers to buy things through social networks.

Leslie Berland, the SVP of digital partnerships and development at American Express, said a year ago, it started distributing offers and coupons on Twitter. In that time, she said, cardholders have saved “millions of dollars” from “thousands of merchants.”

Starting today, all cardholders will have to register to participate, even if they’ve used the service before, this time to provide a physical address for delivering products.

After that, it should be pretty painless to buy something. For instance, participants will be able to buy a $25 American Express Gift Card for $15 this afternoon by tweeting #BuyAmexGiftCard25. American Express will reply via Twitter, asking the user to confirm the purchase in a tweet. All products will be shipped via free two-day shipping.

Starting Wednesday, more items will go on sale, including an Amazon Kindle Fire HD for $150 and an Xbox 360 4GB console with three months of Xbox Live for $180. All deals will be offered for a three-week period.

While it’s easy for cardholders to participate, American Express is having to do a lot of work on the back end to make it run smoothly. There is a customer care support team to address any issues that arise, and it is working with a partner to provide the shipping logistics — neither function trivial … or cheap.

Berland acknowledges that it took “a great deal of work to think about every single use case.”

The commerce platform is coming to Twitter first, but it will also eventually come to Facebook and other platforms, Berland confirmed. Twitter is not getting a cut of the revenue from the transactions. “This is Chapter One,” she said. “We are very invested in Twitter, and we’ve taken it a step further here, but the best is yet to come. We are very confident that it will perform very well.”

To date, there have been very few examples of Twitter commerce. The most high-profile launch, perhaps, was by Chirpify, a Portland-based startup that helps merchants accept payments from a Twitter stream. Otherwise, the best implementation of selling products on a social network so far is likely by Facebook itself through its sale of gifts.

Here’s a video demonstrating how an Amex cardholder can redeem offers and buy something through Twitter:

To understand how graphs address data complexity, we need first to understand the nature of the complexity itself. In practical terms, data gets more complex as it gets bigger, more semi-structured, and more densely connected.

We all know about big data. The volume of net new data being created each year is growing exponentially — a trend that is set to continue for the foreseeable future. But increased volume isn’t the only force we have to contend with today: On top of this staggering growth in the volume of data, we are also seeing an increase in both the amount of semi-structure and the degree of connectedness present in that data.

Semi-Structure

Semi-structured data is messy data: data that doesn’t fit into a uniform, one-size-fits-all, rigid relational schema. It is characterized by the presence of sparse tables and lots of null checking logic — all of it necessary to produce a solution that is fast enough and flexible enough to deal with the vagaries of real world data.

Increased semi-structure, then, is another force with which we have to contend, besides increased data volume. As data volumes grow, we trade insight for uniformity; the more data we gather about a group of entities, the more that data is likely to be semi-structured.

Connectedness

But insight and end-user value do not simply result from ramping up volume and variation in our data. Many of the more important questions we want to ask of our data require us to understand how things are connected. Insight depends on us understanding the relationships between entities — and often, the quality of those relationships.

Here are some examples, taken from different domains, of the kinds of important questions we ask of our data:

• Which friends and colleagues do we have in common?
• What’s the quickest route between two stations on the metro?
• What do you recommend I buy based on my previous purchases?
• Which products, services and subscriptions do I have permission to access and modify? Conversely, given this particular subscription, who can modify or cancel it?
• What’s the most efficient means of delivering a parcel from A to B?
• Who has been fraudulently claiming benefits?
• Who owns all the debt? Who is most at risk of poisoning the financial markets?

To answer each of these questions, we need to understand how the entities in our domain are connected. In other words, these are graph problems.

Why are these graph problems? Because graphs are the best abstraction we have for modeling and querying connectedness. Moreover, the malleability of the graph structure makes it ideal for creating high-fidelity representations of a semi-structured domain. Traditionally relegated to the more obscure applications of computer science, graph data models are today proving to be a powerful way of modeling and interrogating a wide range of common use cases. Put simply, graphs are everywhere.

Graph Databases

Today, if you’ve got a graph data problem, you can tackle it using a graph database — an online transactional system that allows you to store, manage and query your data in the form of a graph. A graph database enables you to represent any kind of data in a highly accessible, elegant way using nodes and relationships, both of which may host properties:

• Nodes are containers for properties, which are key-value pairs that capture an entity’s attributes. In a graph model of a domain, nodes tend to be used to represent the things in the domain. The connections between these things are expressed using relationships.
• A relationship has a name and a direction, which together lend semantic clarity and context to the nodes connected by the relationship. Like nodes, relationships can also contain properties: Attaching one or more properties to a relationship allows us to weight that relationship, or describe its quality, or otherwise qualify its applicability for a particular query.

The key thing about such a model is that it makes relations first-class citizens of the data, rather than treating them as metadata. As real data points, they can be queried and understood in their variety, weight and quality: Important capabilities in a world of increasing connectedness.

Graph Databases in Practice

Today, the most innovative organizations are leveraging graph databases as a way to solve the challenges around their connected data. These include major names such as Google, Facebook, Twitter, Adobe and American Express. Graph databases are also being used by organizations in a range of fields including finance, education, web, ISV and telecom and data communications.

The following examples offer use case scenarios of graph databases in practice.

• Adobe Systems currently leverages a graph database to provide social capabilities to its Creative Cloud — a new array of services to media enthusiasts and professionals. A graph offers clear advantages in capturing Adobe’s rich data model fully, while still allowing for high performance queries that range from simple reads to advanced analytics. It also enables Adobe to store large amounts of connected data across three continents, all while maintaining high query performance.
• Europe’s No. 1 professional network, Viadeo, has integrated a graph database to store all of its users and relationships. Viadeo currently has 40 million professionals in its network and requires a solution that is easy to use and capable of handling major expansion. Upon integrating a graph model, Viadeo has accelerated its system performance by more than 200 percent.
• Telenor Group is one of the top ten wireless Telco companies in the world, and uses a graph database to manage its customer organizational structures. The ability to model and query complex data such as customer and account structures with high performance has proven to be critical to Telenor’s ongoing success.

An access control graph. Telenor uses a similar data model to manage products and subscriptions.

• Deutsche Telekom leverages a graph database for its highly scalable social soccer fan website attracting tens of thousands of visitors during each soccer match, where it provides painless data modeling, seamless data model extendibility, and high performance and reliability.
• Squidoo is the popular social publishing platform where users share their passions. They recently created a product called Postcards, which are single-page, beautifully designed recommendations of books, movies, music albums, quotes and other products and media types. A graph database ensures that users have an awesome experience as it provides a primary data store for the Postcards taxonomy and the recommendation engine for what people should be doing next.

Such examples prove the pervasiveness of connections within data and the power of a graph model to optimally map relationships. A graph database allows you to further query and analyze such connections to provide greater insight and end-user value. In short, graphs are poised to deliver true competitive advantage by offering deeper perspective into data as well as a new framework to power today’s revolutionary applications.

A New Way of Thinking

Graphs are a new way of thinking for explicitly modeling the factors that make today’s big data so complex: Semi-structure and connectedness. As more and more organizations recognize the value of modeling data with a graph, they are turning to the use of graph databases to extend this powerful modeling capability to the storage and querying of complex, densely connected structures. The result is the opening up of new opportunities for generating critical insight and end-user value, which can make all the difference in keeping up with today’s competitive business environment.

Emil is the founder of the Neo4j open source graph database project, which is the most widely deployed graph database in the world. As a life-long compulsive programmer who started his first free software project in 1994, Emil has with horror witnessed his recent degradation into a VC-backed powerpoint engineer. As the CEO of Neo4j’s commercial sponsor Neo Technology, Emil is now mainly focused on spreading the word about the powers of graphs and preaching the demise of tabular solutions everywhere. Emil presents regularly at conferences such as JAOO, JavaOne, QCon and OSCON.

The acquisition was reported by several media outlets, including The Wall Street Journal, which cited sources close to the transaction as saying that Chase paid $35 million for the San Francisco company.

Bloomspot’s roughly 100 employees are expected to be offered jobs at the lender and payment processor.

Together, the two should be a good fit.

In general, banks and card issuers are looking for new revenue streams after the Durbin Amendment capped the amount that they could charge merchants on debit card transactions. Additionally, many banks have already begun sending targeted ads or deals to consumers based on their spending habits.

In a recent story, I named financial companies, including Visa, MasterCard and American Express, as potential acquirers for Groupon. However, one impediment with Groupon is its price. Even though its stock is down around 80 percent since its IPO, it would still cost billions to acquire.

The purchase today by Chase shows that there is an interest, just at a lower price point.

In a release, Jeff Kinder, president of Chase Offers, said, “Merchant partners are continually looking for ways to engage the right customers, and consumers have shown a clear interest in receiving offers from their favorite merchants. We believe Chase has a unique set of assets to bring these customers together and deliver highly targeted, relevant merchant offers at scale.”

Over the past few years, Bloomspot, which was led by former Yahoo executive Jasper Malcolmson, has tried hard to disassociate itself from both Groupon and LivingSocial. Even though on the surface it seems as though Bloomspot distributed similar offers, Malcolmson said he was focused on bringing merchants profitable customers rather than just getting new people in the door.

The company’s motto was, “Great Offers. Great Customers.”

But this deal may not have been so great for investors.

Last summer, Bloomspot raised $35 million in a second round of funding just before Groupon’s public offering. Prior to that, it raised nearly $11 million, for a total of about $46 million. Investors include InterWest Partners, Columbia Capital, Menlo Ventures and True Ventures, among others.

Wall Street is certainly enthusiastic for such an outcome — even grabbing onto a specious rumor that perhaps Google was sniffing around the troubled Chicago-based social discount deals company, which is currently valued at just over $3 billion. On Friday, Groupon’s stock jumped 23 percent on takeover speculation after Tom Forte of Telsey Advisory Group was quoted as saying: “Where the stock is currently trading, it’s a takeout candidate.”

Actually, the stock has been trading at these levels for a very long time, so the sudden attention is decidedly overwrought. More to the point, sources close to Google — which had offered $6 billion for the company before it went public — said that Google has not been contemplating a second foray into acquiring Groupon.

The same is true for eBay, said sources, and Amazon is an unlikely buyer because it already owns a stake in LivingSocial, the second-largest daily deals provider. Additionally, there are lots of other problems that any purchaser would face in buying the company, which sells everything from bikini waxes to GPS devices at a discount.

In an onstage appearance this morning, CEO Andrew Mason declined to address the thinly sourced rumors of a takeover. “What I have said about Groupon is everything I will say about it,” he said. “I am focused on looking forward.”

Given the non-answer, it’s still prudent to ask, is there actually a buyer for Groupon?

First, let’s address the price. Two years ago, Google offered to purchase Groupon for $6 billion. A year later, it went public at $10 billion, and today, it is trading for $2.9 billion. The company has $1.2 billion in cash, and owes merchants about half of that, or around $573 million.

That said, it is still a relatively low price for a company that includes a customer base of 40 million people who bought something in the past year, a hodgepodge of local retailers and merchants that consider Groupon their online marketing channel, and — perhaps most importantly — a better-than-expected mobile business that now represents a third of its transactions.

But, while it costs much less than it once did, that doesn’t necessarily make Groupon a steal.

That’s because over the past year, the Chicago company has stumbled operationally. Europe is underperforming, the company’s main coupon business is slowing as the novelty of the business is wearing off and it has started investing heavily in selling products, a low-margin business that requires tons of logistics to package and ship items to people’s front doors. On top of that, the board recently discussed replacing Mason, who some directors fear may not be the right choice to continue leading the company. While they ultimately decided to keep him, it was a perceptual blow.

At least one big investor is betting something will happen: Tiger Global Management, which recently bought up close to 10 percent of Groupon. The well-regarded hedge fund and private equity firm may be betting it can’t get worse, and perhaps would even push for a sale.

In any case, here’s a look at some of the scenarios:

Google

When Google made the offer two years ago, the search engine was interested in entering the daily deals business as a way to gain a foothold into all things local, including commerce. Since Groupon rejected that $6 billion acquisition, Google has spent the past two years building Google Offers.

While Google Offers still has a very small piece of the market, it has been pivoting toward an integrated ads model, which is less complementary to Groupon’s approach. Google believes that merchants will pay Google only after a purchase has been made, and the sum will be determined by the consumer. The cost per acquisition model is very different from Groupon, which has the consumer paying up front for a heavily discounted coupon.

As one source with knowledge of the situation said: “The timing would be a bit wacky.”

That said, Nikesh Arora, Google’s SVP and chief business officer, had been a very strong advocate of the original deal and might still want more heft in Google’s corner in the competitive local scene. One major plus is that Groupon could also help build a local salesforce to push Google+ Local, which includes Zagat, the online reviews site that competes against Yelp. Groupon might also support its Google Wallet business, which has largely failed to gain traction among consumers.

Another source familiar with the two companies said running a daily deals business is “operationally intensive, and it’s a muscle that Google doesn’t have, so from a synergy standpoint it would be complementary.” But, “if they are still serious about local, is that the business model for local that they want to pursue?”

eBay

For the past two years, the e-commerce company has aggressively been going after the local commerce market by helping transactions occur online or at a nearby store. Additionally, its PayPal division is moving fast into the physical payments space. Strong merchant relationships, like the ones Groupon has, could go a long way toward making those things happen faster.

EBay recently raised $3 billion in debt financing and has $7.3 billion cash on its balance street. Its stock price also has gone up more than 65 percent in the past year, giving it plenty of fire power to make a big move.

It also has the stomach for acquisitions. However, many of its purchases over the past two years have been about buying technology and talent. It bought RedLaser, the barcode scanning technology for $10 million; Milo.com, a local inventory company, for $75 million; and Zong, a mobile payments company, for $240 million. Over the years, it has also made substantial purchases, including GSI last year for $2.4 billion, Bill Me Later for $1.2 billion and Skype for $2.6 billion.

A few months back, the company entered the daily deals business with the launch of eBay Lifestyle Deals, which runs daily deals in a number of markets, including San Francisco, Seattle, Los Angeles and Washington, D.C. To do so, eBay teamed up with Signpost, which arranges the deals with local merchants. Interestingly, Signpost is backed by Google Ventures, and already provides deals for Google Offers.

The company is also experimenting with eBay Now, a service that allows consumers to buy something on their phone and have it delivered within an hour. “They continue to be interested in local, and they have this experiment going on right now with eBay Now, but they are still iterating and figuring out the local angle,” one source said.

Likewise, PayPal’s local strategy is under development. It is trying to roll out physical payments to big-box retailers like Home Depot while also offering a credit card reader for smaller retailers called PayPal Here.

The biggest argument against this deal is that eBay may not need Groupon, and that it already has the infrastructure to roll out deals through partnerships — which would cost a whole lot less and be a lot less painful.

Amazon

Simply put, Amazon already has its own troubles with its significant stake in LivingSocial, which just slashed 400 jobs. In the third quarter, Amazon took an impairment charge of $169 million, or 37 cents a share, related to its stake in LivingSocial, resulting in the company reporting an overall third-quarter net loss of $274 million, or 60 cents a share.

Any potential Amazon-Groupon tie-up would then be a merger between LivingSocial and Groupon, creating perhaps an even bigger black hole that would also result in a lot of ongoing integration problems. While together LivingSocial and Groupon would easily make Amazon the largest daily deals company and up its local commerce efforts, it’s still not clear if the online retail giant wants to double down here.

Separately, Amazon has entered the daily deals business on its own with a service called Amazon Local that competes directly with LivingSocial and Groupon. The offers became particularly interesting to the company after it started using them to discount the price of its Kindle e-readers and tablets. If owners don’t want to see the offers, the tablets can cost up to $40 more.

The company has said that it essentially doesn’t need help building the business – it thinks it can get to scale fast in the space because it already has 164 million active customer accounts worldwide (which are defined as people who have made a purchase in the past year).

Perhaps most importantly, though, Amazon has a history of building, not buying.

Visa, MasterCard, American Express

These three payment companies have huge market values, and should not be discounted as players in the local commerce space. In addition, a year ago, all of them started looking for new revenue streams after the Durbin Amendment capped the amount that banks and card networks charge merchants on debit card transactions.

Already, many banks are sending targeted ads or deals to consumers based on their spending habits. However, it’s unclear whether they need to be the actual deal makers, or just act as a distribution system for advertisements and coupons. For example, MasterCard recently partnered with Gilt City, the daily deals division of Gilt Groupe. Through the partnership, MasterCard will be able to offer its users deals for restaurants, concert tickets and travel, and at the same time, help Gilt City get in front of some of the card issuer’s millions of users.

MasterCard may be the frontrunner of the three as a potential suitor. Not only has it shown direct interest in the space, American Express is still absorbing its acquisition of Revolution Money, for which it paid $300 million cash in 2010, and Visa has been active with its purchase of CyberSource for $2 billion in 2010. More recently, it made an investment in Square, the hot mobile payments company.

Other Suspects

A number of other companies could be put on a Groupon acquisition list, such as Yahoo, Microsoft and Facebook.

Microsoft and Yahoo both have the money, but have not done much in the space so far. An acquisition would allow them to catch up quickly, but would be expensive and largely not complementary with what they are doing already — which is almost nothing. Facebook, in particular, tried once to enter the space and failed and might be focused on other lower-hanging revenue sources.

Groupon could also look to private equity firms for a buyout, which would allow it to have some space while it fixed some of its issues.

Internationally, there is Japan’s Rakuten, which owns Buy.com in the U.S., and China’s e-commerce giant Alibaba, which has been looking at ways to enter the U.S. market.

Of course, Groupon might simply keep stumbling forward and hope it can turn itself around. But, at some point, without improved revenue and cohesion at the top levels, something is sure to bring pressure to its options. 

In fact, in afternoon trading today, the rumors continued to keep the stock elevated. Shares closed 3.76 percent higher today at $4.41 a share.

Images of Money

Visa’s V.me service is similar to eBay’s PayPal and other e-wallet services under development by MasterCard and American Express. The consumer benefit for all of these is that checking out online or from a mobile phone will be easier because customers will only have to enter a username and password, which automatically populates dozens of fields, including credit card numbers and shipping addresses.

While V.me is operated by Visa, it is promising to be open, meaning that consumers can fund it using a variety of sources — including Visa, MasterCard, America Express and Discover cards.

Today, Visa is announcing the commercial launch of the service after unveiling V.me in beta a year ago.

In that time, it has signed up 23 online retailers, including Blue Nile, Buy.com, MovieTickets.com, 1-800-Flowers.com, Cooking.com and CozyBoots.com. And agreements have been secured with 50 of the top issuers and banks, including BB&T, CSCU, BBVA, U.S. Bank, dozens of credit unions and more.

Jennifer Schulz, Visa’s global head of e-commerce, said the company will be relying mostly on the banks to promote the digital wallet service. Some banks have committed to directing consumers to the V.me site, or to integrating the registration process directly on their own sites. Any consumer, regardless of whether their bank is participating, can sign up at V.me.

Visa still has a long way to go. It will reach 55 million consumers through the bank relationships, and it is working with only 25 of the top 250 Internet retailers, Schulz said.

The partnership between American Express and Microsoft is similar to other deals the credit card company has made over the past year or so. For example, American Express holders can link their account to their Foursquare, Twitter or Facebook accounts to unlock offers. But this marks the first time American Express has entered the interactive TV space.

Leslie Berland, the SVP of digital partnerships and development at American Express, said the company wants to be visible on the platforms that its customers are using today, “which we know gets them more engaged in the card and more loyal to us.” She said it also allows American Express to be considered a digital marketing platform for its merchant partners.

Once a cardholder links his or her account to Xbox Live, the partnership will work in two ways:

• An American Express page on the Xbox Live dashboard will allow consumers to pick offers and load them directly onto their credit cards, enabling them to redeem them later without taking any further action. The savings will automatically appear on the next statement.
• American Express also will connect offers to the actual games, starting with the highly anticipated Halo 4 release. Once players hit certain achievements in the game, they will be eligible to win various prizes, including a trip to E3, the annual video game trade show.

The first marketing partners to sign up include AMC Theaters, PacSun and Best Buy in the U.S. and Carphone Warehouse, Cineworld Cinemas, Dixons Travel and Topman in the U.K. Berland said they will continue adding sponsorships and rewards to the platform and will evaluate branching out to other interactive TV and gaming platforms.

Xbox marks a good first move, given that it has been the top-selling game console for several months running now. Likewise, Microsoft has been working on ways to integrate more ads within Xbox Live, which reaches roughly 40 million users. These people tend to be hard to reach elsewhere, given that the most dedicated users spend about three hours a day, an average of 84 hours a month, on the platform.

Maybe now, through deals like the ones from American Express, all that time spent on the platform will start paying off.

Photo credit: Zero Gravity

Plus, Google goes way beyond the normal conference perks of t-shirts and pens and fancy dinners. Attendees were each invited to participate in a zero-gravity flight that mimics the weightlessness of space. “As an extension to our theme, we will be providing an opportunity for you to experience what it feels like to be outside of our world,” Google told them.

By the way, the normal price for these flights? $5,000 per head.

But they don’t come without their downsides, as LeWeb CEO Loic Le Meur charmingly noted:

I’m back on planet earth. I went really crazy in 0 gravity with spins an upside down etc then my breakfast went 0G too!

— Loic Le Meur (@loic) October 14, 2012

Still, Google missed perhaps the most perfect product tie-in ever when it didn’t supply skydiver Felix Baumgartner with Google Glass to livestream from his own head his record-breaking trip from space onto (nearby!) New Mexico on Sunday. Sergey Brin, you have been seriously one-upped.

In more serious Google news, the company reports third-quarter earnings on Thursday.

In an interview, Mihir Shah, Groupon’s VP of Mobile and Merchant Products, confirmed to AllThingsD that Groupon Payments is available starting today in the U.S.

The launch follows a pilot program in the San Francisco area with more than 150 businesses. The service allows merchants to accept credit and debit cards by swiping them through a card reader attached to an iPhone or iPod touch.

While payments has become a very hot space over the past year, with many companies providing card readers for mobile devices, what stands out about its service is the price. At least, that’s what Groupon is hoping.

Shah said Groupon is guaranteeing it has the cheapest rates — and will beat a merchant’s current rates if it doesn’t. He said that merchants often don’t even know what they are paying because of complicated rate structures and monthly fees that make it hard to figure out.

Photo by Etsy user cklausen

Now that on-site payment is available — the new Etsy Direct Checkout is structured to be roughly competitive with PayPal — Etsy wants sellers to use it. So it will start selling gift cards to consumers in October that can only be used with Direct Checkout-enabled stores.

The site will also waive all credit card processing fees in September for Direct Checkout stores. Sellers still pay listing and transaction fees like normal.

Of 800,000 active shops on Etsy, 100,000 are now Direct Checkout enabled. It’s only available for U.S. stores, though, and Etsy doesn’t break out how many stores are in which region. Direct Checkout stores apparently see increased conversion and sales — in part because buyers don’t get lost when they wander off site to pay. The stores have processed $50 million so far.

Etsy hired American Express veteran Camilla Velasquez as its director of payments last year to launch the program. “It’s been a long time coming,” she said yesterday. 

Next up, Velasquez wants to add physical gift cards as well as international availability for Direct Checkout. She didn’t give dates for either.

In a blog post, Google announced: “Today we’re releasing a new, cloud-based version of the Google Wallet app that supports all credit and debit cards from Visa, MasterCard, American Express, and Discover.”

But American Express spokesman Brad Minor told AllThingsD that no official agreement has been signed between the two companies, and “they haven’t gotten our approval for the additional use.”

In previous iterations of Google Wallet, including Google Checkout, American Express was an accepted form of payment.

UPDATE: In a statement, a Google spokesperson said, “For many years, we’ve accepted American Express, Visa, MasterCard and Discover for online and mobile transactions. The latest version of Google Wallet extends these same benefits to people who choose to use the Google Wallet app to make purchases in-store. We are in active discussions with American Express and look forward to working together as partners as the world embraces digital payments.”

While technically it is still possible for Google Wallet users to store their American Express card in the Wallet and make payments without an agreement in place, Minor said Amex could shut off the feature if necessary.

A Visa spokesperson confirmed that it does have an agreement with Google. Back in September, Google started licensing Visa’s payWave application to allow account holders to add their Visa credit, debit or prepaid accounts to the Google Wallet.

Likewise, Google has a long-standing relationship with MasterCard, and, in fact, it is MasterCard that is making it possible to store multiple card types in the cloud. When users add a credit or debit card to the Google Wallet mobile app, they will be issued a “virtual” MasterCard card number. As a result, the merchant will never receive your real credit or debit card credentials, but rather be presented with that number from MasterCard.

A Discover spokesperson did not immediately return calls seeking comment.

It is not entirely clear why American Express wouldn’t want to participate in the program; however, the mobile payments field is becoming increasingly competitive, and it has its own efforts under way.

Maybe it just wants it all in writing first.

Larry Page, can you please sign on the bottom line?

And Google Wallet has been one of the biggest offenders.

But starting today, the company is making a few key changes that will remove a lot of barriers to entry.

For instance, now users will be able to store multiple cards in the Google Wallet, whether they are issued by Visa, Discover, American Express or MasterCard. In addition, users will now also be able to use Google Wallet to pay online at thousands of participating merchants.

“When we launched, we only supported Citi MasterCard and our own prepaid card,” said Robin Dua, Google Wallet’s head of product management.

With this new approach, adding a new card will be easy. Before, he said, it took several months to a year of working with a bank to complete — a lifetime in the fast-moving technology space.

To make it work, Google explained in a blog post, it will now store the payment information in the cloud, rather than in the phone’s secure element. When users add a credit or debit card to the Google Wallet mobile app, they will be issued a “virtual” MasterCard card number. As a result, the merchant will never receive your real credit or debit card credentials, but rather be presented with that number, adding another layer of security.

As part of the announcement, Google also added new security features that will allow users to log in online and delete all of their information if they ever lost their phone.

So, is Google Wallet now perfect?

No, not really. For now, it is still limited to six NFC-enabled phones.

InsideSocial

Based on one estimate, there are three million food trucks and more than five million food carts in the U.S. A reality-TV show called “The Great Food Truck Race” depicts the drama in setting up shop, and the challenges of making a profit.

So it’s no wonder there’s now an iPad-based solution made specifically for the four-wheeled purveyors.

Revel Systems, a two-year-old San Francisco start-up, has created a point-of-sale system for food trucks and quick-service restaurants. It’s available today, to make accepting ordering and payments as simple as possible.

What’s special about this version is that it allows the trucks to accept orders and charge credit cards with little to no wiring, so kitchen crews in cramped quarters don’t accidentally stumble over or chop their lifeline to the Internet. It also enables them to continue taking orders, even when their Internet connection goes down — because that can happen when moving from one street corner to the next.

“Before, you’d have a router and cabling all around; it was one big mess,” said Revel Systems’ co-founder and CTO Chris Ciabarra. “If you want a printer and a display, where do all the cables go?”

Additionally, the software enables food truck owners to update their location, or offer specials via Twitter.

What’s different about this iPad solution from others, like Square, is that it’s focused on the enterprise customer, Ciabarra said.

As traditional brick-and-mortar restaurants like Popeye’s and In-N-Out Burger experiment with food trucks, they want a point-of-sales solutions that isn’t a one-off, but is able to support franchises, he said. ”The food truck industry is booming. All the brands are trying it out.”

Revel also allows merchants to integrate any payment solutions or rewards and gift card programs, including traditional providers like Visa, MasterCard and American Express, and also upstarts like LevelUp. The software also easily tracks what items are selling well, as well as the things that are the most profitable, so truck owners know which items on the menu to emphasize.

Revel, which was founded in September 2010, launched its first product in beta last summer, and has raised $3.7 million in capital.

The company is charging food trucks $2,000 for the package, which includes the iPad, the cash drawer, a printer, the software and the cabling. Each Internet-connected iPad also costs $30 a month. The enterprise version, which has additional features, costs $3,300, and $100 a month.

That’s a lot of tacos.

If Twitter ads really take off, it will be because CEO Dick Costolo will have figured out how to sell lots of little ads to small marketers, in the same way Google did more than a decade ago. In the meantime, the company seems to be succeeding with the other end of the spectrum: Big marketers interested in experimenting with a brand-new format.

Last year, Twitter ad boss Adam Bain made a point of targeting big brands like Pepsi and American Express. And this year he’s seeing some of that work pay off, as some of them are committing to campaigns that will run for much of 2012.

Twitter won’t talk publicly about its ad-selling efforts. But you can get a glimpse of what they’re doing via a pitch deck the company recently used to woo a big publicly traded company. We’re not going to show you all of it here, primarily because some of the slides identified the would-be advertiser*. But you can still get a pretty good sense of it.

A few notes in advance:

• Twitter is still doing lots of basic explaining about what it is and how it works: Yes, people still use Twitter to talk about their breakfast. But it’s important for Bain et al to explain that people use Twitter to pass along lots of other stuff, too: Rallying cries (like the #Jan25 hashtag during Egypt’s revolution of 2011), cool images (like Stefanie Gordon’s groggy space shuttle pix) or celebrity smackdowns (Drake v. T. Boone Pickens). Big idea: Your brand could be one of those things people share on Twitter, too!
• Also important for Twitter to keep repeating: Unlike Facebook, we’re totally cool with mobile.
• Those “Event pages” Twitter rolled out last month are going to be important for big advertisers. Obviously they are — that’s why Twitter spent money buying TV ads to promote them. But that slide highlighting them reinforces just how attractive they will be for brands – and what a nice compliment they’ll be to 140-character bleats  — when Twitter gets around to selling them.
• Spend enough and Twitter will offer you all kinds of goodies. Just like any other big ad company, Twitter offers white glove treatment for its most important customers, and it hints at some of this in the “Joint Business Plans” slide: Early looks at new ad products, help coming up with new campaigns, custom events, etc. The part where Twitter promises to provide all kinds of “analytics” might be particularly relevant for some of the third party companies that do the same stuff.
• Spend enough and Twitter will let you spend less.  That same slide mentions “key discounts,” detailed on an “investment grid.” I’m not reprinting that one, but am happy to tell you what’s in there: Twitter says it will knock 10 percent off the rate card for anyone who ponies up more than $6 million a year (An earlier version of this post incorrectly reported that number as $6,000). Again, standard issue for any big ad business. But always interesting to see spelled out.

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I scan my phone to pay for a latte at Starbucks, I snap pictures of checks to make bank deposits. Once, I used it to buy a few screws at Home Depot without ever pulling out my credit card.

But this week, Apple officially announced its first steps into the payments space with Passbook, an application that electronically stores loyalty cards, gift cards, boarding passes, electronic movie tickets, coupons and more on the phone.

Passbook comes out this fall, and Apple hasn’t yet said if it will accept payments or store any credit card information. But based on several conversations I’ve had over the past week, nearly everyone expects that is where Apple is headed.

The truth, however, is that accepting payments is a lot trickier than it sounds. Transferring money responsibly between parties is extremely sensitive. Even for Apple, it could prove difficult to come up with a game changer that would be as elegant as they’d like it to be and make everyone happy.

Passbook

But, for now, Apple’s first step is Passbook.

The point of the application is to make it easier to keep track of gift cards, coupons, passes and tickets and other things that get lost in your wallet or on your phone.

Using Passbook, iPhone and iPod touch owners will be able to call up electronic bar codes on the screen to check in for a flight, get into a movie or redeem a coupon. They will also be able to see when coupons expire, pinpoint where their concert seats are or check the balance of a coffee loyalty card. The app uses location-based services too, so when a consumer is close to a movie theater or store, a ticket or relevant coupon will appear on the phone’s lock screen.

Several partners have already signed up for the program, including Target, Fandango, Starbucks, Amtrak, United Airlines and the W Hotel.

Ticket seller Fandango confirmed in a statement that, with Passbook, “moviegoers can bypass the box office at select theaters with their scannable ticket on their iPhone, and with location and time features, the Mobile Ticket will automatically be displayed for quick and convenient access as soon as the moviegoer arrives at the theater.”

As seamless as it sounds, both retailers and consumers will have to do some juggling to make it work.

Target and Starbucks, for example, have already upgraded their hardware at the point of sale to be able to read a bar code from the phone’s screen. And consumers will have to make a conscious effort to save their coupons and bar codes in the application, much like when they add an event to a calendar.

Already a payment provider

If Apple chooses to build more functionality into the app, it does have a few things going for it.

For instance, on Monday Apple said it has about 400 million iTunes accounts — meaning that the company has that many credit cards on file. To put that number in perspective, PayPal has about 100 million active accounts — a quarter of Apple’s reach.

Another benefit is that Apple owns the phone’s hardware and operating system, so if it needed to tweak something, such as integrating near field communication, it could easily do that in the next generation. NFC is often considered the linchpin to mobile payments because it would enable people to tap to pay at the register, without having to show a barcode.

Complexities abound

On the other hand, turning Passbook into a payments network will not be easy.

The simplest route would be to enable users to charge everyday purchases like groceries and gas to their account with a tap of their NFC-enabled phone. The approach would be similar to PayPal’s business, which allows people to check out online using the credit card it has on file.

But that’s not the kind of game changer that everyone is looking for from Apple.

In our digital lives, today’s consumers want more capabilities, such as being able to make charges to a variety of cards, monitor their account balances, pay bills, make returns and save receipts. Coupons and offers should also be part of the mix, based on a person’s interests.

In building an application that does all that, Google has faced several setbacks with its Wallet app, especially when it comes to partnering with the carriers, banks, retailers and handset makers. In particular, NFC has been slow to get off the ground, and carriers — including Verizon, T-Mobile and AT&T — have blocked Google’s Wallet from appearing on Android phones.

PayPal has made slightly more progress, but it is still working out the kinks in the system. Currently, the company is focused on signing up lots of retailers so it can learn from real-life experiences, in order to make a big push in 2013.

Apple faces these same technology hurdles, and it would have to build a system that addresses the security needs of consumers while also complying with laws in every country in which it operated. The least of its problems may be figuring out a way to make money in payments — or at least not lose money.

Right now, Apple charges companies 30 percent each time they sell anything on iTunes.

That’s a much larger cut than what they could get away with if they extended it to retailers, who are used to paying around 2 percent. Of that much smaller percentage, Apple would still have to pay the processors, such as Visa and MasterCard.

There are other options, too

Since Apple clearly intends for the service to become one of its flagship applications — like Siri, FaceTime or Maps — how else might it address the payments business?

There are a few more options, based on what already exists in the market.

Instead of copying Google or PayPal, Apple could try to compete with Visa and MasterCard.

Better yet, it could steal a page from Square’s playbook. The San Francisco company, led by Twitter co-founder Jack Dorsey, has developed a mobile application called “Pay with Square.” The app allows users to pay by giving the clerk their name at the register — no credit card or fancy NFC-equipped phone required. In advance of the payment, consumers would have to store their account information in the app and take a picture of themselves to make identifying them easy.

In addition, the store must have an iPad at the counter, so the salesperson can correctly identify people from their pictures.

The whole experience is pretty slick — just how Apple likes it. Plus, it could generate additional iPad sales. But there’s a catch. Without a critical mass of retailers on board with the program, consumers would not be able to reliably leave their house without a physical wallet.

Should companies be afraid?

The problem with not knowing what Apple has in store makes it impossible for companies to gauge whether they should be excited about the possibilities of Passbook, or whether they should be scared.

Scvngr’s Seth Priebatsch said that it’s not clear to him, either, but he’s willing to take the risk. He plans to integrate his company’s LevelUp application into Passbook, which operates similarly to Square.

“My feeling is that Passbook is very much like [Apple's] Game Center, in that it’ll be a nice additional distribution channel for all mobile payment/loyalty app developers,” Priebatsch said. “Of course, that could come back to bite us all when — not if — Apple bakes in their own mobile payment solution.”

WhaleShark’s SVP of Mobile John Faith also said that his company would consider integrating RetailMeNot — a coupon app it launched this week on the iPhone — into Passbook.

“Our value for companies like Apple, Google, PayPal and Bing is a partnership where our coupon content can become a part of similar consumer offerings — making saving while shopping with a mobile phone a more seamless experience,” Faith said.

If you take the literal translation of the word “passbook,” it seems to be a play on two words: “Passport” and “checkbook.”

It may be inevitable that Apple enters the payments space, but whether it pulls it off is another thing entirely.

Here’s the good news: The nearly-new board of Yahoo is chock-full of experienced and active operators from a variety of backgrounds that are critical to the future of the Silicon Valley Internet giant.

And the bad news? The nearly-new board of Yahoo is chock-full of experienced and active operators from a variety of backgrounds that are critical to the future of the Silicon Valley Internet giant.

In others words, in almost completely upending its director roster over the last several months, Yahoo has given itself a new lease on life, but has also created a significant challenge in forming a cohesive governing structure that can work together in fixing all that ails Yahoo.

Among the important decisions that this new boy band — and they are, as usual, all men save for one woman — has to come to agreement on within the next months: Settling its patent-infringement lawsuit with Facebook; deciding on a permanent CEO — either selecting current interim leader Ross Levinsohn as permanent or someone else; approving a strategic plan for the company that actually sticks; and, most of all, figuring out a governance style that is strong without being too meddlesome.

Which should make Yahoo’s annual meeting on July 12 much more interesting than most.

One thing is clear: The days of overwhelming control in the hands of a few directors — as has been the case in recent years under departed Chairman Roy Bostock — are over.

In its place is a situation with a number of strong factions under new Chairman Fred Amoroso, who appears to have taken a consensus approach to managing the board.

It’s not as if he had a whole lot of choices, said numerous sources, especially noting the aggressive involvement of activist shareholder Daniel Loeb of Third Point — who joined the board with two others in the settlement of a proxy fight — in all aspects of Yahoo of late.

Along with helping finally complete a partial sale of Yahoo’s assets in China, Loeb has also be active in discussions with Facebook over a patent settlement, and has also been searching for new board members and possible new execs for Yahoo.

“Dan has a lot of ideas,” said one person close to the situation, “and he is not shy about communicating them.”

To be fair, it’s a welcome change from the lackluster performance of the previous board, which seemed almost comatose at times as Yahoo pinged from one crisis to the next.

And Loeb is also joined by several other directors who are taking a more substantive role, including Weather Channel CEO David Kenny, American Express CMO John Hayes and former Discovery Communications COO Peter Liguori.

“Every one of them has a lot to say and has definite opinions on what needs to be done, since most have run major businesses,” said another Yahoo source. “Which either means 11 times the noise, or 11 times the help.”

Or, perhaps, 11 times the fun (but only for me).

Speaking of fun, here’s the comely One Direction showing how it’s done, in the music video “What Makes You Beautiful”:

Additionally, it said it is partnering with four software providers to gain access to 50,000 small- to medium-sized merchants.

Meanwhile, tomorrow will be exactly a year since Google launched its mobile wallet.

So, you ask, which large technology company is winning the race to gain the hearts and wallets of consumers and retailers?

Pretty clearly, it’s neither.

Google may have gotten off the blocks first, but ever since, it has been plagued by execution issues and management departures. In contrast, PayPal has a lot of institutional advantages, but it still has a long way to go before it is synonymous with Visa or MasterCard.

Here’s just a snapshot of the two companies’ advantages and disadvantages:

Google:

Pros: It has relationships with 25 national retailers, totaling 140,000 locations.

Cons: It bet too early on using near field communication technology. Sprint, the third-largest U.S. wireless carrier, is the only provider so far that is backing it and it’s deployed on only six Android devices.

PayPal:

Pros: There are 110 million people using PayPal worldwide, who are on track to spend a record $7 billion in mobile payments this year using PayPal on the phone.

Cons: The company is expecting to deploy with 20 retailers by year’s end, but based on the 16 retailers announced yesterday, I calculated that it has access to about 16,000 U.S. locations (far fewer than Google Wallet). That does not include the thousands of locations that those 50,000 small- to medium-sized retailers would contribute if they signed up for it.

Clearly, it is still early days.

And when you look at the broader market opportunity, the race is not just between Google and PayPal. All of the incumbents, including American Express, MasterCard and Visa, have announced digital wallet strategies. And then there are the start-ups, such as Square, which is seeking a $4 billion valuation in its next funding round.

There are two points to be made on the debate between PayPal vs. Google Wallet that can’t be stressed enough: PayPal has the user base, and it has the technology with the lowest barriers to entry.

In theory, if a consumer has signed up for the service from their PayPal account, they will be able to conduct a transaction using their mobile phone number and PIN – without changing carriers or phones. Likewise, merchants won’t have to upgrade their point-of-sale hardware.

In an interview, PayPal President David Marcus acknowledged there’s a chicken and egg problem: Without a lot of locations, there won’t be a lot of consumers using it. But this year is about learning and testing, he said, and next year, “it will be about iterating and full-on execution.”

If you asked the folks at Google, I’m sure they would agree. A Google spokesperson declined to comment for this story, but already, there are signs that Google has learned a lot and has started to pivot.

Rick Oglesby, a senior analyst with Aite Group, believes that Google is distancing itself from NFC and from being the merchant of record.

“I think they will follow the path of least resistance, because for them, it’s not about payments — it’s about advertising,” he said. “It’s about pay-for-performance marketing. Just like how they get paid for a click-through on the Web, they want to get paid when you walk through the door — but no one is monitoring that.”

Last month, Google purchased TxVia, a little-known payments technology company, another sign that it’s changing directions.

Tony Felice, a senior digital strategist for Vladimir Jones, who worked with TxVia at his former job at Red Door Interactive, said TxVia and Google Wallet together can be very powerful. He said TxVia has all the banking relationships, which will help enable payments, gift cards and other services, and also has the ability to produce analytics about what consumers are doing and spending money on.

“Together, they will be able to get a 360-degree picture from the moment of truth to purchase,” he said. “In order to do that, you have to pull in disparate sources and synthesize it in a single place. The transactional data from TxVia is just one piece of a puzzle.”

Oglesby said despite Google’s hiccups, it’s not yet out of the race.

“It’s been a slow-growing situation, and there’s been big turnover on the executive team, but they are reassessing the situation and have made an acquisition,” he said. “I wouldn’t say they’ve screwed up because no one has run way ahead of them. They were leading the market, and tried an approach, and now there’s other approaches for them to try.”