Last year, we conducted an interview with Karen Webster, CEO of Market Platform Dynamics and President of PYMNTS.com, about the future of emerging payments systems. Her comments still prove relevant as we navigate across this changing, evolving industry.
Every time we see an iPhone scanned at Starbucks, we think about how our retail world is inching ever closer to a mobile wallet. Here’s part of what she had to say about the field last year. We hope to catch up with Karen again soon to see how far we have (or haven’t) come.
How do you view the overall progress of emerging payments? Which industries are leading the way?
Payments, as a sector, is at an interesting juncture. The traditional payments players are focused on expanding their reach into adjacent ecosystems, including mobile, social networks, healthcare, online games and exchanges, media, and software. At the same time, players in these very same large, networked ecosystems are trying to determine how payments can be pulled through to add value to their core businesses. This “push/pull” ecosystem dynamic creates enormous opportunity as well as enormous disruption.
Some of the most interesting opportunities may be in how emerging players are helping to drive innovation in the areas of healthcare payments, compliance and billing, B2B payments across all business segments, as well as the use of data to support customer acquisition and retention.
What have been the biggest trends in this space in the last six to 12 months? What are the implications of these trends?
Mobile is on everyone’s “trends in payments” list. The ubiquity of these devices worldwide provides a unique platform to enable commerce for just about everyone – from the most developed economies to the least developed nations. A mobile device for many segments of the population is THE only way that they are able to access the Internet.
Next, is the blurring of the online and offline environments. The rise of IP-enabled devices, like mobile phones, tablets, and IP-enabled POS systems, are at the heart of a trend that enables the discovery of an item on a mobile phone or tablet (either via an offer or a search) that can then be purchased in a physical store and vice versa. Furthermore, IP-enabled POS systems create a mechanism for delivering a more personalized experience in a physical store, such as the ability to swipe a mag-stripe card and have an offer presented based on what is in the basket and/or an offer to offset part of that purchase with points.
Another trend is the shifting loyalty paradigm away from deferred redemption via points toward immediate gratification via offers and deals. The plethora of daily deal sites have both introduced and numbed us to the notion that you can get a great deal today from just about everyone and that consumers will respond. The age-old assumption that consumers would establish preference for a card just because it would earn them points to be redeemed later is no longer a key driver for payments preference and usage. Interestingly, it isn’t a core proposition of any of the emerging commerce players either.
Do you think it’s important to get all members of the mcommerce ecosystem together in a forum, as opposed to only hearing from one’s own industry in this discussion?
mCommerce, is an example of a “platform of platforms” play and as such is incredibly complex. Here’s why: Payments, as a standalone sector, has the business challenge associated with bringing merchants, consumers, issuers, networks, processors, and others together via a business model and value proposition that makes it possible for consumers to use just about any mag-stripe card issued from any bank and at just about any merchant. Mobile is its own complex ecosystem with its own business model and value proposition challenges to incent operators, handset manufacturers, apps developers, payments players, and consumers to participate.
Add to this the swelling number of intra-and entrepreneurs who see the potential of browsing/buying mash-ups via mobile and the entrenched interests of each of those stakeholders to consider. This includes figuring out who gets paid and how much. Only when we begin to recognize these cross-platform complexities and get those with the interest, incentive, and capability in this opportunity together in an honest and realistic conversation about these issues can we start to make progress.
What are your concerns about organizations taking the “wait and see” approach to incorporating alternative payments products and services into their platforms?
The knee-jerk answer seems like it should be, “wait and see at your peril.” Yet integrating new payments products into an organization is a resource issue that must be carefully evaluated. So, probably the best approach is to have a process and set of filters in place to know when to say “yes” to the ones that matter and “no” to those who either don’t fit or won’t ignite.
If your retail business is ready to ramp up its strategy for emerging or mobile payment technologies and platforms, perhaps it’s time you considered talking to some of your peers about what they’re doing. Emerging Payments aims to provide that arena. Check out the preliminary agenda if this kind of thing is up your alley – and please, tell us what you like and what the program is missing!