In the market today, there’s no shortage of problems to solve and matchmakers rising to the challenge of addressing them.
In this week’s episode of The Matchmaker Is In series, host Karen Webster was joined by Lars Dige Pedersen, CEO of Creditcall and Chairman Of Xena, to discuss how payments is one of the tools that matchmakers use to ignite their platforms and get scale.
It’s something Pederson said he’s seen result in payments enabling new business models as they use software and technology to solve problems — and use payments to monetize. Though not a matchmaker, Creditcall is, instead, the payment gateway that helps matchmakers connect to the variety of payments methods that help these matchmakers find the best payment option to fit their market and customer base.
“The key word is ‘friction.’ Matchmaker business models are all about facilitating different things in a frictionless way. If everything else works well and the payments experience is friction-filled, then, of course, it goes against the whole premise of what the business model is,” Pedersen said.
The Payment Alternative
But matchmakers aren’t the only ones looking for scale.
Often, it is the alternative payment providers that are also looking to get the flywheel spinning by getting merchants to accept them. Oftentimes, payment gateways, like Creditcall, are in a position to enable those services. Pedersen described Creditcall’s role as being a provider of connectivity across all parties and facilitating the transactions so that alternative payment players can attain the scale they need.
“Any alternative payment method is only going to be successful if it can benefit from network effects, and it’s all about reaching scale, name recognition and coverage,” Pedersen explained. “Of course, the quicker they do that, the better off they’ll be.” Matchmakers, he said, offer one such path for these new alternative players.
Merchants today are faced with many different alternative payment method options today and have had to reevaluate their own priorities to determine how and what to accept.
“Many merchants are beginning to realize that it’s not that people like to pay. Obviously, they would much rather not pay,” Pedersen joked. “But since we have to, we’d like it to be an experience that is extremely seamless and one that we trust.”
A Lay Of The EMV Land
Switching gears just a bit, Pedersen explained that, while EMV has come a far way in the U.S. market since the liability shift last October, it still has not reached the level of adoption many had hoped.
His observation is that one-third of merchant locations in the U.S. are EMV-ready today, meaning they have certified payment terminals that accept chip cards. While the remaining two-thirds are either going through the transition now or have not started the journey.
While it may sound impressive that roughly 20,000–25,000 merchant locations are being activated to support EMV payments each week, Pedersen noted that, with a total of approximately 8 million merchant locations in the U.S. market, it will still take four or five years to see widespread adoption.
But chargebacks and fraud remain strong economic incentives for merchants to make the EMV move, and it’s expected that that will continue.
“It’s not the nicest of motivators, but it works,” Pedersen said. “A lot of companies are beginning to realize that payments is very important and also very important to the success of their businesses.”
Room For Competition
For Pedersen, an example of a matchmaker that is doing things right is Airbnb, which enables an experience of being able to stay in nice places and meet new people, a concept he said he appreciates.
But even with the notable success of well-known matchmakers, like Uber and Airbnb, there’s still room for change in the evolving market.
“As these technologies become more common, my expectation is that some of them — including Uber — will find a lot of local competition in markets,” Pedersen said.
That business model is a great business model for a period of time, he explained, but local solutions may rise up and compete on purely a cost standpoint.
“There’s obviously a long list of matchmakers, and we are just beginning to see them emerge.”