Just two days ago, I posted a question on LinkedIn about the one innovation in 2009 that had the potential to change the landscape for the next 2-3 years.
Had I responded yesterday, I might have said PayPal’s decision to open up its platform to developers so that applications can more easily be payments enabled (via the PayPal payment engine, natch). With that announcement, PayPal, in essence, positioned itself as a payments platform with the potential to disintermediate the incumbent players in the space. It put a whole new spin on the concept of “co-opetition” which has been the sector’s watchword for decades, and a concept which, in fact, helped PayPal get its running head start.
The announcement also, as my colleague, David Evans has written about for years, underscored the notion that it will be these invisible engines (aka software platforms) that will be the gamechanger for payments given their ability to rise above the impossible morass of payments infrastructure that has made innovation on any grand scale costly, time consuming and in some cases unthinkable.
Wow, what a difference a couple of days makes.
Today’s AmEx announcement of their acquisition of Revolution Money is further evidence of three things. (1) that game-changing innovation in payments will be driven by these invisible engines, (2) that the incumbents, in particular, recognize the need to look beyond their own four walls for ways to amp up the innovation meter and (3) that incumbents are willing to buy and not build these invisible engines if they want to get solutions to market in any sort of relevant timeframe. Certainly, this deal has been in the works for a while, but one might interpret the timing of the announcement, a mere week from the PayPal developer’s conference, as not wanting to let too much time go by before signaling their intention and capability to compete at the same level. (Gee, it wasn’t that long ago, when it was exactly the other way around…)
The game certainly got a lot more interesting today. Invisible engines – and in particular, the platforms in the payments space that enable the efficient integration of these invisible engines to the messy downstream infrastructure, means that technology is no longer the nail in the coffin of good ideas. It will be fascinating to watch what happens over the next couple of years as the elegant mashups of new applications, established brands and new channels enable commerce on devices and in places that we cannot yet imagine.
I can hardly wait for tomorrow’s news.
Karen Webster is the President of Market Platform Dynamics (MPD), a management consulting firm that helps companies profit from industry disruption. She serves as an advisor and member of the board for a number of companies operating in the payment, technology and digital media industries. More info here.
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