One of the more interesting – and perhaps even amusing – parts of human nature comes from the assumptions we attach to examples of growth and success. Once someone proves himself a winner, or something proves itself a winning proposition, many of us, despite knowing better, give into assumptions that growth and success will keep on flowing with relatively minimal effort. We give into notions of inevitability and certain progress, even though history is littered with countless lessons about why that is not usually the case.
Sorry for the pop-up philosophy lecture, PYMNTS readers, but there is a point that applies directly to digital payments and commerce. The growth of the sharing economy – the success of a model that contradicts many of our dearly held ideals about ownership and what it means to be a consumer – has been so robust so far, and has involved such a variety of products and services that it can be easy to think further success is inevitable. Maybe so. Nothing wrong with being an optimist, especially when the desires of young consumers seem to heavily favor the sharing economy.
But that optimism depends heavily on trust, as Philipp Pointner, chief product officer at identify verification services provider Jumio, discussed during a recent PYMNTS interview. Without trust, the online sharing economy probably would not collapse – sharing is becoming almost a way of life for too many consumers, for one thing. But without building more trust into the sharing economy model, it’s easy to see how growth in that part of payments and commerce could be slowed.
Mistrust of the Sharing Economy
New research from Jumio about how consumers view the sharing economy bolsters that point, and also served as a foundation for the PYMNTS discussion with Pointner.
The company found that only two-thirds of U.S. adult consumers feel “very safe” or “somewhat safe” when using online sharing platforms and services. As well, about 20 percent of those consumers told Jumio they feel “somewhat unsafe or “not safe at all” when it comes to the sharing economy. Those consumer views could have significant impact now and down the road, given that the sharing economy will have some 88.5 million users by 2021, with at least $335 billion being transacted via those products, services and online platforms, according to Jumio.
That doesn’t mean operators of sharing economy platforms can just take growth for granted. Nor can they afford to just concentrate on direct competitive issues, at least not how Pointner tells it. Further success and growth in this particular area of eCommerce – whether it involves vacation rentals, automobiles or other products and services – depends heavily on building trust between buyers and sellers.
After all, Pointner said, the sharing economy is essentially “based on the fact that people trust each other to uphold their end of the bargain.” Granted, that holds true for other forms of commerce and payments, but the sharing economy is a different beast, a relatively informal part of retail, a place where regular people and not just organized companies can transact and make serious money.
As well, while sharing is certainly not a new concept, the digitally enabled provision of services and products that are “shared” instead of bought – or not accessed via longstanding, relatively formal retail channels – naturally causes skepticism and reluctance among many consumers, as those survey results seem to indicate.
As Pointner discussed, any loss of confidence in the sharing economy could have a major impact – think about, perhaps, the difference between cutting down or pulling from the ground a sapling and sawing off a branch from a 100-year-old live oak.
Another challenge the relatively young online sharing economy faces, oddly enough, is lack of regulation.
No, Pointner wasn’t arguing in favor of imposing regulations on the sharing economy – it is unclear how that could be done in any case beyond the regular rules and laws involving payments and retail. Instead, he talked about how in other industries served by ID verification technology providers – eCigarettes, online sales of alcohol, web- and mobile-enabled gambling – strict regulations govern who can purchase what. In a way, that serves to impose a sense of trust onto those platforms. Not every participant follows the rules, of course, but working outside the law is becoming trickier as more consumers and lawmakers take notice of the cheaters and fly-by-night operators.
The sharing economy lacks some mandates from above. That means the general question of trust – and all those efforts to build trust between buyers and sellers – depends more on the voluntary efforts of sharing economy operators, as Pointner discussed during the PYMNTS interview. The smart operators, he said, realize that not building that trust – not protecting consumers’ personal data, for instance, or not delivering what those consumers are paying for – will not only work to dirty a particular company’s reputation, but will also spark more skepticism and negative views about the sharing economy in general.
When it comes to those sharing economy consumers, however, they are not always helping to drive the march toward more trust, Pointner said. They are not always willing to go through the process of robust ID verification, often thinking it will take too much time or will otherwise require them to, in his words, “jump through extra hoops.” Yet those consumers certainly demand more security, fraud protection and other trust aspects when it comes to the sharing economy.
That certainly stands as a challenging contradiction for businesses and other sellers involved in the sharing economy, but it’s not exactly unique – not when you consider the larger aspects of human nature. After all, Pointner said, pretty much anyone who travels by air favors tight security to prevent terrorist acts directed at airlines. But when those consumers consider new and specific security measures, he said, that support drops off.
Nobody said it would be easy. Building trust usually take a long time, even with the benefit of digital technology. The good news is that the biggest players in the sharing economy, Pointner said, have grasped the importance of trust, and are setting examples that other companies can follow. As well, he said, “a large percentage of the population is not using sharing economy services,” which presents both challenge and opportunity – and a chance for companies and other sellers to demonstrate that they get consumers’ expectations for trust.
It would be hard to bet, at this point in 2019, against the general growth and further success of the sharing economy. But even good bets are never certain, and just a few big missteps on trust can do lasting damage.