On this day in history in the year 2009, the world of payments and commerce was changed forever. The skies parted, the Earth shook and the song of angels was heard from on high. Well, that’s how we remember it, anyway. Nine years is a long time, after all. If we had a nickel for every mobile wallet that had come and gone in that time period, we would at this point be larger than The New York Times.
But, back to the earth-shaking events of nine years ago. No, we’re not talking about the launch of Square – that was in February of 2009. Our grandiose memories harken back to the launch of PYMNTS.com, which was first introduced to the digital world on Oct. 20, 2009.
Don’t worry if you didn’t remember to get us a present – we didn’t want to make too big a deal out of it, so we didn’t remind you. (The traditional gift for a ninth anniversary is pottery, and our offices are in Boston – but, you know, no pressure.)
Of course, we don’t really expect or even want gifts for our ninth anniversary. The gift has been the chance to follow and document the rapid-fire evolution of the payments and commerce ecosystem, from the early days of the iPhone and the App Store in 2009 to the present day, when 77 percent of American adults own a smartphone. When we launched, that was true for fewer than a third of Americans.
In that same nine years, retail went digital, and then omnichannel; contactless mobile burst big onto to the scene (if not big into users’ habits); bitcoin has risen, crashed, risen again and crashed again; blockchain has been identified as the future of everything (though that future never seems to get here); and the great EMV migration came and went in the U.S. – and was followed by the great cybercriminal migration to the web and card-not-present transactions.
And that’s just barely scratching the surface. There’s also been the rise of voice assistants, the explosion of online order-ahead, tokenization, the Amazon effect, the never-ending hit parade of hacks that has left most Americans’ personal data for sale on the dark web … at some point, trying to list the various goings-on in the payments and commerce ecosystem of the last near-decade becomes a bit like trying to sing along with “We Didn’t Start the Fire” by Billy Joel – impossible for anyone without an improbably good memory.
But then, we had a feeling that something like this might be about to happen in a world suddenly able to be online and on the go at all times – it’s why we were founded in 2009. Really, just ask Warren Buffett, whose Berkshire Hathaway-owned company, Business Wire, was then our joint venture partner. (That is no longer the case today.)
In The Beginning
In the Beginning
Much has changed at PYMNTS in the last nine years. For those who watched the video, that bright lime-green color in the graphics used to feature prominently on our homepage. But a lot has stayed the same. We always want to talk to innovators and those who understand them best. And we always want to talk about what’s next.
Which made Warren Buffett, as a long-time payments enthusiast and investor, a pretty good fit for our launch interview.
“I’ve watched the credit card industry almost from the beginning, and we got in early. I could see it was a powerful tool – and I think how payments is going to evolve and develop is going to be really interesting,” he predicted. “What we have seen to be true is that the American public likes to reach into their wallet and pull out a card.”
True in 2009. And, as of the latest edition of the PYMNTS Mobile Wallet Adoption Tracker, still kind of true today. The last 10 years has seen a lot of time – and some very impressive sums of money – spent moving consumers away from paying with plastic (or metal, if their card is fancy) and toward paying with their smartphones at the point of sale. But there hasn’t been a lot of success so far, as customers seem pretty good with reaching into their wallet and pulling out their card at the POS in the store.
But given all of the changes, much has become quite different than it was – and since that first chat, we’ve had courtside seats with some of the busier players in the game about those changes, and what they meant in real time.
The Interesting Ideas
Over the last nine years, it has been PYMNTS’ privilege to speak with some of the most innovative minds in payments and commerce.
We would never say that we can tell you everything you need to know about payments and commerce, or that we should be your only source of information. What we can say is that if you’ve been reading along, you’ve probably been able to spot the seven highly effective rules for getting it right – or at least getting on the right track – in payments and commerce. And we have them here, as explained by the innovators that learned them, in real time, on the ground.
1. No matter how good the technology you built is, payments is hard. Really hard. Much harder than you were ever expecting.
What I would love to have had then is the relationships I have now. When we started Square, the hardware, the servers, the technology was working in three weeks. It took us 18 months to launch the product in a legal and compliant and secure way. It was not a technical challenge; it was a business challenge to get all the regulations, PCI, KYC, money transmitter relationships, banking relationships, the capital reserves, the fraud — all of the things we needed to do took a year and a half. Ultimately, those came down to relationships with larger entities.
2. The product isn’t the point. The customer relationship is the point – and truly understanding the customer is the only way to build it.
I think that if you are any company, not just a retailer, and you define yourself by the widgets you supply by opposition to what you do for your customers, you will get commoditized. And as you get commoditized, you are exposed to competitors of any kind. But if you focus on the job that you do for your customer … and the whole product — not just the gizmo itself, but the gizmo and what it needs to work and the sense of services that are put in place for the consumer to get it, when you look at the whole product then it is very easy for a provider that thinks in those ways to see what we can do to help them be more effective.
3. Instead of building a product and then trying to find the problem it might solve, it is always better to find a customer’s actual problem and then build a product that solves it.
You can lay a sidewalk somewhere that a landscape architect says it will look nice and hope to convince people to walk on it, or you can look at where the grass is already trampled down, and lay the sidewalk where people are already walking.
- Bill Ready, co-founder, Braintree; COO PayPal
4. All ideas, even really good ideas, have unintended consequences – in innovation, in regulation and in deployment – and one person’s brilliant idea can be another’s big problem in the making.
Innovations that make it to the mainstream … aren’t necessarily looked at as positive change[s] for people who live in neglected parts of the country. My favorite easy example is lots of folks in the valley are rightfully very excited by driverless cars. But if you are one of the three million Americans who … [do their own] driving, that news can actually be kind of alarming
5. Time is money. And customers care as much, if not more, about saving time as they do about saving money.
Our customers continue to tell us that the need to save time has become just as important as the need to save money. We want to make every day easier for busy families. We’re connecting all the parts of Walmart into one seamless shopping experience with great stores, easy pickup, fast delivery, frictionless checkout and apps and websites that are simple to use.
6. Fairness counts – and it’s always better to build products predicated on customers succeeding than ones based on customers failing.
The more I looked at retailer-sponsored finance, the more I realized people routinely end up paying atrociously more than they bargained for, given the large degree of “cost shifting” that happens … This is not only morally outrageous, but it’s bad for business. We always want to underwrite the ability to pay. If this person can’t afford this, we won’t lend. The idea of spreading risk across the borrowers, we see that as long-term detrimental to the economy.
7. However far we’ve come, and however much has been accomplished, we’re only just getting started.
The reality is that most commerce transactions are not seamless transactions. The opportunity to make commerce more seamless — whether a consumer is buying something in a physical store or buying something on a website or a tablet or mobile device, or anything else that operates as part of the connected commerce world we are creating — is something that we get very excited about.
The fun thing about payments and commerce is we really can’t comprehensively tell you what’s next. We can make some educated guesses – like omnicommerce will no longer be called omnicommerce because it will become so common people will just start calling it commerce. Mobile payments will continue to grow – though probably not in the form factor replacement for credit cards way, because thus far, that hasn’t gotten too much traction. Amazon will continue to be Amazon, and it will be interesting to see the rest of retail running to keep up.
But in payments, you also don’t know what you never know. We have our frameworks for looking at innovation in this burgeoning ecosystem and making some pretty good educated guesses. When we launched, a voice-activated AI assistant was something that appeared in superhero movies, and no one was talking about it as a consumer innovation. Nine years from now, we might be talking about how our self-driving cars also manage all our financial services.
Or perhaps cars will be a thing of the past, when Tesla rolls out teleportation pods five years from now and living in the digital age means something totally different.
But no matter what, PYMNTS will be here with you and along for the ride – so you can always keep track of that moment when what’s next becomes what’s now.