03 March 2014
The Think-a-Thon and The Power of Collective Innovation
Much innovation is about the lone venture pursuing the dreams of its entrepreneurs, creating a successful product, and reaping vast rewards. Everyone should celebrate that. But sometimes society faces problems that would benefit from “collective innovation” by bringing together participants from across industry, academia, government and other parts of society. In fact, collaboration may be the only way of solving some of these problems.
As we embrace the possibilities offered by the technological revolution that is leading to the reinvention, and creative destruction, of payments, we face numerous challenges in creating an industry that serves society. Some of these challenges entail seizing new opportunities for helping society, while others involve lowering the risk of emerging practices that ultimately could harm society.
In the Think-a-Thon
While the Think-a-Thon is about collaboration, we are still going to rely on the forces of competition to get the best solutions. Three teams across each question will compete to come up with the “best solution” for each problem.
The Prize
At the 2014 PYMNTS Innovator Awards Dinner, the winning team, and its members, will receive the Innovation Project Collective Innovation Award, and the winning Team Captain will receive highly coveted Payments Guru designation.
All solutions will be turned into short chapters and published in a PYMNTS.com eBook to be released in May.
The Problems
Making Online Payments as Easy as Offline Payments
The Problem
Twenty years after the start of the commercial Internet, it is far harder to pay online at many merchants than it is to pay offline. At the physical point of sale in most developed countries, consumers can use any major payment card to pay any card-accepting merchant in the matter of seconds.
The experience is very similar at most merchants within a country and not that different across countries. Online there is no ubiquitous, standardized, and fast method for paying. As a result, consumers spend more time paying online, and merchants lose sales.
While wallets such as PayPal, and now others, help solve this problem to a degree they require that consumers sign on for these wallets and use them in addition to getting the underlying cards. The reason for this difference between offline and online is that the mag-stripe, and later chip, standard have enabled the development of a fast, standardized and ubiquitous offline experience.
To solve the online-acceptance problem, the industry needs a solution that can provide the same standard. This could not only revolutionize online payments but enable a true omnichannel payment experiment that could be brought into the physical storefront now that connected devices are used by consumers and merchants both.
The Problem to Solve
Devise a solution that would enable consumers with any card or wallet to pay merchants that accept any card or wallet online in less than 5 seconds and that could be adopted as an industry standard.
Catastrophic Failure and Systemic Risk
The Problem
Electronic-payment systems are subject to catastrophic risks of failure from software malfunctions and cyber attacks. Isolated failures wreak havoc only on the consumers and businesses directly affected by it.
Thousands of customers couldn’t pay their bills or get money out of their accounts when RBS encountered a “glitch” in its software in 2012. Broader systemic failures are also possible and if they happened could bring much economic activity to a grinding halt. Like nuclear meltdowns, small probabilities of catastrophic results are worth worrying about and trying to prevent. Of course, eliminating risks is costly, and society has to weigh the benefits against the costs of risk prevention.
The Problem to Solve
Devise a solution that would reduce the likelihood of a catastrophic failure of the electronic payment system and minimize the consequences of such a failure if such a failure was it to occur.
Leapfrogging and Replacing EMV
The Problem
The EMV standard was developed long ago, before there were smartphones or widespread cloud computing. While the resulting deployment of chip-and-PIN in many parts of the world has reduced security issues, it has increased the amount of time it takes for consumers to pay since “dip and PIN” takes longer typically than swipe and PIN or even swipe and sign. It has also required merchants to install more expensive equipment.
Cloud-based and mobile solutions hold the promise of replacing the EMV standard with a method that is more secure and provides a better and faster experience for the consumer at the point of sale. This may emerge naturally over the next decade as various mobile-based payment systems develop.
The issue is whether the industry could devise a replacement for EMV that would accelerate the move to mobile-based payments, lead to fast and convenient payments at the point of sale that would benefit both consumers and merchants, and that would minimize the overall investment of merchants in new point of sale equipment and employee training over the next decade.
The Problem to Solve
Devise a cloud-based mobile solution to EMV that can be implemented in a two-year time period, that is as fast and convenient as swipe and PIN, and that would minimize the expenditure of merchants on new POS technology and training over the next decade.
Revolutionizing Global Cross-Border Payments
The Problem
It is difficult, cumbersome, and expensive to move money between businesses and people around the world. That is the result of a highly fragmented world banking system, complex banking and payments regulations in every country, and the existence of multiple currencies.
The result is moving money between business, between people, and between businesses and people is time consuming and expensive. This also makes cross-border commerce difficult and has slowed the development of global ecommerce.
The Problem to Solve: Devise a solution that could increase the speed and efficiency of multi-country, multi-currency and multi-channel payments methods.
Judging the Best Solution
The best solution could be a prescription for exactly what should happen. For example, your team could propose government regulation, new legislation or industry self-regulation to achieve that solution. Or the “best solution” could be a framework for solving that problem. For example, your team could propose a working group and mission statement for solving that problem.
The best solution must take into account the interests of multiple stakeholders, including consumers, merchants and the industry. Ideally, every stakeholder comes out ahead. If that isn’t possible, there has to be strong reasons for why the interests of one group should bend for the interests of another.
The best solution must br practical. It ought to be something that people could start working on implementing right after we finish our two days together.
The Judges
There are seven judges for the Think-a-Thon:
Tim Attinger, Head of Strategy, Corporate Development and Innovation at Blackhawk
Raj Date, Former Deputy Director of the Consumer Financial Protection Board
Karl Metha, Founder, PlaySpan and Partner, Menlo Ventures
Hans Morris, Former President of Visa, International and Special Advisor to General Atlantic
Alex Rampell, Founder and CEO, TrialPay
Richard Schmalensee, Former Dean, Sloan School of Management, MIT
George Wallner, Founder, Hypercom, and Chief Technologist, Loop
The Impact
Last year’s winning team gave rise to a cross-industry solution being pursued today in the area of financial inclusion. Another planted many new seeds of opportunity in the area of making mobile more accessible. So this is far more than just a way to pass the time and meet new people. The problems this year are important and material and will challenge Innovation Project Delegates to dig deep and devise solutions that can serve our ecosystem and our society.
If you’d like to join a team, please contact Jacqueline Murphy at Jacqueline.Murphy@marketplatforms.com.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
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