Americans hit the road en masse this weekend. A little-known fact is that Columbus Day is actually the second most road traffic-producing holiday of the year, following only Thanksgiving. Nationwide, citizens have set out to leaf peep (in the Northeast), drink cider and enjoy the last weekend or two before it’s time to start agonizing over the holiday shopping to come.
And in the face of all that natural technicolor splendor, pumpkin spice and relative peace, who’s going to think about the wonderful world of payments, technology and commerce?
We are, as the PYMNTS team is immune to foliage and cinnamon and are only truly happy when we are thinking about payments, commerce and technology. So, what do you need to know this week to be the smartest person at the mid-morning meeting?
Well…
As Q4 is warming up, the official reports from the third quarter of 2015 are starting to roll in.
The run-up has not been kind to the tech sector, who spent the back half of last week taking a beating on Wall Street. Sales appeared to have turned a tad sluggish on the eCommerce front and dragged the numbers down. That seems to be a bit of a switch-up from August commerce trends that showed sales up, driven by consumer confidence and strong auto sales.
EBay, according to reports last Thursday (Oct. 8), saw its stock slide 6 percent, following ChannelAdvisor reports that clients selling wares on the online auction hub had seen sales increase only 1.1 percent since the same time last year.
Seeking Alpha further reported that this was, in fact, the slowest pace of growth eBay has seen in the last 12 months. In fact, were it not for a double-digit increase in a single category, eBay Motors — which as a group was up 12 percent (though down from the 20 percent seen in August) — same-store sales would have actually shown negative growth in September. Auctions dropped 31 percent, while fixed price sales were barely positive.
The situation was somewhat less grim over at Amazon, which likely explains why its stock took a less severe hit, only dropping by 1.9 percent.
The company saw same-store sales gain 19.2 percent, and while that sounds like a nice, double-digit growth rate, it represents a fall-off from 24.7 percent in August and also represents a 12-month nadir. Roughly a third of the company’s gross merchandise value came from its fulfillment services, which leapt 29.9 percent from last year, while sellers that had used that fulfillment platform had seen 30.1 percent in same-store growth.
The goods news for Team eCommerce, of course, is that “the most wonderful time of year” is about to begin, which means those numbers will almost certainly end up back in the black. How far into the black — particularly for eBay — remains a subject for debate among analysts, as does what the stock picture will be in the run-up.
For reasons that at times seem inexplicable, bankers love the blockchain. SAN InnoVentures (the investment arm of the Santandar Group) has decided to drop $4 million into Ripple’s Series A round. This makes Santander one of many high-profile financial services investors to take an interest in the distributed ledger technology that provides the backbone for virtual currencies like bitcoin.
Head. Hurting.
With the Santander kick-in, Ripple is up to $32 million in Series A funding.
According to reports, Santander was not among the 13 or so major banks that were linked with a consortium of lenders to discuss the blockchain and its potential place within the financial world. The debate over the virtual currency continues unabated, with some touting bitcoin as the uncontested future of finance and others harboring some pretty deep doubts.
“It does not solve a single problem that anyone, anywhere has — unless you are a criminal and need an anonymous currency to pay or be paid. That is bitcoin’s most prevailing use case,” MPD CEO Karen Webster noted in her “everything you need to know about the blockchain so please, please, please ask” commentary last week. “It’s not a substitute for cash digitally, and it’s not a solution for developing economies. There is no business case anywhere for a global currency that usurps any central bank authority to manage its fiscal policy through the use of its currency. Absolutely none.”
Webster did note, however, that the blockchain — divorced from bitcoin itself — might have some potential.
Ripple is not bitcoin, thankfully, but it’s faced its own fair share of legal tremors. It was the first virtual currency company to be involved in a civil enforcement action. FinCEN (Financial Crimes Enforcement Network) fined the startup $700,000 for allegedly violating the Bank Secrecy Act.
And Ripple is not a purely blockchain-based technology; rather, it claims that its technology is “considerably faster and more efficient” than the bitcoin-based blockchain. The company was actually among the earliest proponents of moving bitcoin away from ledgers that tracked their use.
Upon news of the Santander investment, Mariano Belinky, managing partner of Santander InnoVentures, stated that the firm is “actively exploring where and how best to apply Ripple technology inside the bank. Ripple and Santander share a common vision of the future of the industry, and we intend to jointly advocate it in the community.”
Just stay away from that other “b” word — bitcoin — would be our advice.
The 2015 World Payments Report is out and indicates that digital payments are gaining ground over physical ones.
The report, jointly released for the last decade by consulting firm Capgemini and the Royal Bank of Scotland, notes that the increased drive in digital payments is being fueled by factors like the U.S. economic recovery, robust growth in emerging Asia and the rapid advance of payments technologies.
Non-cash payment volumes are expected to continue on a high growth trajectory of 8.9 percent, heading toward 389.7 billion transactions globally, a substantial jump from the 7.6 percent growth rate reported in 2013.
“New technology is accelerating change in the payments industry, offering holistic solutions as customers move from physical to digital payments as evidenced by the adoption of contactless in the U.K. with 53 million transactions in March 2015. As a trusted partner, we’re at the heart of client transactions, facilitating the transition to digital payments,” Marion King, director of payments at RBS, said in a news release announcing the report results.
“As the digital economy transforms innovation in technology, it, in turn, gives customers greater choice and convenience in how they pay and conduct business,” King added.
Non-cash payments are forecasted to gain strength from expansion in China, increased adoption of mobile and contactless payment technology and the global shift towards Immediate Payment schemes, the release explained.
But China is not the most “cashless” society. Finland nabbed that honor this year with an average of 450 million non-cash payments made in Finland during 2013.
So, the morals of the story this week: It’s a tough time to be in eCommerce (but things will get better), a good time to be into the blockchain (because the world is essentially irrational) and bad to be cash (and things probably won’t get better).
We’re always on the lookout for opportunities to partner with innovators and disruptors.
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