If you are a manager of an online business, particularly if that business is a small one, this time of year is likely a boom time for your operation. Whether you’re selling hand-knit sweaters, specialized gift baskets, last-minute holiday gifts, or printing someone’s greeting cards, you are most likely a major beneficiary of one of the most revolutionary “evolutions” in commerce: selling your stuff online to people you don’t know. Let’s face it, running a small business just 15 or 20 years ago was an entirely different proposition. You set up shop, hung out a shingle, bought some space in the back of the local paper, maybe put up a poster or two, and hoped like mad that customers would come to find your small storefront somewhere off main street. (Related Article: Top Trends and Tips for Payments Companies This Holiday Shopping Season)
My how the world has changed —if you want to set up a small business today, you can take an entirely different tack. Here’s a representative chronology for setting up a small business to sell products for the Holiday Season of 2010:
- Monday: Apply online for a small business license and tax ID, receiving them via email that day
- Tuesday: Go down to the local bank branch to open up a small business account, using that tax ID and license. (interesting how bank account setup isn’t really all the way to online “bright” just yet?)
- Wednesday: develop your website using a packaged software program, photos of products from your iPhone, and ad copy banged out on your iPad while watching Giuliana and Bill on the TV
- Thursday: go online and sign up for a quick merchant processing solution to add to your site for payment, and buy some AdSpace priority from Google to get your site noticed
- Friday: launch your site before the weekend, making your products available to any one of the over 2 billion people in the world with a credit card and a shipping address
If you’re a small business owner, that’s the beauty and the promise of the global commerce systems built by financial institutions and issuers the world over. Ubiquitous access to consumers. Guaranteed payment. Efficient sales. (Related Briefing Room: Small Business)
But a funny thing might happen on your way from Wednesday to Friday. Once upon a time you could go to CyberSource’s authorize.net or Verisign and set up that payment processing quickly and relatively easily. They’d even help you source a merchant bank so you wouldn’t have to have the 50-page form-filling discussion with the small business banker down the street, who really didn’t want to sell you merchant acquiring services in the first place. But something’s changed here, and it remains to be seen how it will affect the small business owner in 2011.
Most of the major eCommerce gateways have been acquired by global payments processors, who already have or are in the process of integrating them into their operations and –potentially— are changing the strategic focus and service model of those acquisitions. Let’s take the most prominent example of this trend – prominent because it’s the oldest and now most familiar: Verisign. Verisign used to be the place where a small business owner would go for one-stop shopping to 1) buy a web address, 2) set up email services, 3) set up multi-brand eCommerce payment processing, and 4) establish web hosting relationships. Granted, you can still get most of these things from Verisign today. But that once independent company that served the online community is now a division of a much larger payments juggernaut called PayPal. True, that acquisition has helped PayPal provide much better payment services and acquiring capabilities to the online community, and the company continues to enable small business payments for small online merchants. But in a funny twist, the primary way that small businesses set up acceptance today with Verisign is through…accepting PayPal. (Related Article: PayPal Unveils New Payment Solution for Digital Goods)
Might Visa’s acquisition of CyberSource, along with acquisitions of other gateways by MasterCard and First Data, change the landscape for small businesses looking to get online from one of “ubiquitous multi-brand” payment acceptance to “preferred brand” payment acceptance? PayPal and Verisign may be a case study. Then again they may not.
What is certain is that a new generation of online commerce gateway servicers, born in a web 2.0 world, experienced in the development and delivery of IP-enabled payments services delivered through software, and stepping in to fill what they believe will be a void in small merchant independent gateway provision. So, if you’re a small business owner, in the middle of our hypothetical week setting up an online portal to sell some last minute holiday gifts to (what you hope will be) a boatload of consumers over the weekend, you may want to add the names “IP Commerce” and “Braintree” to your eCom gateway shopping list on this Thursday.
Twelve Days of Christmas
- Did Payments Get a New Mom, or Enter Rehab?
- Will 2011 Be The Year of the Opt-In?
- Is 2011 the Year for Social Commerce?
- New Global Payment Schemes: Imitation, the Sincerest Form of Flattery?
- Small (Biz) Is Beautiful and Plentiful (for Paying and Borrowing)