by Tim Attinger
LESSON 3 DISCUSSION QUESTION: What is likely to be the greatest driver of commerce convergence growth in the near future? Payments or mobility networks (like Visa and Verizon) adding value and features, or value- and feature-rich consumer networks (like Google and Facebook) adding mobility and payment? Click here to respond.
So, this week we’ve taken a look at the forces at work to drive commercialization across a constellation of network businesses, all of whom appear to be headed on a collision course for a central space where they plan to create commerce. Retailers, eCommerce merchants, online advertisers, social media companies, and mobile operators are all converging to provide payments capabilities and transaction processing to their network participants. As they converge, the forces of information, alias management, location-based services, and mobility shape the solutions they have begun to build and deploy.
Loyalty provision, mobile marketing, and remote payment solutions are the leading solutions beginning to emerge from commerce convergence now underway. And all of these solutions are tied, in some way, to the underlying trend of mobility among consumers — mobility in access to information, mobility in the locus of consumer demand and fulfillment, and mobility in the provision of payment. (Related Article: Will Mobile Marketing Drive Mobile Payments?)
Which Ecosystems Are Driving? It’s difficult to predict winners and losers in the coming convergence, and is it not necessarily very informative to try to do so. All of the major ecosystems we’ve discussed in this week’s course will grow, change, and benefit for the coming convergence of their businesses on mobile commerce creation. Retailers will find ways to stimulate consumer interest, locate that consumer in time and space, and drive him into a retail store to stimulate a purchase. eCommerce merchants will continue to drive consumer registration in and adoption of checkout solutions, and they will work to migrate those solutions to the mobile web to facilitate remote commerce transactions in that place where consumers time-slice their lives and multi-task their days. Online advertisers will find a way to further segment and profile consumers on the basis of service engagement, online media consumption, search activity, and interest. Social media platforms will continue to work their way toward commercialization of the high level of engagement and activity that consumers exhibit in their environments, taking advantage of the referential benefits to be gained by inferring consumer behavior from the groups to which they belong and the associations they make. And in all of this, the mobile operators, platform managers, and other ecosystem participants who build, deploy, and manage the devices and networks on which everyone else’s business model success depends are working overtime to ensure that they have commerce provision capabilities of their own to bring to that middle place in which they find themselves, and to which it seems an entire galaxy of industries is headed.
All things converge. So, as we always do in our last class of the week prior to the quiz, let’s launch into conjecture about how the players and solutions in the mobile convergence landscape will evolve, and what may be the implications for the payments ecosystem in that convergence. How will this play out for the existing payments businesses and established players? We won’t debate whether they will remain relevant. It is almost certain that payments networks and processors, financial institutions and third parties, will all continue to exist and provide payments functions of some form in the marketplace.
However, as the industries which the payments business serves become increasingly networked themselves, and as their business models develop to depend more and more on the execution of payments transactions, what will become of the role of payments capabilities as independent, branded, distinct functions provided to consumers by financial institutions? Will the payments that matter most to these converging ecosystems, and therefore to their customers, still be managed independently by payments specialist companies, or will payments become a hidden execution function buried inside a new consumer-facing brand and capability that is but a component tied more closely to a piece of a much larger non-payment ecosystem?
So What Becomes of Payments? The answer to this question depends greatly on how payments systems integrate into new ecosystems. The answer to this question depends greatly on how payments systems integrate into new ecosystems –it depends on how, to quote Charlie Darwin once more, truly “adaptive” the payments systems we know and use today are to integrating themselves within the businesses of other industries and ecosystems. Why is this? For one thing, the payments systems we know and use today are to some extent victims of their own success. As revolutionary as the ability to access funds electronically from anywhere, at any time, for just about anything seemed at the time it first broke onto the scene a few decades ago, this capability is now taken pretty much for granted by the vast majority of payments participants. All of us expect transactions from our payment cards to work flawlessly, all the time, everywhere. We play straight past it.
We are now driven by the solutions that solve the challenges that surround payments: What’s on sale? Where can I buy it? What’s new out there that I didn’t know about? Is someone going to make me an offer on it? Is the product a good one? Should I buy it? What do my friends think? And who is that texting me while I’m in the checkout line?
Payments companies would do well to heed the lessons taught by the explosive participant and revenue (and, not to mention, valuation) growth of a new generation of network businesses. Many of them were born in the past decade or so, have grown users dramatically, and have done so by delivering unique value and services to consumers and businesses. Connecting advertisers and marketing targets while delivering web search and e-mail functions, building and deploying insanely great consumer electronics devices networked into a holistic platform and marketplace, creating a streamlined checkout process tied to predicting what you might like to buy next and then deploying that capability for others, and building a platform on which you can publish everything you like about yourself, chat for 7 hours a day, or raise virtual crops with your friends.
Payments are a critical function for all of these businesses as they commercialize the core activities on their platforms. Payments are but a piece of the puzzle — the more easily a non-payments ecosystem or platform can integrate your payment capability, the greater the chance that the commercial activity generated by that platform will come to you. The drivers of commercialization tomorrow may well be the other network and not the payments businesses themselves.
In this environment, as major ecosystems converge on commerce opportunity, payments companies will need to make themselves available and flexible for integration into the business models drive convergence. For payments businesses, that means that opening the edge of a payments platform is not just a good idea but rather is critical to the ongoing relevance and growth of the core payments franchise. And mobile will be the linchpin. (Related Article: Balance, Harmony and Open Platforms)
We will discuss this in greater detail in next week’s class. But for now, let’s discuss what we’ve reviewed today.
LESSON 3 DISCUSSION QUESTION: What is likely to be the greatest driver of commerce convergence growth in the near future? Payments or mobility networks (like Visa and Verizon) adding value and features, or value- and feature-rich consumer networks (like Google and Facebook) adding mobility and payment? Click here to respond.
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Driving Payments Innovation through Education- PYMNTS University
Durbin Debit 101 (required): Retail Deposits Have Changed Radically Overnight
Debit 201 (Required. Debit 101 prerequisite): Is Prepaid “Debit-Lite?”
Point of Transaction 201 (required): Competition for Consumer Choice
Mobile 205 (required): GPC Payments Value Proposition
Mobile 206 (elective. Mobile 205 prerequisite): Emerging Payments Value Proposition.
Cloud Payments 210 (required): Building Value in the Network
eCom 301 (elective): Evolution of Online Commerce
eCom 302 (elective): Emerging Competition
Mobile 305 (elective. Mobile 205 and Debit 201 recommended): Emerging Markets Mobile Prepaid
Cloud 310: Adding Value to Network Transactions
Cloud Payments 311 (Cloud 210 prerequisite): Monetizing the Information from Payments
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