There are two things that people in payments are doing this first week in August: vacationing or coming to our R2\Retail Reinvention Summit that starts on Tuesday! Regardless of which camp you’re in, no doubt, you’ll be looking for a few things to read as you while your time away on the beach or get prepped for the scintillating conversations you’ll be having with us in Chicago.
With that in mind, here are 10 of my musings on the topics of conversation circulating around payments so far this year.
Payments’ fashion accessory this season is the buy button. Everyone either has or wants one. Two of the newest players that hope to cash in on the Buy Button mania are Pinterest and Facebook. Many believe that this is the next logical step in their quest to monetize those who visit the site daily.
But buy buttons, of course, aren’t just alive and well inside of marketplaces, and not all buy buttons are the same – or even about commerce. In fact, in this piece, I suggest that there are actually three types of buy buttons, each of which has had varying degrees of success in capturing a consumer’s clicks, and, therefore, getting any traction on mobile and/or on the Web. Turns out, I suggest that buy buttons aren’t even all that new – Amazon and PayPal are the patriarchs of the “buy button” family and have been around for a couple of decades. But what makes them a topic of conversation is their potential to remove the friction associated with converting a browser to a buyer on a small screen. And, even, I hypothesize, to stimulate the posting of more content inventory on marketplace sites that need it to entice new and fresh eyeballs daily. Since more people consume content then create content on these sites, buy buttons give marketplaces new content since they give advertisers and brands an incentive to post content that they hope people will buy – which is a win for the marketplace even if consumers never click.
Companies love to ask consumers questions about stuff. And a lot of them are asked a lot of questions by a lot of companies in payments about what they think about security and what they might like to do with a shiny new payments method if given the chance.
In this piece, I explore the dichotomy of what consumers say about both of those topics and more, and then, what they actually do. For instance, 80 percent of consumers say that they expect that their financial information will be compromised and are worried about that, yet 73 percent of them use the same passwords for multiple sites that have remained unchanged for years. Why they do that, whom they trust with their data, new payments innovations and how they traverse the Web is the topic explored here.
By the way, we’ll be unveiling the results of a brand new piece of research we’ve done on this topic on Tuesday, Aug. 4. We asked more than 2,000 consumers what they actually do when they shop online and via mobile – where they start, what payments methods they use and why and what they regard as the most important thing to them as they hop, skip and jump all over the Web and in apps. Be sure to check back on Wednesday morning for a summary of those results.
Boy, Yelp sure seems a bit on the ropes these days. If you read between the lines of their earnings call last week, things look a bit grim: Their chairman is out, rumors of sale seemed to have stalled, revenues are tanking and its plans for commerce inside of its network have really gone nowhere. I wrote about a year ago this same time that Amazon should buy Yelp – despite the fact that it would have violated their “never pay more than a billion dollars for anything” acquisition rule of thumb. Maybe if they wait long enough, they’ll get their chance.
But a year later, I posit in this piece that Yelp, along with Twitter and a few others, have succumbed to what I described as the “curse of the goldfish” aka a consumer attention span of less than 12 seconds. Consumers are so bombarded with ads and messages from everywhere on and offline and inside of everything they do that they have (a) tuned out and (b) now start their search for things that they want to buy where they can buy: marketplaces. In this piece, I describe the sad state of consumer attention, highlight the impact to those in payments and commerce who are vying for that very distracted consumer and offer some thoughts on who might survive and thrive.
I took a little heat over the title of this one which was not intended as a nefarious comment on payments, but a nod to the hidden threat by payments to the advertising ecosystem. Over the years, I’ve written a lot about the disruption taking place at the intersection of advertising and loyalty – two areas of commerce that I think are extremely broken and judging by our survey of the state of innovation in payments, sorely lacking any.
In this piece, I make the case that the most disruptive force in online advertising, at least as it relates to payments and retail and commerce, won’t come out of advertising or media but the card brands. The theory of that case is the network’s investments in card-linked offers platforms that can both aggregate and leverage consumer transaction data to essentially create the next-generation ad networks. These networks can push offers based on history, location, and a variety of other triggers directly to consumers via mobile devices and apps and have those offers redeemed right then and there directly to the account used to complete the purchase. Relevant offers, timely delivery and no fuss/no muss redemption online can and will severely disrupt any other form of online advertising over time for one big reason: they can prove an ROI.
Shortly after Android Pay was announced, I said that Android Pay was about a lot of things, but not about payments, at least as a primary function. I argued in the piece that as a new mobile-based offline payments method they will face the same challenges of getting consumers motivated to dump the plastic cards that work everywhere for a mobile wallet that works some places – and not very many right now. And that their hurdle is overcoming a much more fragmented user base and a less affluent customer base overall. All of that suggests for me that Android Pay isn’t in it for payments, but three other things, including helping to sure up how Google makes money in the first place – by selling advertising on its search pages.
Apple Pay always makes news and I’ve written a ton on Apple Pay since it launched. We also track its adoption via our Apple Pay Transaction Tracker and will break some news next Wednesday when we release the results of our third quarterly survey of consumer use and adoption.
In this particular piece, I go through the business model challenges facing Apple Pay as it moves away from its U.S. roots to play on a global stage, and also do the math on just how many Apple Pay users there are in the U.S. Although it’s never easy to be exactly right when it comes to anything Apple, given how close they play their data cards to their vest, we did our best to extrapolate the latest and greatest here. When you go through the math, you can decide for yourself whether they’ve made a lot of progress or only a little.
Square made news two weeks ago when it announced that it would IPO the new-fashioned way, well, at least for those whose annual revenues are sub-$1 billion. But Square has been making news ever since it launched six years ago and created the category we now call mPOS. They’ve also pivoted their strategy over the years to one that was strictly focused on the underserved, micro-merchant, to a new small business/consumer mobile payments network to SMB merchant services solutions provider.
In this piece, I describe their journey, and suggest that today, Square’s ambition to play on a SMB merchant solutions stage may be their biggest ambition disguised as their biggest threat yet. Why? Players ranging in size, scale and focus — from PayPal to Verifone to First Data — have a running head start with a more robust portfolio of solutions to offer merchants and may be better positioned to serve the market Square would love to have, but may never get the chance to.
Amazon makes news almost every week with a new initiative of some kind focused on expanding its commerce sphere. Amazon, which considers itself a logistics company as much as it does a commerce company, entered the grocery business with now four solutions – Amazon Pantry, Amazon Fresh, Amazon Dash and Echo – all intended to provide a different grocery experience depending on the whims and preferences of the user. Along the way, Amazon has taken a category that many felt would never make the transition to online to one that is easily making that shift now.
In this piece, I take a look at the reasons why Amazon has set its sights on grocery, why consumers are comfortable doing something online that they only ever did when they had the chance to personally inspect the products before buying them, and what the disruption means for the grocery category as a whole.
Innovation is a fact of life in payments and commerce and as a broad topic, can even be a little boring. But who is driving innovation is anything but — and fodder for some of the most interesting discussions in and around payments.
We did a yearlong study in 2014-15 to identify and rank the 100 most innovative players in payments and commerce. Who made the Top 10 made news – and for a very important reason: 6 of the 10 aren’t even payments companies. Apple (#1), Amazon (#3), Alibaba (#9), Facebook (#4), Google (#8) and PayPal (#7) edged out many of the familiar names and faces who built the payments ecosystem that we rely on today to drive trillions of payments transactions around the world every day. Now, let’s face it, many of these guys leverage the existing ecosystems to make what they do work and would be nowhere without them, but the shift in power – and brand recognition – in payments and commerce is palpable. I explore the implications of this for payments players in this piece.
As I get my head wrapped around the details for the R2/Retail Reinvention Summit this week, retail is obviously on my mind. I actually wrote this piece in 2014, after seeing published reports of the precipitous decline in foot traffic at physical retail establishments.
In this piece I liken the decline of physical retail to the newspaper industry – and its decline, one that was precipitated by the same forces now catching up to physical retail: the consumer’s move to digital. In the piece, I suggest that, like newspapers, the big guys in retail with scale will survive, as will the local players with a specialized product selection and service. But the big unwashed and undifferentiated middle is at risk and in a big way. And retailers who take solace in the commerce numbers that show that 90 percent of retail is still consumed in stores, are missing the fact that some categories – like clothing and specialty retail and electronics – are tipping online in a big way, and even categories like grocery are starting to move online, too.
Consumers still use physical retail, of course, but it appears they do when they know what they want to buy. That means that the physical retail shopper has done her homework and shows up to that store more informed and ready to buy. So, the silver lining to the dark physical retail cloud is that although foot traffic is down, sales per shopper are up.