The ball has dropped, the champagne has been drunk and it is officially 2018.
Happy New Year!
Today is something of a blank slate – a year that is yet to come with no events cast in stone, just yet. Which means, of course, that everyone is speculating about what’s next: Will bitcoin reach $50K, is Apple’s reign as the planet’s biggest tech company coming to an end, will Alexa soon be able to drive your car?
And while we don't have a crystal ball with which to answer those questions, we have found that often the best way to figure out where one is going next is to take a look back at where they’ve already been.
So, in honor of the year we just left behind, we’ve prepared a look back through the stories that made the biggest impact on the payments and commerce ecosystem over the last year – 17 of them, to be exact.
What made the list?
While January 2017 may feel like a long time ago in a retail universe far, far away, it was in fact only a year ago that Walmart was gearing up to launch its own Amazon Prime-like membership service. Walmart’s service was cheaper than Amazon’s – $50 a year vs. $99 – but it was much less robust, as it lacked add-ons like music/video streaming and unlimited cloud-based photo storage.
Ultimately, however, Walmart decided that it wasn’t the right way to try to compete with Amazon, as an estimated third of Walmart’s customers were already Prime customers. Instead, Walmart “primed” the pump on two-day free shipping for everyone who spent at least $35.
“In this day and age, two-day shipping is really just table stakes,” said Marc Lore, now president and CEO of Walmart U.S. eCommerce. “We don’t think it’s necessary to charge a membership [fee] for it.”
Notably, Walmart did not give up on the eCommerce competition in 2017 – their 50-plus percent growth in online sales per quarter attested to that, as did the acquisitions of ModCloth, Moosejaw and Bonobos later in the year. But Walmart did change its focus. Instead of trying to beat Amazon at a (membership) game that Amazon invented, they instead focused on using the set of resources they have, that Amazon doesn’t: A physical store within 90 percent of the American population. That led to a major push toward in-store pick-up (with a discount) and online grocery delivery.
Did it have an effect on Amazon? Well, Amazon, after briefly flirting with raising its free-shipping threshold for non-Prime members, was forced to lower theirs to match Walmart’s.
Oh, and they bought Whole Foods for $14 billion later in the year – because a physical footprint is a nice thing to have when in a head-to-head race with the largest physical retailer on Earth.
February: Amazon Retires Amazon Pay
This year, with the expiration of its patent on 1-Click payments, Amazon officially retired the “Amazon Pay” moniker. The frictionless payment option is one of primary reasons that so many online customers frequent Amazon. Some have suggested that 1-Click brings in a good deal of annual revenue for the eCommerce giant – potentially in the billions of dollars, since firms like Apple had to pay Amazon to use the 1-Click feature in places like their App Store.
So, while the patent expiration could be a bit of a disappointment for the online retail behemoth, its expiration marked a red-letter day for all the other online sellers who waited nearly a decade to get a free crack at it.
But don’t cry too hard for Amazon, who had a good run with Amazon Pay. A very good run.
According to the PYMNTS Buy Button Report, published in October, the Pay With Amazon button was second only to PayPal in terms of presence on top eCommerce sites.
And Patrick Gauthier, Amazon’s VP of external payments, told Karen Webster in a February 2017 interview that as of the beginning of last year, Pay with Amazon had 33 million consumers from 170 countries. Roughly half of those customers are members of Amazon’s coveted customer base, Amazon Prime. Nearly a third of the transactions made by those customers were done via a mobile device, with an average transaction size of $80.
“This is really not surprising, because we are giving [the consumer] something they are already familiar with – and familiarity is something that builds behavior, because it takes the risk out of the consumer’s decision-making,” Gauthier explained.
Amazon may hold the number two spot in terms of “buy button” presence on the web, but PayPal takes the top spot – and by a very wide margin.
In fact, by the numbers, PayPal has had a very impressive year.
Two months into 2017, PayPal had two big headline numbers to announce. The first was 200 million: the number of active consumer or member accounts (as of Q3 2017, that figure was up to 218 million).
The second were the penetration figures for One Touch, PayPal’s one-click buy button for mobile and desktop web. As of early 2017, that platform officially crossed the 50 million active user mark.
PayPal’s COO, Bill Ready, said those figures make it the most rapidly adopted product in the company's nearly two decades of existence.
“It’s a pretty good feeling,” Ready told Karen Webster. “We have seen all this very powerful growth, while others have continued to struggle to get users on the platform and then struggled to get repeated usage. We processed $31 billion in mobile payments in the quarter and more than $100 billion mobile payments throughout 2016, both record amounts for PayPal. It’s exciting that more than half of our active account base made a payment on PayPal using a mobile device over the last 12 months.”
First Data, the commerce-enabling technology company, announced in March it had entered into an agreement to acquire Acculynk, an Atlanta-based technology company that delivers eCommerce solutions for debit card acceptance.
Acculynk’s debit routing technology enables merchants to process online debit payments through the debit network, helping merchants reduce their total cost of acceptance. In addition, Acculynk touts its True Debit gateway via PaySecure as a means of decreasing fraud rates, expediting payment settlements and creating a consumer experience with less friction.
It was the first of many acquisitions and partnerships for First Data this year. The firm also snapped up BluePay and CardConnect, and inked partnership deals with Flywire, CareCloud and Jack Henry.
“Whether it’s a formal acquisition or a partnership, I think of all of these deals as partnerships in the sense that they are about how we enable others to do more,” said First Data's CEO, Frank Bisignano. “In some cases, we buy a firm, but even when we do, we integrate them into a larger set of assets because our end goal is always the same: Deliver more value to the client.”
In July of 2016, Visa and PayPal announced a strategic partnership in which the world's largest payments network and the largest digital payments network would jointly leverage their considerable individual strengths to accelerate the pace of digital payments innovation and adoption. The news was eye-catching.
As it turns out, it was still pretty eye-catching in April of 2017, when the two giants of payments and commerce announced they were taking their show on the road, to the Asia Pacific region.
In a conversation with Karen Webster shortly before the news went public, PayPal’s head of global core payments, Jim Magats, said this partnership structure is “market specific and takes the goodness of the U.S. deal and the principle of consumer choice and makes it come alive in an exciting and dynamic region of the world.”
The “goodness” of that U.S. deal includes giving Visa cards prominent positioning in the PayPal wallet, extending consumer choice in a way that preserves the issuer’s brand. It also includes access to Visa’s Digital Engagement Platform (VDEP) for tokenization, the enablement of contactless in-store payments and access to Visa Direct for instant deposits.
For the Asia Pacific region, Magats said that, given its incredibly large and incredibly diverse payments environments, there isn’t a one-size-fits-all solution. Initial plans include auto provisioning of Visa products in the PayPal wallet for pan-region issuers and access to VDEP and Visa Direct – something Magats described as the “convenience and security core” of the PayPal-Visa pair-up.
“Visa and PayPal both have a number of creative assets that we can use to remove cash from the ecosystem and fully engage that consumer who’s sitting on the sidelines of the digital economy because they don’t today have access to credit cards or debit cards.”
May - WannaCry Attack
The "WannaCry" ransomware attack, which held computers hostage until their owners coughed up a bitcoin bounty, was brutal for how widespread it was, hitting businesses from all sectors, especially hard globally.
From European automakers to Chinese companies and more, massive infiltrations saw millions of infected machines, hundreds of nations and hundreds of thousands of businesses hit by hackers demanding $300 to $600 in bitcoin.
Among those businesses attacked? Sixteen hospitals.
And, as Karen Webster pointed out, WannaCry was just the latest and most visible of a growing trend: Computers held hostage by those looking to get paid for freeing them.
Why did that become a trend? We can thank the pseudonymous Satoshi Nakamoto and his brilliant invention, bitcoin.
“Before bitcoin, getting paid for holding people’s data and computers hostage faced a lot of frictions, and the threats, therefore, were considered more of a nuisance than anything else…” Webster wrote. “Bitcoin made it easy for criminals to make a big digital leap."
June: Zelle Launches
First announced in October 2016, Zelle was the bank-backed offering of a real-time bank account to bank account, person-to-person (P2P) mobile payments platform that would compete directly with the likes of PayPal, Square Cash and Venmo.
And on June 12, Zelle officially announced that it was open for business to the pool of some 86 million U.S. consumers who use mobile banking services.
According to Lou Anne Alexander, group president of payments at Early Warning (the enabling firm behind Zelle) – who spoke to Karen Webster immediately after the launch was announced – Zelle's goal is to be as inclusive as possible, for as many consumers as possible.
“I think we have heard consumers say, ‘I chose these kinds of P2P services because of where my friends and family are already,'" she said. "I think the goal for everyone who is participating in this space is to build a ubiquitous network where all consumers can be interactive and participate.”
Though Zelle was initially only accessible through the apps of banking partners, it has since released a standalone app in its attempt to widen its tent.
Just as its bank-backed rival was launching, Venmo – Zelle's main competitor in the market for P2P payments – announced that customers would now have the ability to choose instant payments, care of their debit card, and the use of the Mastercard and Visa rails.
The timing, Ready noted in an interview with Karen Webster at the time, was completely coincidental.
“Over the course of the last year, we haven’t just reframed the way we are working with Visa and Mastercard, but also how we are working with the entire banking ecosystem,” Ready told Webster. “We aspire to be one of the best ways for issuers to engage their customers and drive engagement and revenue for them and for the ecosystem.”
Leveraging the network of PayPal and Venmo users, he said, is another way for banks to create more consumer engagement, while also extending and strengthening their digital reach through mobile bank transfers. And for customers, there is an easy, seamless option for instantly sending money between friends, across all banks and smartphones.
“We want to help people get the most use out of the cards they already have in their wallets, and make that interaction easy and secure and instant, if that’s what they want," Ready explained.
June: Uber CEO Steps Down
Travis Kalanick's decision to step down from Uber, the ride-hailing company he founded, followed a grueling six months marked by a string of scandals and high-profile exits from the firm.
Eventually, investors had enough – they asked the CEO to leave so that Uber could rehabilitate its image and clean up the “bro culture” that has become synonymous with its name.
Those investors wrote a letter to Kalanick explicitly stating they did not believe he would be able to make the types of changes recommended by former Attorney General Eric Holder following his investigation of Uber’s workplace culture.
After taking a brief leave of absence, Kalanick agreed and stepped down.
“I love Uber more than anything in the world, and at this difficult moment in my personal life, I have accepted the investors’ request to step aside so that Uber can go back to building, rather than be distracted with another fight,” Mr. Kalanick said in a statement.
Kalanick was replaced by Dara Khosrowshahi, formerly the CEO of Expedia.
But even after their controversial CEO was gone, the firm’s troubles were far from over.
In November, the firm revealed that it had been hacked a year ago – to the tune of 57 million consumers’ and drivers’ data being lifted from their system – and that instead of disclosing the hack, they had instead paid off the hackers to return the money so they could keep the secret.
As 2017 drew to a close, Uber’s once vaunted $68 billion valuation took a 30 percent haircut, when a new round of funding led by SoftBank effectively dropped the firm’s valuation to $48 billion.
The good news is logically speaking, Uber’s 2018 would almost have to be better than its 2017. The bad news: It has an awful lot of work and climbing back to do.
It’s not every retailer that can essentially make up their own commerce holiday and get away with it, but Amazon has always been unique.
And uniquely good at making money.
This Prime Day was no exception – though it was exceptional, as Amazon claimed that the 24-hour shopping holiday was its most successful day of sales ever. Move over, Black Friday and Cyber Monday.
“To those customers who tried Prime for the first time and our long-time members, thank you for a great Prime Day,” said Greg Greeley, vice president of Amazon Prime, in a statement. “Our teams around the world will keep working to add more and more to your membership, so Prime continues to make your life better every day. We are already looking forward to our Prime Day celebration next year.”
It was a good day for Amazon, and an especially good day for Amazon Echo and Echo Dot, which sold at rates three to seven times higher than they did during Prime Day 2016. It was also a good day for marketplace sellers on Amazon – according to reports, third-party sellers had unloaded 50 percent more items on the site by noon local time (1900 GMT) than in the same time frame last year.
And while Amazon didn’t release much in the way of hard numbers, they did note that at its peak, customers were making 6,000 orders per minute.
Hey, just because it’s a made-up holiday doesn’t mean it can’t be lucrative.
August: Vantiv Buys Worldpay
So much for the lazy, hazy days of summer.
After some back and forth during the summer, in August it became official: Vantiv would be buying Worldpay for $10.4 billion.
The combined company will be headquartered in Cincinnati, with a primary listing in New York and a secondary listing in London.
Vantiv shareholders will control 57 percent of the combined firm, while Worldpay shareholders will own around 43 percent. Vantiv's chief executive, Charles Drucker, will head the new firm as executive chairman and co-CEO; Worldpay CEO Philip Jansen will be co-CEO of the joint group.
“The growth of eCommerce and the way consumers expect to transact is increasing complex for businesses around the world,” Jansen said. The “combination of scale, innovation, technology and global presence will mean that we can offer more payment solutions to businesses, whether large or small, global or local.”
Collectively, the combined entity will process approximately $1.5 trillion in payments per year and 40 billion transactions. Those transactions will use 300 payment methods in 146 countries and 126 currencies.
Combined net revenue is forecasted to be $3.2 billion.
September: The Rise Of The ICOs
Going from a term that no one had ever heard or used just a year ago to everyone’s favorite get-rich-quick scheme by the end of 2017 – initial coin offerings had a big year.
On the surface, the ICO is a simple way to raise funds. The transaction is one in which a company will offer up new currencies – very new, as in haven’t been traded yet at all – in exchange for the ones you’ve got in hand. The funds are typically earmarked for a new cryptocurrency project or to bankroll ongoing operations. The coins issue themselves digitally, typically debuting (or eventually to debut) on distributed ledgers, which are immutable and indelible.
The tokens, or coins, may change hands, but they have typically never conferred ownership rights. This is a big departure from the notion that has traditionally underpinned the stock market for centuries, as well as initial public offerings (IPOs), from which ICOs take at least some cues.
But will ICOs be around in 2018?
Startups like them, since they provide a way to raise a lot of funds without having to go through the heavily regulated processes involved with IPOs and issuing securities. Which is also why regulators hate them – and why the SEC and others have spent much of the back half of 2017 noting (increasingly loudly) that ICOs bear an uncanny resemblance to illegally issued securities.
Plus, the reports of scams are proliferating. As it turns out, ICOs were, for some players, just a really good way to get people to give them a lot of bitcoin – at a time when the price of bitcoin was doubling every five days.
That's a long way of saying that we wouldn't get too attached – we suspect that ICOs as we know them today may not be around all that much longer.
September: Equifax Hack
In any given year, there are a lot of hacks and hack attempts in the payments and commerce ecosystem – at this point, it has become a cost of doing business.
But the Equifax hack? That was the big one.
The credit scoring company announced in September that it had experienced a cybersecurity incident that may have impacted approximately 143 million consumers in the U.S., as well as the credit card numbers of approximately 209,000 people.
For those keeping score at home, 143 million is nearly the entire adult population of the United States.
According to Equifax, the impacted information included names, Social Security numbers, birthdates, addresses and, in some instances, drivers' license numbers. The company also reported that 209,000 U.S. consumer accounts were accessed by the hackers, as well as certain dispute documents with personal identifying information for approximately 182,000 U.S. consumers. As part of its investigation, Equifax also identified unauthorized access to limited personal information for certain U.K. and Canadian residents.
“This is clearly a disappointing event for our company, and one that strikes at the heart of who we are and what we do,” chairman and CEO Richard F. Smith said in a press release. “I apologize to consumers and our business customers for the concern and frustration this causes. We pride ourselves on being a leader in managing and protecting data, and we are conducting a thorough review of our overall security operations. We also are focused on consumer protection, and have developed a comprehensive portfolio of services to support all U.S. consumers, regardless of whether they were impacted by this incident.”
Equifax said once it discovered the breach on July 29, it immediately moved to stop the intrusion and engaged an independent cybersecurity firm. Why it waited over six weeks to tell the world that it had been so fundamentally violated is one of many, many questions regulators had for the credit rating agency.
As of the effects?
Experts agree that given the size, scope and depth of what was taken, it could be years before all the effects are fully felt.
September: The iPhone X Debuts
The super-cycle is upon us – and Apple released not one, but two fancy new phones to celebrate.
The first was the iPhone 8, best described as a pretty slick upgrade to an iPhone 7 (uncharitable reviews called it the iPhone 7S).
The second was the showstopper – the “one more thing” – the iPhone X. Button free, and controlled with facial ID instead of TouchID, the X is the biggest redesign in Apple's history.
The features, particularly the animojis, got a lot of press. The price – starting at $1000 – got a lot more, as did the question “will consumers really pay four figures for a phone?”
It seems we'll have to wait a few weeks for the answer, if we get it at all. The early days for the iPhone X looked favorable – it sold out within minutes the day it was available, and wait times stretched on for weeks. But as of December, those long wait times had waned, and analysts were beginning to wonder if the X had missed its mark … and consumers were actually stocking up on iPhone 8s this season.
And while there’s no way to know – the evidence on all sides is very thin – it will be interesting to see what Apple tells us about Q4 in a week or so, and what they don’t.
Signing at the end of a transaction at the physical point of sale is hardly ever about showing off a consumer’s best penmanship. Often distracted and in a hurry, buyers typically produce what can only be described as a cross between modern art and a second-grader’s early attempts at cursive.
It’s why consumers are being asked for their John Hancock increasingly less often during retail transactions, as Mastercard EVP Linda Kirkpatrick told Karen Webster. After all, the clerk doesn’t know what it is supposed to look like anyway – and most of the time, it is little more than an illegible scrawl.
And so Mastercard decided to get rid of it entirely – as of April 2018, the requirement for a signature at the point of sale will be finished.
“We are at a transitional period in payments,” Kirkpatrick told Karen Webster in a conversation shortly before the news broke. “The way our rules are written, merchants don’t even have to ask for the signature 80 percent of the time, but we felt it was important to go the final mile.”
Kirkpatrick acknowledged that requiring a signature at checkout is a holdover from the days of only plastic cards, when signatures on the back of those cards served a purpose. Now, she said, they only slow things down at checkout. In the era of EMV and ever-improving biometric authentication methods, she noted, it is a protocol that has simply outlived its usefulness.
“We’re at the right point in time in the evolution of digital payments to make the change,” she said.
It's a change, notably, that inspired others. Shortly after, American Express announced they would also drop their signature requirement.
November: Whole Foods/Amazon Cut Grocery Prices
When Amazon bought Whole Foods earlier in the year, the question that echoed around the ecosystem was: How would the two brands work together? Was it possible that Whole Foods prices might actually go down enough that they would no longer be nicknamed Whole Paycheck?
The answer to that question, at least early on, seems to be yes.
Especially during the holiday season.
“These are the latest new lower prices in our ongoing integration and innovation with Amazon, and we’re just getting started,” said John Mackey, Whole Foods Market co-founder and CEO, when announcing the Thanksgiving price drops. “In the few months we’ve been working together, our partnership has proven to be a great fit. We’ll continue to work closely together to ensure we’re constantly surprising and delighting our customers while moving toward our goal of reaching more people with Whole Foods Market’s high-quality, natural and organic food.”
Amazon cut prices on organic turkeys (especially for Prime members), chicken breasts, shrimp canned pumpkin, organic broccoli, one-pound organic salad mixes, organic russet potatoes and organic sweet potatoes.
All of these price cuts were in addition to Amazon’s first round of price reductions.
And yes, there are more to come – Amazon and Whole Foods have been very clear on that.
December: Bitcoin Hits $20K, Crashes, Rebounds And Crashes Again
Bitcoin hit the $1,000 mark in January of 2017 – and for the rest of the year, there was a wild ride of buildups and breakdowns.
But as 2017 was winding down, things got particularly wild.
After hitting $20,000 per unit briefly on Dec. 17, the value had fallen to around $15,000 by midweek, and was trading at a little over $10,000 by Saturday.
So, had the bloom come off the tulip?
On Tuesday, bitcoin rallied, and it had recovered more than half its losses and was trading at $16,000 by the end of the day.
False alarm, then?
Well, maybe not.
Bitcoin dropped again 24 hours ago, as South Korea announced that its regulators are contemplating the shutdown of many of the nation’s very active cryptocurrency exchanges. South Korean exchanges will soon require real-name cryptocurrency transactions and impose a ban on the offering of virtual accounts by banks to crypto exchanges, according to a statement from the Office for Government Policy Coordination.
So much for anonymity as bitcoin’s calling card.
And while South Korea was the only country rolling out new rules, regulators all over the world were throwing in their two cents – and none of them were supportive. Massachusetts Secretary of the Commonwealth Will Galvin said that bitcoin “didn’t pass the smell test," and India’s financial regulator warned consumers that bitcoin’s volatility could ultimately wipe out any funds they stored in it.
Bitcoin’s price today? About $14,500 per coin.
Tomorrow? Your guess is as good as ours.
But then, that is the fun of a new year – all the things you don’t know, and don’t know that you don't know.
Many of the things on this year’s list could not have been called a year ago. For example, if you told us in January 2017 that bitcoin – which was still under $1,000 – would at some point be worth $20,000, we would have told you to lay off the Kool-Aid.
But looking back can give you a good idea of where we are moving toward – and all signs indicate that things are about to somehow get even more digital out there.
We’ll keep you posted as it happens.
Happy New Year.