There was no shortage of things to watch this summer for payments and commerce peeps. Contactless launched in New York City, retail earnings season was an ongoing rollercoaster, Facebook decided to digitally mint its own currency, the iPhone lost its dominant footing, Prime Day made all the money and Elon Musk and Jack Ma debated whether AI will be humanity’s future or the end of us all.
In case you happened to blink at some point in the last three months and missed some of that, don’t worry – we have it all here, as summed up by the CEOs who made the big moves and then explained them to us later.
[I] want to recognize [our team’s] hard work over the last few years, which has allowed us to transform nearly every aspect of our business. Without those efforts, we might have found ourselves in the unfortunate position of many of our competitors who are struggling to perform in the face of rapid changes in the consumer and the marketplace.
-Brian Cornell, CEO of Target
In a retail earnings season sharply bifurcated between winners and losers, with only a handful of mixed cases, Target was arguably the big winner and the investor favorite. The retailer beat analysts’ expectations across the board – earnings, revenue, comparable sales and digital sales growth all came in ahead of analysts’ expectations pre-release and showed quarter-to-quarter and year-on-year growth. The transformation Cornell refers to above is a now two-year-old turnaround project that has focused on renovating and remodeling physical stores and building fuller multi-channel experiences for consumers.
I think the point is, what do we know for sure? We know for sure that customers want to save money. Everybody wants a value. And we also know people want to save time. And with today’s technology, there are new ways to help them accomplish both, and that’s what we’re innovating to deliver.
-Doug McMillon, CEO of Walmart
Walmart, like its rival Target, came out ahead of analyst expectations across the board, though with less impressive overages. Digital was the center of Walmart’s earnings presentation, particularly in its grocery business. To date, 2,700 of its stores offer grocery pickup, while 1,100 offer same-day delivery. For all its strength, however, digital has also been a source of some backstage drama among Walmart’s executive team this summer, according to reports. There is also evidence that Walmart is beginning to hone and prune its eCommerce efforts this summer, with reports of a ModCloth sale coming two years after its acquisition by Walmart.
I think what differentiates us is not just about eCommerce; it’s about all these channels, including mobile, so that a seller can bring all the channels together from offline, mobile and online in one place, in one dashboard, and have the suite of all other tools that we offer … not just to make sales, but to actually grow the business and provide insights into it.
-Jack Dorsey, CEO of Square
Building an ecosystem has been Square’s theme for the summer of 2019 – or two ecosystems, technically, since CEO Jack Dorsey’s comments during his presentation to investors was largely focused on Square’s “two incredible ecosystems of scale” – the seller ecosystem anchored by its POS device, and its consumer ecosystem anchored by Square Cash. Summer also saw some big moves on that front, notably the release of its Orders API. But the summer has also served up some rather big bumps for Square, including the endnote of losing its key customer Joe & the Juice to Adyen.
There are a lot of possibilities here, and both Facebook and the Association plan to work with regulators to help address all of their concerns before Libra will be ready to launch. We worked with other prospective members of the association to release a white paper outlining the Libra concept in advance, specifically so we could address these important questions out in the open, and we’re committed to working with policymakers to get this right.
-Mark Zuckerberg, CEO of Facebook
Whatever else comes of its – Facebook took the title for “payments story of the summer” with the announcement of its Libra cryptocurrency project, which aims to connect the approximately 1.7 billion people on Earth without access to traditional banking services to the digital economy. On the one hand, the 28 founding members of the Libra Association that will reportedly control the cryptocurrency is a veritable who’s who of global payments luminaries. On the other hand, “terrible idea” is just about the nicest descriptor regulators in the U.S. and around the world have had about this project. If Facebook is as committed as they say they are to “getting this right” in terms of regulation, the company likely has a very long fall (and winter and spring) ahead of it.
We believe the full potential of FinTech can only be realized through partnerships that leverage the best of our collective assets.
-Dan Schulman, CEO of PayPal
Earnings were up, revenue was up and transaction volume increased by a notable 25 percent in the quarter, to $172.4 billion – but Wall Street was a bit down on PayPal after a down prediction for its full-year performance, and as some delayed projects with partners MercadoLibre and Paymentus Corp made investors antsy. Schulman remains upbeat on the partnerships, delays and all, as well as on advancing efforts with Uber.
6. Alibaba and Tesla
I don’t think artificial intelligence is a threat. People [that] worry a lot about this today are those people [that I call] “college smartness.” People like us, “street smart,” we’re never scared of that! We think it’s great fun, and we want to change ourselves to embrace it.
-Jack Ma, Founder of Alibaba
I don’t know, man, that’s like “famous last words.”
-Elon Musk, CEO of Tesla, SpaceX
In a 45-minute conversation that kicked off the World AI Conference (WAIC) in Shanghai last weekend, Alibaba Founder Jack Ma and Elon Musk debated the future of AI as they see it – and they see it quite differently. Ma is an unabashed advocate and believes machines don’t present much of a threat to humanity’s future. Musk is … unconvinced, arguing that the technology is evolving faster than the humans developing it can understand it. Both agreed that, assuming the benevolence of AI, the biggest struggle facing humanity will be underpopulation, not overpopulation.
Contactless basically targets low-value cash transactions as the first place that it kind of changes the paradigm and the speed of adoption. … It depends a great deal on how many cards are in the market that are contactless-enabled, combined with contactless terminals, combined with the use case for everyday payments. If the transport system gets contactless-enabled, it tends to ramp faster. If it doesn’t, it tends to ramp slower.
-Ajay Banga, CEO of Mastercard
Strong consumer spending drove Mastercard’s June quarter earnings, continuing the 2019 trend. The interesting tailwinds, however, were in international and cross-border growth, the B2B segment and in the rapid advance of contactless, card-based payments – particularly in Australia, Canada, Turkey, Poland, Hungary and the U.K. While market conditions can vary, Banga noted that with support, particularly in transit programs, contactless cards encompass the majority of smaller-dollar transactions in a market within four or five years. New York’s MTA went online with contactless payments this summer.
We know it takes strong partnerships across the ecosystems to deliver these great user experiences. … Partnerships are not simply additive to our business model – they are fundamental to our business model, whether it’s traditional financial institutions or FinTechs.
-Al Kelly, CEO of Visa
While Visa has plenty to talk about during its earnings call with investors – tokenization, contactless payments, various global expansion projects – CEO Al Kelly kept returning to the company’s ambition to build a “network or networks” via the construction of “an arsenal of value-added” offerings that are “network-agnostic” – meaning they can extend onto networks beyond Visa’s own. Visa, Kelly noted, is not a competitor to Fintech, but a “natural partner” due to scale.
On so many fronts, there’s an enormous amount to look forward to over the next few months, including the launch of new services like Apple Arcade, Apple TV+ and Apple Card. And without giving too much away, we have several new products that we can’t wait to share with you.
-Tim Cook, CEO of Apple
Last quarter’s earnings call revealed something that is true of Apple as of the end of summer 2019 that has not been true of the company since 2012. As of last quarter, the iPhone is no longer generating the majority of Apple’s sales on its own – it now represents 48.3 percent of Apple’s overall revenue. Apple has remained upbeat on the topic of the iPhone, noting that it returns to growth on an annual basis in June, and that its active installed base is at an all-time high and was up year on year in all of the firm’s top 20 markets. But it is also talking much more about its growth in arenas outside of smartphones – particularly its relative dominance of the wearable market and its rapidly expanding services portfolio. Apple doesn’t want to be about one product anymore – and it is increasingly leaning into a story about an ecosystem of services.
-Jeff Bezos, CEO of Amazon
Sometimes it’s not what you say, but how you say it – or, in this case, where you say it. And there certainly was much to say “thank you” for, considering how big Prime Day turned out to be in 2019. It was Amazon’s biggest shopping day(s) of the year – the retailer sold 200,000 televisions, 300,000 headphones, 100,000 laptops and over one million toys. Prime Day succeeded so much that Amazon’s competitors, like Walmart and Target, were lifted by the rising tide of consumer enthusiasm. And while Bezos did express appreciation for the staff and shoppers who made the whole event possible in his official statement on Prime Day, we are actually quoting his much more memorable “thank you” to everyone who made Prime Day possible.
For those who can’t see the image clearly, that is Amazon CEO Jeff Bezos standing on top of glass domes that make up The Spheres at the company’s downtown Seattle headquarters. He is holding up a sign that says THANK YOU.
Well, no one has ever accused Jeff Bezos of thinking too small.
So, what did we learn from our favorite CEOs to carry into the better half of 2019? Partnerships are good ideas, regulators should be taken very seriously, the digital retail race is moving to its “winners and losers” phase and contactless is coming.
Oh, and the future is already here.
All perfectly good and reasonable lessons.
As for the single takeaway?
It is increasingly a “go big or go home” world out there – which means there should be a whole lot more to watch as 2019’s second act gets started.