The One Thing: Stored Value Ecosystems Square Off With Traditional Banking and Payments

The notion of branded currencies is nothing new — every gaming ecosystem has them — but a new take on the closed-loop approach is keeping cards and banks out of the equation.

On Wednesday (April 6), New York-based FinTech Evvio introduced its Fluid CommerceTM technology, promising “frictionless eCommerce without the need for the traditional financial system, including credit cards, bank accounts and other third-party transactions processors.”

Speaking with PYMNTS’ Karen Webster, Evvio co-founders Adrian Jones and Bradley Albright talked about their inclusive vision of value exchange that trades out third-parties, including banks, card issuers and other intermediaries, for value exchange within ecosystems.

“What we had in mind was to allow for more direct engagement between transaction counterparties and to eliminate the need for third parties to be involved,” Albright said.

Sounding a bit more philosophical, Jones said, “We envisaged a future in which value could be stored and exchanged in many different forms. That’s integral to what Fluid Commerce is.”

Noting how most eCommerce transactions are routed in and through the traditional financial system and banks, Jones walked through the steps of using a credit card to pay a vendor on a marketplace, receiving value in that marketplace, then having to move it to a bank to spend.

The breakthrough was seeing that “we didn’t have to transact via the banking system every time,” Jones said. “Once you’ve got value which has been transferred into, if you like, an eCommerce platform, why should that value have to leave that eCommerce platform? It can be transacted and spent within platform. That’s the crux of what Fluid Commerce is.”

Promising faster transactions, zero transaction fees and a new kind of spending experience, the co-founders believe stored value can transform how we pay in the connected economy.

See also: Data: B2B Firms Eye Embedded Finance Payment Options

Stored Value Applies Itself

Ecommerce is a complex landscape of marketplaces and standalone websites — most with apps — and for all its innate efficiencies, the way money moves isn’t the most effectual.

On the other hand, value exchange that begins and ends inside ecosystems opens a universe of use cases, or at least a metaverse, as Jones called Fluid Commerce akin to super apps.

“Our reference architecture allows interconnection of ecosystems,” Jones said. “A super app would be a great example of that. It might be a gaming ecosystem where value is being earned within a gaming platform — you may wish to connect that with another ecosystem, which is doing something quite different and allowing the value that’s been generated within one ecosystem to be spent in another.”

The point is the value is earned and spent inside ecosystems that can be connected, or not, but funds never pass through banking or credit card processing systems: “That’s the key to it. Allowing value to stay within either a single ecosystem or within interconnected ecosystems.”

Along with the super app comparison is the idea of Fluid Commerce as an eWallet for any ecosystem or collection thereof, from which value is earned, stored and spent.

“You can think of it as being a multicurrency, multi-format eWallet,” Jones said. “It’s not an eWallet in the sense of having a user interface — it’s an eWallet in the sense of providing the programmatic interfaces for allowing and supporting that trading, and exchange of value and transactions, to take place.”

What does this do for online marketplaces and ecosystems using Fluid Commerce?

Referencing extensive research that’s been done, Albright said, “We estimate that total value for an eCommerce operator could approach up to 49% or more of total revenue that they currently do. It’s a very dramatic potential with regard to what can be achieved.”

He added that valuable legacy businesses “who are thinking about how to address the competitive landscape that is rapidly evolving through new capabilities being introduced … see Fluid Commerce as a way to protect the business that they have, and ideally expand it.”

Related: Sowing the Seeds of the Connected Economy, Seed Round by Seed Round

Fluid Commerce Flows

Originally inspired by wanting to offer options to the unbanked, Fluid Commerce also expands the total addressable market of stored value shoppers. Estimating that 60 million U.S. adults are unbanked or underbanked, both executives see a vast untapped group.

On the business side, benefits of stored value extend to a “third-party payment processing community that’s looking to step into the future, evolve their own businesses, maybe protect the assets that they already have,” Albright said.

“For marketplace operators or ecosystem operators, the potential that they see is to provide a more compelling environment they recognize will lead to a more robust community of commercial counterparties, which means more transaction volume [and] a more appealing place to engage commercially,” he continued.

What comes next is formally engaging with potential partners and licensees on the road to a new way of paying that goes all the way on the digital transformation of value. Evvio will makes its money licensing the technology, which it’s been busy quietly doing.

“The model doesn’t have to be about taking a fee based on each transaction,” Jones said. “We are not looking to be at toll on the financial highway. The more valuable thing to the business is actually growing the economy for them and growing the revenue opportunity.”

Albright added, “We’ve tried to keep it as simple and straightforward as possible for partners to embrace the opportunities of Fluid Commerce. What form it ultimately takes, whether it is a measure of exclusivity for a given ecosystem or not, is just subject to discussion and negotiation with a given partner and what represents the best opportunity for all.”