Reaching Toward Critical Mass in Payments

Moving toward critical payment mass

In payments, innovation is as much as art as science – in terms of finding the balance between buyers and sellers, and reaching critical mass for both sides, as BarclayCard’s Nick Kerigan explains.


The concept of matchmaking is an old one. Think love, worship, the ancient symbols of yin and yang. Each part has a counterpart. So it is with payments, where buyers and sellers link to transact in a perfect world, with a one-to-one relationship. The advent of technology is a movement to try to make the transaction, ideally, a frictionless one.

But how can technology work to bring new merchants to new buyers, without lopsided development or imbalances on either side of the scale? That in part was the focus of discussion between MPD’s Karen Webster, Richard Schmalensee, co-author of the book "Matchmakers: The New Economics of Multisided Platforms," and Nick Kerigan, managing director of Future Payments at BarclayCard, in the latest installment of PYMNTS' weekly series, The Matchmaker is In.

“We like to think of platforms as something interactive and enabled by the mobile age,” said Kerigan, who noted that matching buyers and sellers is a process that traces back to the Ancient Greeks, and card payment networks stretch back across several decades, with one milestone having been passed as Barclays itself marks the 50th anniversary of debuting its credit cards in the United Kingdom.

But, noted the executive, when it comes to payments, innovation “is an art as much as science in terms of what is likely to succeed,” where bringing supply and demand together can be a dicey proposition – and where it is important to identify the friction points that exist for consumers and suppliers that can be alleviated through technology, enough so that it can in effect change consumer behavior.

The discussion took a turn toward a concrete example in the form of video game consoles, as posited by Schmalensee, where the question remains as to how new games can support new consoles and new consoles can spurt the continuous development of new games.  The trick? Pricing the console low enough so that there is what is tantamount to a “public promise” that pricing will be low enough to spur adoption by consumers (and developers), while at the same time lending credibility to the game makers that developing and marketing new offerings will be worth the time and effort.

“When I think about the learnings we’ve had in contactless in the U.K. since 2007, you’re trying to get critical mass on each side, and there’s really kind of subtle learnings that you get through experience,” where insights come into play delving into consumer behavior, said Kerigan, and then it becomes apparent the importance of other initiatives, such as training the staff within the actual merchants. “That’s not obvious when you are starting out in a major program,” continued Kerigan. “You learn some of the smaller prompts that actually become quite important,” he added, with true value realized upon moving toward critical mass. Of special importance is providing concrete use cases that demonstrate the value-add of technology as it comes aboard an enterprise.

Added Schmalensee, “There’s so many business models that would work brilliantly at scale, but getting them to scale, you often find new bumps and hurdles that you hadn’t anticipated … Being flexible enough to learn [is key],” he said.



The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.

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