Driving Network Effects with Platforms

How do I bring in more participants? How do I increase transactions?

These are just a couple of the questions Market Platform Dynamics Managing Director Tim Attinger addressed in his presentation; a part of the “New Payment Platforms for Innovation” panel.

Attinger discussed the “positive feedback loop,” an ideology similar to David S. Evans’ “virtuous cycle” of open software platforms – a circular pattern in which more users lead to more applications and so forth.

Like Evans, Attinger cited Apple as an example, arguing that even more so than the iPhone itself, the company’s greatest opportunity for future growth lies in its open platform that allows developers to create applications.

“There are great ideas out there… that I might never get to,” advocated Attinger with regards to the benefits of companies opening up their software platforms to developers.

Another key to keeping the “positive feedback loop” on replay is adding value to each transaction, noted Attinger. He stated that innovative services and value in the network cloud drive value to interactions between network participants.

Making a network an advantaged piece of someone else’s payment problem can help companies grow, summed up Attinger on a serious note, who then proceeded to joke that this approach can help industry leaders from staying up at night wondering if Facebook will take over the payments sector.

Other panel presenters included Mario Shiliashki (Mastercard SVP & Group Head of US Emerging Payments) and Dan Schatt (PayPal Sr. General Manager for Innovation). Shiliashki discussed MasterCard’s partnerships designed to fuel the company’s payments innovation efforts, especially in mobile with companies including Obopay, Orange, and more.

“Innovation should happen at the intersection of everything we do… with the industry, with our partners, and with the consumers,” he said.

Schatt, meanwhile, presented a case study on PayPal X and talked about highlights from the recent PayPal X Developer Conference. (Related article: PayPal Innovate: X marks the start)

He also discussed PayPal’s new initiative with Discover (more details) and how the venture allows PayPal to expand into a new region of the payments landscape.

“And it’s an opportunity for them to get into a $2 trillion market,” said Schatt.

In the Q&A session, security was a central topic. Shiliashki touched on the balance between giving developers “a sandbox to play in” while still having the company be in control.

Schatt noted PayPal has a rigorous screening process for developers looking to access the PayPal X open platform.

“There’s a guaranteed way to stop risk. Stop processing transaction. Zero Risk,” joked Attinger.

Schatt also stressed the importance of providing a support system for developers trying to build applications.

“It’s not a build it, and they will come,” he said.


PYMNTS.com Blog Entries from the Innovation Institute

  1. LIVE: The [Payments] Innovation Institute
  2. David S. Evans: Why the Time Is Right for Innovation (and Cash Is Not Dead) (9 a.m.)
  3. No Need to Give a Eulogy for Venture Capital (10 a.m.)
  4. There’s Two Sides to Every [Payments Platform] Story (11:30 a.m.)
  5. The Key to Igniting and Launching Mobile Payments Platforms (12:30 p.m.)
  6. Fed’s Proposal for Interchange Rates to Be Announced Within a Few Weeks (2:30 p.m.)
  7. What Payments Professionals Can Learn from FarmVille (4 p.m.)
  8. Driving Network Effects with Platforms (4:30 p.m.)
  9. What Is The Next Great Payment App That Has Yet To Be Created? (5 p.m.)