Was on the phone w/ the CEO of Bling Nation recently. The company’s advisory board includes John Reed, a former chairman of Citibank and of the New York Stock Exchange and Jeff Stiefler, a former chairman of Digital Insight and a former president of American Express. I was very impressed with the focused value proposition and team they have put together.
Overview
Stick RFID tags on phones, establish NEW RAILS, NEW SWITCH and provide merchants POS terminals. Focus is “on us” payments within community banks.
Key items that should give Visa/MC and the big banks pause:
– NEW RAILS. They have direct integration w/ core deposit systems (think JackHenry)
– NEW SWITCH. They are the switch between DDA and POS, completely new Auth system
– REPLACE CASH.
– Consumer Adoption. They have 10 community bank pilots going on now. 25% of all DDA volume is going through them within 4 months. John Reed said “if this consumer behavior is true.. it would be the fastest consumer adoption [of a new Payment method] in banking”
– Value Prop is FOCUSED.
Merchant: Small merchants.. 50% reduction in interchange
Community Bank: Replace Cash, Interchange revenue, customer retention (loyalty program), minimal
IT work for bank. Core deposit system “plug in”, hosted services
Consumer. Use your phone as a payment device, get rewards and account status. Keep your money with local banks
– USABILITY. Instant activation.. get the tag in the mail, call up your bank and give them the number
– Board of Advisors. John Reed is a visionary.. how often have you seen his name on anything? These guys will be successful
Challenges
– Private networks have typically faced regulatory and compliance scrutiny. How advanced are the operating rules and agreements? Think ACH return… 🙂
– Long term consumer adoption.. is it just a flash in the pan.. or could this be an enabler for repacing cash for “community POS” payments (thing barber and soda shop) and move upstream from community to micro payments.. Something like this help small banks take back customers from the big guys?
– Fraud. Fraud doesn’t attack a system until there is sufficient volume to warrant investment. If Cash replacement focus, then system should be air tight as it will be tough to commit investigative services to $0.50 transactions.
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