My perspective has been evolving as I work to build out infrastructure for “when Crypto grows up” in my new Company. I’m pleased to report that Accept Payments (acc3pt.com) went live this month and is expanding our private rollout as we fine tune all of the CX. Thought for the day… Its about trust..Continue reading “DeFi, CDBCs and Web 3.0”
Given that I’m building a new Company focused on Crypto acceptance in physical assets (stealth – pilot in 3 weeks), I thought I would share some perspective on the drivers of Crypto, CBDC and Decentralized Finance (DeFi).
There are about 50,000 people that read this blog.. Glad you enjoy it.. I’m most surprised anyone can stand my writing style for that long (sorry for all the typos – no editor).
As most of you know I love to read the arcane (ex favorite book is Weak Links – related blog) and I love economists. Today I’m reading some of Thomas Phillippon’s research (NYU’s economist and author of The Great Reversal: How America Gave Up on Free Markets). Many of you will recall I covered Dr. Phillppon’s work in my 2015 blog Changing Economics of Payments. My summary of Phillippon’s work:Continue reading “Case for CBDC – Market Efficiency”
My track record on Apple is pretty good.. having broke the Apple Pay news in 2014 and Last August I announced the Apple/Mobeewave acquisition. Apple is great at keeping secrets… perhaps the best tech company in the world in this regard. My latest forecast? Apple will enable payment acceptance in the US this October with Elavon as payment processing partner.Continue reading “ApplePay Accept (Mobeewave) in October”
Imagine a world where bank accounts don’t matter. You select services that solve your problems when you have them. Walmart (and Amazon) are unbundling banking.
As always pardon the typos
It seems like only yesterday that 30 members of Congress wrote the acting chairman of the FDIC to stop Walmart Bank.
“Wal-Mart’s plan, to have its bank process hundreds of billions in transactions for its own stores, could threaten the stability of the nation’s payments system,”30 Members of US Congress, March 2006
Of course, we all know that Walmart pursued a different course to deliver services. Partnerships (MGI, Moneygram, Paypal, …) and banking in a box (literally an isle with prepaid cards). Most analysts discount or “write off” Walmart’s achievements in financial services. Given Walmart doesn’t break out financial performance of Money Center, analysts are left with the tea leaves of MGI and GDOT reports. There is little doubt that comparing Money Center financial metrics to tier 1 banks would leave most unimpressed. However, Walmart has created a portfolio of banking services that supports their overall retail strategy and creates overwhelming loyalty amongst their core customer base.Continue reading “Walmart – Banking and FinTech”
Understanding flows of data, and the structures in which it is controlled, provides a map of: value, power and margin. What is changing in the flow of data?
Warning.. biggest blog ever.. So I made a two page summary.
Happy New Year! Best to you and yours. Having completed the successful sale of Commerce Signals to Verisk last year, this blog is a reflection on some of my lessons learned as well as my predictions on where I see things headed. The thoughts here are guiding my investments and launch of my next venture. I love the interaction, so please take time to write a comment on any of this. Also I ask for your pardon in advance for typos..
Understanding flows of data, and the structures in which it is controlled, provides a map of: value, power and margin. What is changing in the flow of data? What data is still “unique”? Where is power shifting? My past blogs referred to this dynamic as Rewiring Commerce, Value Orchestration and the Transformation of Commercial Networks.Continue reading “Data Games – Battle of The Cloud Part 6”
- Primary driver of finicity/Plaid deals is not open banking, but in support of the “network of networks” strategy.
- The owner of the consumer directory, will rule payments. Tokens are the central battle field for trust networks (and payment network) consolidation as well as new services.
- MA lost out on the Plaid purchase, but is likely to end up far better off for it.
- The Visa/Plaid deal is likely to fall through as the retain consumer credentials for 5yr (claimed by class action).
- V/MA will likely own the payment token directory
- Visa is leading – 1B tokens issued by Visa (acquisition of BellID/Rambus)
- Mastercard Track successfully leads the market in global B2B Least Cost Routing
- V/MA have substantial hurdles in expanding the directory beyond payments
- Few direct consumer or merchant relationships
- Bank and Apple/Google leadership in Customer Identity/Trust
- Trust is the core of bank risk management (and Bank margin)
- Network effects decrease transaction costs for established services and increase value (acceptance). However they have the reverse effect on new services.
- Value/Margin is migrating to the ends of the network and many new networks are forming.
- The energy to manage participation in multiple networks is dropping (with Mobile). Enabling specialized networks that cater more finely to precise needs of each node.
- V/MA will see substantial growth in core payment volume with continued network effects and the breakdown of Payment silos.
17 Jun 2020
Short Blog today. Before jumping in.. I’ve been working on 2 significant blog series
- Consolidation in Financial Services. Given convergence of several forces, we are in the midst of a consolidation of networks, and services. The pandemic has placed new strains on sub scale players, which will provide the basis for significant M&A. My involvement in the deal flow has slowed the writing down.
- Big Tech, Neo Banks and Financial Services. Looking to give the “inside baseball” look at what is really happening.
I’ve got over 100 pages of material… hope to get it out in bite size chunks in a few weeks.
EU and Apple PayContinue reading “EU probe of Apple Pay”
18 Feb 2014
One my most often repeated lines is mobile payments are not about payments.. but about everything else. We have no payment problems today. When was the last time you left a store without your goods because the merchant doesn’t take your form of payment? Payments are the easy part, and experience has shown that it takes a VERY VERY long time to change consumer payment behavior (20 yr plus, see my blog on Behavior Change). My personal bets are all around mobile’s future role in commerce…. I call it Rewiring Commerce (previous Blog).
As an engineer I like to take a control volume approach to systems. To some extent, marketing is a measure of inefficiency… heat or friction in a mechanical sense. Marketing spend makes up almost 19% ($750B) of total US Retail sales (around $4T), with most of that spend untargeted and non digital. Even these astounding numbers do not begin to touch the total opportunity in Commerce Efficiency (ie transportation costs, spoilage, mark downs, discounts, and inventory write offs). Rewiring Commerce is much more than Apple’s beacons talking to you when you shop, it’s about how local suppliers/producers could meet needs locally, providing manufactures with tools to better estimate demand (eliminating waste and transportation), mass customization, resource optimization, value orchestration.. yada yada yada.
Who is impacted by rewiring commerce? Everyone that buys or sells. What is key? Data, trust, identity, platform.
I see disruption of Commerce (ie rewiring) occurring in 4 phases.
The First phase of mobile commerce disruption was focused on improving information flow (ie Showrooming). Second phase is underway, experimental and highly fragmented with one my favorite companies being Blue Kangaroo. In this phase there is context to the mobile interaction without the consumer’s direct input. This is where Apple’s beacons will play (see blog Apple and Physical Commerce earlier this month). Perhaps the best categorization of Phase 2 is in shopper marketing from Booz & Company.
Third Phase: Intent
Theme here is consistent with a physical world version of Google’s search word marketing advantage. In this phase retailers and manufacturers work to influence your behavior before you are in the store (as opposed to in store beacons in phase 2). One of the start ups I’m incubating is focused on helping any company purchase intent information. For example, when someone turns their car off in a mall parking lot they may be intent on shopping. Or when you buy suntan lotion you may be intent on a beach trip. Google is light years ahead of everyone in physical intent… why do you think they want to put up all those free wi-fi hot spots. But their information is extremely limited.. much more location based than behavioral. In this phase retailers use their consumer insight in combination with others to provide relevant information to specific consumers.
In order for consumer adoption to take place there must be real value. Value requires:
- knowing the customer (historically),
- knowing the customer now (intent),
- having the ability to touch the customer before they shop (publishing),
- trust (consumer permission),
- ability to run an advertising campaign,
- ability to target consumers based upon insight,
- ability to track consumer behavior after the campaign (redemption/purchase)
- tracking requires ability to work with retailers
Yep.. that is a long, long list. What companies can do this today? Google, Apple, Amazon and Facebook.. with Google and Amazon 3-5 years ahead.
There are several strategies at play here today, but the biggest challenge is in obtaining real world intent. Several “Omni Channel” plays leverage online intent to create off line behavior to get around the real world data challenge (only if the consumer starts online).
- Platform: Amazon, Apple, Google, Facebook
- Retailer Focused: Square, Amex/Loyalty Partners PayBack Card, OminChannel, Paypal
- Big Data: IBM, …
- Big Government: NSA (meant for a laugh, please don’t add me to Echelon/PRISM)
Third Phase Summary
In this phase the Retail environment is not changing substantially, we are better using mobile to interact with consumers within the current retail and advertising constructs. Junk mail and random push messages are gone. Consumers are choosing to “trust” entities that consistently deliver RELEVANT VALUE. Services will be focus toward affluent consumers, as the focus of value will be around discretionary purchases. As efficiencies improve, we will begin to see a massive shift in advertising spend toward digital channels and specifically mobile. The key for mobile monetization will be in Consumer Identity Arbitrage.. with Apple’s framework the clear leader.
Fourth Phase – Value Orchestration
In this phase we will see real world changes to how Commerce is conducted, including: store formats (footprint, layouts, inventories), advertising, online/omni channel, customized products (by region and individual), local sourcing of goods, new intermediaries, brokering of: trust, identity, anonymity,…..etc.
Retailers and Mobile Network operators will begin to translate their distribution and data advantages into new platforms. Big data will be used to project your behavior, and recommendations will be targeted to you. I’m not going to go into much detail here, as this is where most of my big bets are…..
This is not a good wrap up.. but I have work to do.
Next Blog: Targeting and Attribution
Word on the street is that Visa is set for a major mobile payments announcement in next 6-8 weeks. Separately, US MNOs are also rumored to be collaborating on Near Field Communications (NFC) payments with acquirers. Could it be that the log jam on NFC is about to be broken? Is Visa developing new rails to support mobile payments?
25 November 2009
Word on the street is that Visa is set for a major mobile payments announcement in next 6-8 weeks. Separately, US MNOs are also rumored to be collaborating on Near Field Communications (NFC) payments with acquirers. Could it be that the log jam on NFC is about to be broken? Is Visa developing new rails to support mobile payments? Let me say up front that this blog represents “connecting the dots” more than a definitive market projection.
The US market is ripe for a break from the 6 party political “fur ball” that is hampering delivery of mobile payment (Card Issuers, Acquirers, Network, Merchant, MNOs, Handset Mfg). For those outside the US, MNOs have substantial control over handset features and applications, and have been leveraging this “node control” to “influence” direction of payments. The central US MNO argument being: “it is our customer, our handset, our network we should get a cut of the transaction rev”. Unfortunately existing inter-bank mobile transfers/ payments are settled through existing payment networks that provide limited flexibility in accommodating a “new” MNO role and the network rules leave much room for improvment in: authorization, authentication and consumer “control”.
Outside the US, the situation is much different, as consumers have great flexibility in switching MNOs, have ownership of their handsets, and are largely on pre-paid plans. The MNO challenge for payments in this environment is largely regulatory. Many countries (EU, HK, Korea, Japan, SG) have open well defined rules for MNOs role in payments (example: ECB ELMI framework within the EU), while other countries are highly restrictive and are in the midst of developing their legal and regulatory framework. Even in the countries where MNOs participation is defined, they have largely benefited from the complimentary role that the service plays with pre-paid plans (not in interchange at POS).
Globally, MNOs are looking for a payment platform where they can benefit from interaction between consumer and merchant, with flexibility to deal with a heterogeneous regulatory environment. The competitive pressures on Visa/MC are much different then they were 5 years ago (when both were bank owned). The network fee structures and rules were written with banks and mature markets in mind. Emerging markets present a much different set of opportunities, as MNOs lead banks in brand and consumer penetration within every geography.
All of this leads to the case for a new “Mobile Payments Settlement” network, a network which will alienate many banks. I expect to see Visa roll out the initial stages of this network in the next 2 months with an emphasis on NFC. Quite possibly the best kept secret I have ever seen from a public company. I’m sure many Silicon Valley CEOs are crossing their fingers (with me) on this, as a “new wave” of innovation is certainly close at hand that will drive growth (and valuations).
For those not keeping up with the 50 or so product announcements a day on NFC, handset manufacturers committed to have NFC enabled phones to consumers in mid 2009 in the GSMA 2008 congress. NFC capabilities are numerous (Vodafone YouTube Overview), and may represent a true disruptive innovation surrounding payments. There have been many very recent product announcements that will enable existing phones to use NFC, and P2P Capability. All of which will blossom in a more “fertile” mobile settlement environment. See one example “future” Visa mobile service here: http://tomnoyes.wordpress.com/2009/09/24/googleoff/
Side note: This is not all bad news for Banks, as the structure will certainly provide for existing cards (debit/credit) and may deliver substantial revenue through cash replacement (small < $50) transactions. More details on structure of MNO in settlement 2 weeks….
Select Product/Alliances Below:
- Neustar http://www.americanbanker.com/issues/174_125/-383355-1.html
- http://www.nearfieldcommunicationsworld.com/2009/11/04/32152/zenius-adds nfc-to-standard-mobile-phones-with-bladox-waver/