When it comes to payments, there are many companies, large and small, that are focused on making electronic payments convenient, secure and easy. Yet, most of these companies are focused only on one side of the “exchange of value” equation – the merchant. For the most part, the other side of the equation – the consumer – is being wholly ignored. As an industry, payments companies and start-ups believe that the merchant owns the transaction, resulting in the hyper focus to build a “better mousetrap” for the mobile or online payment.
While these new payment companies understand how to make payments work, they have ignored User Experience 101 – they have failed to put the consumer in the center of the equation. Yet, the leading consumer technology companies – Amazon, Apple, Facebook – who always focus on the consumer, are actually better suited than anyone to “disrupt” the consumer payment experience, ultimately giving them a serious opportunity to forever change the way we pay.
First, let’s take a look at Amazon. The company’s greatest strength is its ability to deliver what we want, the very day that we order it. The company’s ability to focus on the consumer’s need and deliver instant gratification will get customers to buy more products on Amazon. As the adoption of Amazon Prime has soared, the company now has the leverage and the customer base to build its own payment network. Through 1-Click ordering and mobile checkout, Amazon could essentially build their own payment network to connect with their customers on a completely new level. And, this network would be much more than a digital wallet. It would be a game changer as the vast majority of Amazon’s customers would essentially be “on account” with Amazon, instead of individual card-based transactions per order.
Similarly to Amazon, Apple has also built a huge database of payment information for hundreds of millions of customers through products like iTunes and the App Store. However, the real opportunity with Apple is ubiquitous hardware that makes consumer payments effortless. With the success of the iPhone 5S and its fingerprint sensor, it would be easy for Apple to bring this technology not just to iPhones, but future iPads, Macs, smart watches and other wearable technologies. The combination of high consumer engagement (the percentage of Apple customers that have made purchases online) and customer loyalty to Apple’s products, could make Apple the leading hardware company affecting payment processing by 2020.
Finally, there’s Facebook. With over a billion users, Facebook has the network effect opportunity to influence consumer behavior, but it lacks the inherent payment credentials of Apple or Amazon. With the power of social media, Facebook can own the person-to-person payment industry that currently requires a separate app (like Venmo) to exchange value between individuals and/or businesses. Facebook’s tenacious mission to make the world more open and connected, coupled with its native ability to share, gives them the unique ability to build their own e-commerce platform. Facebook also learned some valuable lessons in its first attempt at a virtual currency, “Facebook Credits,” which was focused on a consumer to merchant transaction. Today, Facebook inherently understands the sharing economy, and may well be better positioned than anyone to use their consumer intelligence to build the best mousetrap.
Payment companies and these three technology companies are all focused on the customer. The real difference is that payment companies believe the merchant is the customer while Amazon, Apple and Facebook know that the real customer is the end consumer.
AUTHOR: Matt Golis, Founder and Co-Chairman, YapStone
[This article also posted from Matt on LinkedIn]
About Matt Golis & YapStone:
Matt Golis was an independent consultant in Cleveland, working for Mountain View-based Netscape in the late 1990s. Matt believed that the way the world pays was going to massively change, with paper checks becoming a thing of the past. In early 1999, he moved to San Francisco and started RentPayment later that year. In 2001, RentPayment joined forces with YapStone, founded by Tom Villante, who is now Executive Chairman. YapStone powers payments to large markets such as property management firms, marketplaces (VRBO) and nonprofits (ParishPay). The company facilitated $8 billion in payments in 2013, generating almost $100 million in revenue, and now has 165 employees. It is also one of the fastest growing companies in the SF Bay Area.