I’m here in Seattle today at NACHA’s Payments 2010 conference along with Russ and Erin. I’m mulling over a couple things I heard in sessions today, trying to draw the line between them.
Early this morning, I sat in on a briefing by eCom Advisors about a study they did in partnership with FIS and PayPal, focused on consumer interest in P2P payments. In the study, participants who had been prescreened asonline banking users were asked whether they were interested in using a bank-driven P2P model. The answer? 48%. Really, only 48% of active online banking consumers could even fathom using their bank to send money to someone else? I’m shocked that this number is so low — is it that consumers can’t conceive of doing a non-cash P2P payment, or that they just wouldn’t rely on their bank for this function… after all, according to the same survey, the PayPal brand had 93% brand awareness.
Cut to the keynote event — Jack Dorsey and Jim McKelvey of Square talking about payments. Square is dedicated to creating a simple payment service with the first version enabled on iPads equipped with a small card reader that plugs into the 3.5mm headphone jack on the phone. Simple customer and merchant sign up and simple pricing… 2.75% plus 15 cents.
At least, that’s how everyone currently thinks about Square. But about halfway through today’s session, Dorsey said “we’re really focused on the receipts” and that’s when it became crystal clear to me: Square is about making the “payments experience” better for consumers and merchants and the actual payment stuff is just a way to get paid for doing that.
For merchants, the “payments experience” they are talking about is creating simple to operate POS, inventory and presumably marketing tools for merchants that are uncomplicated and enhance acceptance of a payment. For consumers, the “payments experience” they are talking about is getting away from being handed a really useless paper receipt and, instead, creating an electronic record of your purchase that you can use to actually do stuff — like analyze your payments, keep track of your balances and, I’d guess, share information as you’d like. With a little imagination, the possibilities are endless. Think Blippy, among other things.
Back to that study I talked about earlier. In the study, banks were advised that (along with other things) record keeping and reporting tools would encourage adoption of P2P payments — 73% of those surveyed this as important — so clearly there’s a signal there that “receipts matter” to consumers when it comes to the next generation of payments. So al of this makes we wonder: who would you bet is going to be the “winners” in offering P2P payments: the banks with their usual “safety and security” approach to the market or Square (and others to come), that have the focus on user experience and utility buried in their DNA? Think about your average Facebook/Twitter Gen Y’er … do they care about “security and privacy” or “fun, convenient and easy to use”?
