[Dave Birch] Forum friend Bob Hettinga sent me a copy of a paper on Computer-Mediated Transactions (18th January 2010) by Hal Varian of Google and I enjoyed reading it on a recent train ride. One of the points that Hal (who you may remember from the early days of cyberspace with the book “Information Rules” written by Hal and Carl Shapiro) makes is that computer-mediated transactions generate information that manual transactions do not and he suggests that using this information might be one of the key areas of competition in the future. I think this is spot on (which is why I am drawing your attention to it, obviously) and I have mentioned before about the opportunity to use payment-related information to generate additional value for customers and merchants alike.

This was echoed a couple of days later at an Evershed’s “Thought Leadership Dinner” that I was invited to. Shashi Verma from Transport for London gave a very interesting after-dinner talk in which he mentioned that the use of information had not been part of the business case for migrating from cardboard tickets to Oyster cards, yet analysis of Oyster information is now a crucial process that saves literally hundreds of millions of pounds every year by directing expenditure more efficiently. Very small changes made to train timetables, for example, using the anonymised journey data from Oyster, can reduce average journey times or overcrowding in ways that simply could not have been predicted.

A day after this, I was in conversation about removing cash from festival sites (music festivals are very popular in the UK and a very big business) but this time the use of the data generated was very much part of the business case: once people are buying the vegetarian curry, real ale and organic cotton T-shirts using contactless wristband or mobile phones then the merchants have access to real-time sales data that will make a big difference to their bottom line.

Now, bear in mind that when I last wanted to query a credit card transaction I logged into my provider’s web site and basically found myself looking at a paper statement, but on the screen. I automatically doubled-clicked on the transaction I was interested in and, of course, nothing happened. So I called them up to ask for more information about the transaction, and they couldn’t give me any, saying that I would have to call the hotel in question. The problem was that the charge was for a hotel in France, and I hadn’t been in France. So ended up having to call and spend considerable time on the phone to discover that the charge was through a French company but was for a hotel stay in Spain. Everyone’s time (and money) was wasted because I couldn’t get to information that the participants had but couldn’t even access themselves. But I digress.

One of the key advantages that electronic payments offer merchants is information, which is why I suspect that providing value-added information services to merchants around commodity payments services may be a good model for the future. In this context, we’re normally talking about loyalty, co-purchasing, portfolio connections and such like. But there are more radical perspective. For example: I saw a discussion about Facebook’s potentially game-changing payment platform which once again stressed value-added information as the core of a business model.

Facebook already knows a lot about you, but being able to know what kind of purchases you make could potentially help Facebook serve you ads in a more efficient manner.

[From Is Facebook secretly planning an internet-wide payment platform? | Royal Pingdom]

Facebook know more about their members than perhaps even Tesco know about theirs, because Facebook know something more important about you than what you’ve been buying in the past. Come to that Google know what you want to buy in the future, so if we put them all together they’ll be omniscient! The point here is that control over the information will be part of the value network that emerges around retail payments and I think it’s clear that leaders in the field are already moving in this direction.

While the new unit will handle a variety of services that help merchants process and analyze customer payments, the greatest potential lies in moving those payments onto mobile devices, said Bell, who had been chief strategy officer and president of First Data’s financial services business.

[From BofA taps into mobile payment market with joint venture | Delawareonline.com | The News Journal]

Something else that I’ve been trying to factor into thinking about more innovative services is the role of mobile. One might suspect that mobile payment data, particularly if it includes location, might be even more valuable than general e-payment data.

IF YOUR mobile phone could talk, it could reveal a great deal… Now imagine being able to aggregate this sort of information from large numbers of phones. It would be possible to determine and analyse how people move around cities, how social groups interact, how quickly traffic is moving and even how diseases might spread. The world’s 4 billion mobile phones could be turned into sensors on a global data-collection network.

[From Mobile phones: Sensors and sensitivity | The Economist]

Money sensors. It’s a wonderful idea. On the evening news, instead of half-informed guesses about the economy, we could watch the actual money weather forecast, showing us how the money has been moving all day. We’d know whether retail sales were up or down in real time. A couple of years ago when I was writing something about “hypermoney” I thought this might be one of the cool spin-offs, but now I’m starting to think that it might be part of the business model.

These opinions are my own (I think) and presented solely in my capacity as an interested member of the general public [posted with ecto]

1 comment

  1. Geo-location,and ‘soft’ authentication of mobile payments was in my mind ten years ago when I worked for a time with a pretty radical satellite broadcaster. This was in the aftermath of the Dot Com I set up to achieve generic transaction registration (OilClear, MetalClear etc), and which was such a good idea that everyone just nicked it, which made me question the business model of a utility like transaction registration:-(
    At the end of the article is the first appearance of the thought that maybe the enabling factor for the next generation of networked markets will be a new – partnership based – approach to legal frameworks for market utilities. It’s recently been picked up by people like Michel Bauwens of the P2P Foundation and led onwards to the Money 3.0 thinking about payments as a subset of global markets which I outlined.

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