[Anthony Pickup] Watching TV can sometimes spark interesting payments-related thoughts. The other night, it struck me how many live news broadcasts are now being performed via Internet services like Skype, at both local and national level, according to Skype. Compared to using a camera man and a dedicated transmission link, the quality is somewhat degraded but the cost is much, much lower.

The degradation is not only in terms of picture quality and sound but also in the unreliability of the connection, with lines dropping out either prior to or during the transmission. The thing is, none of that really matters. Sometimes there are other benefits too:

Monday night saw the first council meeting since the decision had been taken by local politicians in December. That meeting had been marred by disorder and disruption to proceedings by protesters who’d reached the back door of the building. Due to concerns over a repeat of the trouble, the decision was taken not to deploy a satellite truck, but instead to cover the meeting live for BBC Newsline using the Skype app on an iPad.

[From BBC Academy Blogs – Live Skype Broadcast on iPad hits Belfast Deadline]

The cost savings and the resulting access to more content are making these services becoming more and more the norm for news broadcasting, and as the above shows not just for user generated content from Joe Public wielding his mobile phone at accidents.

There’s a parallel with payments.

  • EMV is equivalent to the previous norm in broadcasting – each person (payee) is given a card that reliably and securely provides the service at a high cost using dedicated infrastructure. These costs are things like integration and scheme certification.
  • Bar codes, QR codes and mobile apps are like Internet broadcasting – each person provides their own infrastructure to make a payment. This may sometimes be less reliable but it’s reliable enough for consumers, both payers and payees to think it’s worth it for the added convenience.

Now, there are still people out there who say we don’t need these new systems because the dedicated card system works just fine. But to extend the metaphor from broadcast cameras to regular cameras, think about that famous business school case study about Kodak. Kodak invented digital photography but shelved the idea, partly because it looked like a threat to what they viewed as their core business and partly because the quality wasn’t good enough. But for consumers it turned out that the lower quality was plenty good enough and the benefits of flexibility, cheapness and convenience far outweighed any initial image quality issues, leading to entirely new social phenomena and businesses. And look what happened to Kodak.

In just the same way as digital photography and Skype is good enough for many consumers and TV watchers, so are lower quality payments. Yes, EMV is more secure, more reliable and so on but for the great majority of low value payments it’s as much an overkill as using an entire film crew and a satellite to send a greeting to Granny.

These are personal opinions and should not be misunderstood as representing the opinions of 
Consult Hyperion or any of its clients or suppliers

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