Last week I joined Sherri Haymond of MasterCard and Bharathi Ramavarjula of Facebook on a panel moderated by Paul Moreton, for a CapitalOne summit on Payments. When asked what was more important for the future of commerce – Sherri spoke of how security and trust is key, and I talked about how messaging has intersected with payments, (and in Wechat’s case) now intersecting with lending – with Bharathi eloquently summing it up as – “Facebook sees Commerce as a conversation”.
If Commerce is a conversation between a merchant and a consumer (however loosely defined those terms have now come to be), then it has become contorted and clustered around payments and point of sale. Till not too long ago, there also existed a high barrier for entry to become a merchant, to accept payments, to promote and sell online, and to find cheap capital for growth. All these things are different now – and unsurprisingly, little of this progress can be attributed to banks or other current payment stakeholders. For example:
I didn’t know I could be a merchant till Square showed me how easy it is to accept credit cards, and setup a small business.
I didn’t know that I could become a driver in my spare time – till Uber showed me how easy it is to become one.
I didn’t know that I could become a landlord till AirBnB showed me how easy it is to find people to rent it to.
I know I am oversimplifying. These three and others like them chose to use technology and smartphones to exponentially scale the size of existing two-sided markets as well as create new ones. When another billion people on the planet stand to be connected over the next five years – entirely via cheap smartphones – it is hard to view commerce as a zero sum opportunity. Being wired for commerce may come to mean something entirely different for those billion, and messaging apps and social networks will replace point of sale for discovery, acquisition and engagement.
This is why I believe changes in payments today are largely incremental and localized to the developed world. The platform driven efforts – such as tokenization – do go beyond any specific modality (card, mobile, connected things) to further the notion and benefit of trust entirely within the network. But that is as far as it goes. Issuers and networks may have little role to play in discovery, consumer loyalty and now more so than ever – identity.
Case in point: Through Relay, Stripe enables a retailer to push a button and start selling through new channels while taking comfort in that his pricing and inventory will remain real-time. Through Messenger and Shopping – Facebook will encapsulate product discovery, guide the intent to purchase, host the informed pre-purchase debate and even payment – flattening it and never letting it out of sight. It is no accident that each of the four horsemen of the Internet has heavily invested in voice assistants – (Apple/Siri, Google/Now, Facebook/M, Amazon/Echo, Microsoft/Cortana) – especially as we confront old habits in interaction design that are failing on mobile, to continue to shorten the distance between intent and action through things like 3D Touch, the Amazon Dash button, and intelligent agents. Everything that is interesting in commerce: product discovery, search, interface and interaction design are all being done – with the sole exception of Amazon – by an entity that is neither a retailer nor a bank.
Conversational commerce does not end with payments being swallowed up by messaging apps. It is a pre-requisite, but hardly not even a way point in that journey.
Other Interesting Industry bits from the Oct newsletter:
CapitalOne launches the first bank built Android HCE wallet in the US.
Of the 100 Billion searches Google sees each month, Mobile Searches now surpass those coming from PC.
Apple’s recent support of Bluetooth 4.2 promise speed and data capacity far beyond previous iterations while bringing better security and privacy – and may come to mean new hardware. Question is, what kind. Apple also refreshed its iOS Security Guide to reflect iOS 9.
The e-commerce sector in India is projected to cross $80 billion by 2020, according to a study by Snapdeal. In comparison US was $304B in 2014.
Bullish on AWS vs operating its own data centers, CapitalOne seeks to reduce its data center footprint from 8 to 3 by end of 2018.