presentation delivered at #CFOPayments - Payments Innovation Summit in Chicago, IL on June 11-12. by Eli Katz, of TheEmob.org - discusses various entrants in payments in particular online and mobile, who is disrupting and who is being disrupted.

1. The Payments Landscape
A Merchant’s Perspective
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Payments Innovation Summit
Chicago, June 11-12, 2014

2. About Me
๏ CEO & Founder of The
Emob, the “Family” of online
retailers – a trade association
of mid-market online retailers.
๏ Started my ecommerce
adventure in 1995 – (iBeauty /
FragranceCounter) selling perfume online.
๏ Subsequently started, acquired or managed other
online retail businesses.
๏ HomeClick, InsideStore and Ashford

3. Learning the hard way
๏ Card Not Present (CNP) transactions
๏ Explaining ecommerce in 1995
๏ “I am shocked, shocked, that there is fraud on the
Internet” and other great discoveries
๏ Getting terminated – TMF (terminated
merchant file) it’s a lot like “The Trial” by
Kafka
๏ Building a security infrastructure

4. The Landscape Today
๏ Traditional players – Visa, MC, Amex and the processing
companies that manage most of the merchant transaction flow
๏ Hybrids – PayPal, Square, Stripe
๏ Masters of the Universe – Google, Apple, Facebook. They won’t
rest until they are integrated to every part of your life
๏ Revolutionaries – Bitcoin, Coin
๏ Inadvertent & accidental contenders – Starbucks model
๏ 10 million customers use Starbucks’ mobile payment and loyalty
app. 5+ million transactions weekly in US. Billions of dollars of
funds being deposited onto Starbucks cards (or app) annually.
Starbucks reporting $1 Billion in margin just off mobile
payments last year
๏ Wannabes – tens of startups that are trying to insert
themselves into the “path to purchase” or checkout process

5. Bitcoin
๏ Will we see more merchant acceptance or
just a gimmick?
๏ Pros
๏ Low transaction cost
๏ Universal currency
๏ No credit requirements
๏ Privacy / Confidentiality
๏ Cons
๏ Non-recoverable
๏ Pricing/valuation fluctuations
๏ Future regulations
๏ Stability and source of origins

6. Challenge of mobile payments
1. Using mobile devices as electronic wallet (tap to
pay)
๏ Very low adoption so far
๏ Benefit of using mobile phone to pay vs. swiping a
credit card are minimal (for consumer & merchant)
2. Providing an easy checkout when shopping
online – entering all your info is not fun
๏ A big problem, with many answers but few well defined
solutions
๏ PayPal has huge head start. Apple and Google well
positioned to dominate (but physical goods vs. digital
goods is an issue)

7. Why is this so hard?
๏ Building a consumer brand at a large scale is brutally hard
and expensive.
๏ Companies don’t seem to factor that in their planning
๏ At a minimum innovating in payments is a two sided
marketplace that needs merchants and consumers to
engage
๏ Many offerings are answers looking for questions – the solutions
aren’t solving an existential problem or providing a life-altering
experience for the end-user
๏ Current payment systems/processes are very ingrained and
changing user behavior requires a lot of time, consistency
and proper motivation
๏ Many efforts don’t really give either constituents enough
motivation to participate

8. What consumers want
๏ Do they really, really want a cashless
society?
๏ How important is mobile payments?
๏ Do they really know what they want? Or
will they come if you build it?
๏ i.e. the Apple iPod and iTunes store

9. What merchants want
๏ Implementing a new payment option/methodology/system,
etc. requires a fair amount of investment on the part of an
online retailer.
๏ Anything that adds another step, process, element or screen
in between the “Add to Cart” and the “Submit Order” buttons
endangers the merchants conversion rate, i.e. their business.
๏ Offering too many options to the consumers actually has an
adverse affect on conversion rates
๏ The merchant has little incentive to implement your
‘tokenization’ or other innovation if he/she isn’t paying a
drastically lower fee or other incentive
๏ The trail of failed payment innovators has left many
merchants reluctant to try new offerings if their backers
aren’t committed to supporting it long term

10. Lets talk about security
๏ It’s a Chimera (mythical Greek fire-
breathing monster, part lion, goat
and serpent).
๏ PEBKAC – Problem Exists Between
Keyboard And Chair.
๏ For every major security breach (Target, Ebay)
reported in the media, there are hundreds or
thousands that go unreported, many times
because the business don’t even know that
have been breached!
๏ We would be well served to acknowledge the truth

11. In Conclusion
๏ The incumbents are facing a serious
“innovators dilemma” and have too many
ingrained attitudes that might make them
stumble
๏ The winners will be the companies that
may seem least likely – the object that
looks really small in the side view mirror
until its too late

12. Contact Info:
Email: eli@theemob.org
Phone: 877.ELI.KATZ (877.354.5289) x101
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Twitter: @eli_katz
Website: http://theemob.org