Payments Landscape: A Merchants Perspective - Presentation at Payments Innovation Summit
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Payments Landscape: A Merchants Perspective - Presentation at Payments Innovation Summit

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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, ...

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.

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    Payments Landscape: A Merchants Perspective - Presentation at Payments Innovation Summit Payments Landscape: A Merchants Perspective - Presentation at Payments Innovation Summit Presentation Transcript

    • The Payments Landscape A Merchant’s Perspective ! Payments Innovation Summit Chicago, June 11-12, 2014
    • 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
    • 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
    • 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
    • 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
    • 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)
    • 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
    • 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
    • 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
    • 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
    • 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
    • Contact Info: Email: eli@theemob.org Phone: 877.ELI.KATZ (877.354.5289) x101 ! Twitter: @eli_katz Website: http://theemob.org