Thursday, 12 September 2013

Does your payment system solve a problem?

Originally published on Billing Views.

It's an exciting time to be working in payments. The market is experiencing a plethora of new providers; some will succeed, some will be acquired, some will sink without trace. But what determines who will be successful?

New payment systems that succeed are ones that do it better than what went before or solve a real consumer problem. A problem imagined by the payments industry doesn't count!

Let's examine some examples from the last few years and see why they have been successful:

  • mPOS card payment schemes, like iZettle, solve the problem of card acceptance for small businesses and traders because they deliver a convenient and cost effective solution for both parties, using a process that consumers already trust. mPOS allows customers to pay with a card in scenarios where historically they had to have cash available or write a cheque (remember those?).

  • Contactless card payments, from the usual suspects, use a familiar payment device (the card) and speed up the transaction for both the consumer and the merchant. Contactless takes an existing transaction process and makes it simpler.

  • Mobile handset apps, like Barclays Pingit and NatWest, that support person to person payments deliver instant funds transfer to family and friends. No need to hand over that last tenner in your pocket or post a cheque.

  • Apple EasyPay lets consumers use their Apple handset to buy Apple products in an Apple Store. A nice converged, branded experience for Apple and its customers!

  • Prepaid vouchers, like Ukash, let consumers spend cash online, solving a problem for consumers who don't have or don't want to use cards online (I must declare an interest here). Prepaid vouchers are easy to buy from a huge number of outlets and bridge the gap between cash and ecommerce.

All these payment systems make life easier for the consumer and minimise payments as a barrier to purchase; something that the industry sometimes seems to overlook.

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