The Rise of the Hybrid Startup
In this article, Glenn Kelman, the CEO of Redfin, argues that 2011 will be the year of the Hybrid Startup. Unlike the traditional clicks-and-mortar businesses, that simply add an online presence to its physical-world store, the hybrid business leverages the best of both the online and offline worlds to build entirely new business models.
Hybrid businesses will enhance customers’ shopping experiences by integrating virtual elements, initially through mobile phones. Examples are location-based offers, recommendations, augmented reality experiences and so forth.
As hybrid business are already adding an online layer to the physical-world shopping experience, one would expect that they would take the payment online as well.
Point of Sale Revolution: Transformation of Payment Acceptance
Point of Sale (POS) acceptance, a once sleepy, commoditised, add-on to the merchant acquiring business, is in the midst of a transformation, with several game-changing players entering the market.
There are three key drivers behind the innovation:
1. Internet ubiquity at the point of transaction: virtually all merchants have transitioned from dial-up to always-on connections, facilitating an explosion of new capabilities that integrate traditional terminal functions with new loyalty, marketing, and information services
2. Wireless proliferation: merchants are increasingly equipping the employees with sophisticated, mobile POS tools, such as the iPhone or iPad, which enables the merchant to fundamentally change the shopping experience
3. Emergence of more sophisticated loyalty solutions: merchants constantly seek to develop more attractive loyalty and marketing programmes. POS innovation is enabling them to integrate loyalty more seamlessly in the POS experience and to tailor offers more effectively by leverage the data they captured.
These drivers are significantly altering the POS space and making it one of the more innovative parts of the payments value chain.
Mobile Apps Wars’ Impact on the Payment Biz
In this article, David Evans points out that it is only just over two years since Steve Jobs open up the iPhone for external apps (October 2008). There are now more than 100,000 apps for the iPhone and, for many customers, this has become an equally important reason to buy the phone as the phone itself. Since then, Google Android has developed a successful app market of its own, while Blackberry and others are also having a go.
A number of these apps are payment related. Transactions and PlanetAuthorize have both developed apps that enable merchants to accept payments anywhere, while Yodlee and Monitise have developed online banking apps. However, Evans argues that these are all relatively obvious innovations.
The key, he argues, “is that with all these developers, all around the world, thinking about apps, it is probable that someone — perhaps many someone's — will come up with a killer app that will revolutionize payments”. “Those who believe in a linear path from mobile phone, to mobile phone plus NFC, to mobile phone as payment device at POS are likely to get a rude awakening”.
The payment industry could experience the type of groundbreaking innovation that the computer industry experienced after the launch of the PC or the mobile phone industry experienced after Apple opened up for external apps.
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