Oct 30, 2006

A simple test for would be payment card killer applications

Here is a test for payment card innovation. Payment technology that passes this simple test could become a major killer application. Take any payment technology topic that you want (contactless, mobile payments, etc.) or any new credit or debit card innovation and ask this question:

“Is this new thing so attractive that merchants will feel they absolutely have to have it and will agree to upgrade their payment terminals at their own cost and will pay full interchange?”

Try the test out on a few payment technologies that didn't take off. Visa Cash. Mondex. Chipper/Chipknip. Post issuance applet download. Target coupon kiosks. Everyone knows how to look at these things from the consumer angle, but looking at them from the merchant's point of view can provide new insight into why many never took off.

Then try the test out on something much more topical. Like contactless.

Is contactless so attractive that merchants feel they absolutely have to have it? Do they agree to upgrade their payment terminals at their own cost, or are they balking at the cost of adding contactless readers and re-training cashiers? Do they agree to pay full interchange for low value contactless payments, or are they arguing that those transactions should be cheaper because margins are lower?

1 comment:

Anonymous said...

Aneace I fully support your thoughts on this. Any proposition that involves multiple stakeholders must attribute demonstrable value to each party. (The old Win-Win) Too much focus is on "fad-type" ideas that don't flow through financially or answer truly - "What are we solving for?" Mondex etc were all in this frame and did not answer this last question. Schemes like 'Bonus' and Welcome's own solutions did focus on the needs of all parties and then look at what model needs to be established to ensure full value could be achieved for all.
On returning to the Australian market, I find that a number of propositions look good, but don't necessarily deliver the value that warrants the investment!