I am currently building a new Payment Service Provider. Besides the usual functialities I want to create something new.
I have encountered many startups in the area of mobile payment. But is this really picking up? Is this the real problem we want to solve? Instead of having a card, to use the phone? I am not sure.
So I am wondering, what is the real pain for you as a supplier, a merchant, a customer? What is the next big challenge which you want to get solved?
Simple automated universal payments Credit cards are a disaster (false positives, cards expire, only suitable for small transactions). ACH or IBAN transfers don't work internationally, and can't be used for automated recurring payments.
What I want is a simple way to charge customers somewhere between 500 and 5000 a month, in an automated way, that just works, and doesn't cost an outrageous amount. I'm not holding my breath.
yea, it's called a bank draft .
Everyone thinks the smart phone is the cure all to everything that ails a
human being. Credit Cards for retail, consumerism is so much easier than
fumbling around for some new way to do something. Do you realize how
long we've been using credit cards ? 40+ years. We want change ? Not in
this arena.
There are very good alternatives to bank drafts and credit card payments, but they don't work internationally. The US is lagging behind the rest of the world when it comes to online payments, and has been for a long time.
A US startup can disrupt the industry by replicating payment systems that are enormously successful abroad. It's not easy, but it's doable.
As someone who wants to learn about payments and has little knowledge of they work abroad, could you share what some of those international methods are?
There are too many to list here. You can start by researching the payment systems listed here: https://www.adyen.com/home/payment-network/payment-methods.html
You want to pay someone 5.000 EUR over international borders every single and you don't want to pay for that?
Errr... do you work for free, or why do you expect other people to work for you for free? Banks have huge costs (legal/compliance/technical/clerks/etc), so yes, it's ok for them to charge 10-50 bucks for an international wire.
Mobile is not a why - it's a how. Those with success - Braintree, Stripe, Square - are focused on the why; payments have traditionally been complex for consumers and expensive for merchants to integrate into existing systems.
These new players are making it incredibly simple to use any kind of payment instrument (cards, Bitcoin/cryptocurrency) without the merchant or consumer having to know much about the complexity of payments.
The problem area they're not focusing on is reconciliation and consolidation of remittance information. PayPal does the latter well but within a defined ecosystem (ie, validated ebay shipper info).
How = reconditioning human behavior . Big task.
The problem isn't credit card payments - the problem is that credit card payments is almost entirely dominated by one company, and IS entirely dominated by 3.
This causes transaction costs to not decrease over time except with the most gigantic customers, and causes huge fees for small merchants to support credit card payments from their customers.
Case in point: Square was immensely popular when they first came out - because they offered new merchants a fantastic deal: 1.5% or $1500 - whichever was lower. Not only would the merchant not have to pay the monthly fee for hardware/service which was $30 or more - usually significantly more - but the merchant didn't have to pay the per transaction minimum fee nor the 2.xx% or more for each transaction.
Obviously this lost Square a ton of money even as it helped them gain customers, and Square now charges 2.75%.
This is why Bitcoin looks attractive: while it is a crap technology (it does NOTHING to protect the value owner), it does allow payments to bypass the credit card stranglehold.
So from my view - if you want to fix payments, figure out how to get around the big 3 credit card strangle to offer a secure, insurable, and minimal merchant cost credit payment scheme.
This ain't gonna be an app, though apps will be part of it.
And if you say Apple Pay: All Apple Pay is, is the use of Apple's huge scale to show a relatively better product, but it is still one beholden to the Big 3. After Apple starts taking its bite out of it, the incremental benefits will be nil or negative.
Who gives a fuck about payments. There isn't much to "fix." Maybe in the b2b space, but even there the space is crowded, with stripe, Braintree, recurly, and a dozen more.
In the consumer space? The "problems" NFC and Apple Pay are "solving" are non-issues. Pull out cc, swipe, done. Nobody thinks twice about it. Security is a non issue with Visa etc standing behind fraudulent use. The newest entrant, Clinkle, is an embarrassment. They couldn't even hack payment by phone (which nobody really gives a flying fuck about) and have a debit card.
Do something useful instead.
I don't agree at all. The present setup is a huge barrier for micropayments. The Big 3 dominance also provides a 2% to 5% top line drain off the bottom line at every stage in the payment ecosystem - which compares quite favorably with what franchises do to suck value out of franchisees.
The value extraction made sense 20 years ago, but in today's technology and execution environment - it is just pure profit.
The reason everyone wants to be in on payments is for the same reason: its a ginormous pie, and even a small % rake is a huge amount of money. Once in, it is also really hard to get turfed out - so is attractive to investors.