I was recently talking with a high-ranking executive in the payments industry. It doesn’t matter who or from what company; she’s a pro, and has been for a long time. She did repeatedly conflate virtual currency, digital currency, and alternative currency, which is annoying. The value buttressing your US dollars is just as virtual as that of Bitcoin! But what she really wanted to talk about is balancing awareness of upheaval in the industry with a certain amount of caution against hype.
Her company, like almost every other, is spending gobs of money experimenting with mobile technologies. Yet aside from a few notable exceptions, mobile payments initiatives haven’t really taken off. There may be some large(ish) numbers associated with a few projects, and certainly the numbers about mobile uptake generally make for great skywriting, but then what? When was the last time you paid for something with your phone? Me? I can’t recall. I know. I could. Yet as I’ve stated previously, the value proposition is still either too obscured or too puny for me to bother revamping what are remarkably engrained behaviors.
The executive likened this hype-reality gap to the history of paper checks. (That is, the history of paper checks in the US. Forgive me, readers elsewhere). That story goes something like this: about 20 years ago, she and her colleagues were hearing from everyone and their cousin that paper checks were going to die. Soon. So everyone in the industry braced themselves and then… waited. And waited some more. But paper checks didn’t really die. Those damn entrenched behaviors again.
It wasn’t really until the credit card giants rolled out debit cards, that consumers could deploy much like credit cards, did the paper check take the kind of hit that tech pundits of the early 1990s had predicted. In the span of about five minutes, the payments executive had served up two rather substantive illustrations of how the monetary revolution may not be so revolutionary at all. The old way of doing things, the existing infrastructure, the familiar form factors, conventional wisdom about what is and isn’t currency—maybe’s it’s not changing that much. Is society, and the tech sector especially, so drunk on hype about monetary upheaval that we can’t (or refuse), to pause and remind ourselves that most technological, social, and behavioral change is incremental?
I don’t think so. The revolution is real for a handful of reasons that I can think of, and probably many more. Paramount among them are acceleration, appetite, and amplification. People are more aware of the friction of money nowadays, whether it be the cost to toggle between currencies or the fee to process credit card transactions. Consumers are on the lookout for ways to reduce that friction. Our appetite for innovation in the areas of payments, currency, and banking is much greater than it was 20-plus years ago. And while many parts of the world enjoyed periods of economic growth during that period, citizens today have the financial crisis fresh in their memories, which only makes them more keen to see and support new ways of doing business.
When checks were supposed to die out but didn’t, the internet wasn’t an everyday thing. People didn’t carry computers in their pockets, let alone ones connected to the internet. Nowadays, when consumers find a tool that delivers a compelling value proposition, they amplify the crap out of it. Square and M-Pesa are easy examples, but there are many others, such as Dwolla, LevelUp, Venmo, and iZettle.
My point here isn’t the laundry list of cool startups. After all, a skeptic could merely fire back about the same hype-reality gap. No, the real difference now is that when something transformative arrives, it spreads. Outrageously fast. Back when people were forecasting the death of checks, social media would have been a meaningless phrase. By comparison, consider the recent trajectory of Bitcoin. Whatever your opinion of this controversial currency, recall just how fast it grew some mysterious guy’s academic paper to economic phenomenon.
About two days after speaking with that executive, a friend in the payments space sent me a note about something called See2Pay, which enables users to pay for stuff using Google Glass. No apps necessary; the money just zooms from your Dwolla account to the recipient. Equally interesting, I think, is the fact that the payments processing company that announced this pilot, The Members Group, put the code out there for free. This isn’t something they want to make money from, at least not directly. Rather, See2Pay is just one of those trial balloons among hundreds, if not thousands, of other similar balloons. Will it catalyze regime change in the worlds of payments and currencies? I doubt it. But the collective wave of experimentation will. Just watch.