I was reading an article a few days ago on the plateau of ebook reader sales and the slow retreat back to paper (here), and of course this lead my thoughts back to our own industry – particularly the nonsensical cheque lobbyists. However, does this harking back to a bygone era of paper banking reveal a bad case of Technodazzle in our industry?
Technodazzle is a word first used a few years ago to describe the act of being blinded by the technology and forgetting all the realities that need to happen for it to become part of everyday life. And as regular visitors may recall, I’ve lived through a few cycles of hype during my time in payments – and sometimes when the technodazzle subsides there is something behind it, perhaps not the jewel that the dazzle suggested, but certainly something worth possessing.
Today there’s three (at least) big, bright technodazzles in Europe driving payments spend and fintech focus – mobile nPay solutions; immediate payments; xs2a. And to be honest none of them are the empty boxes that ePurse; SET and facebook credits proposed with, but they’re not 500 carat Cullinan’s either, at least not this time round.
Take mobile nPay solutions for example, and by this I mean all those card-based mobile solutions that end in the word ‘pay’ (applepay; samsungpay; mipay; androidpay; alipay…) which in essence use the EMV tokenisation specifications to represent your card more securely on a mobile device, and then use the EMV contactless specifications to perform a card transaction. Some retailers are panicked that these solutions will ‘suck’ insights out of their retail systems and that Apple will have new understanding of consumers enabling them to sell stuff to their customers, or sell insights to the highest bidder. To be honest, they don’t get anything more out of the Apple Pay transactions than an acquiring bank today – what they do get is all of the other info that passes through your i(insert device here) and adding on to the the type of retailer you just bought from a good guess at what you’ve just bought. The problem is, acquirers have been able to do this for a long time, just didn’t in most cases – which is why upstart acquirers like Square have been able to build a business around retail insights while playing in the banking space. However, Apple Pay requires you to have a 450-1000 EUR device, which many people can’t/won’t have. And so their ability to grow beyond their own technology platform is limited (even if that’s a big limit). Stripped down, Apple Pay is just another contactless card – made special by its brand – and in most European countries so constrained by the business model it is unlikely to launch or gain significant traction. Don’t just take my word for it.
“Probably the biggest reason platforms fail is because, no matter what they do, they won’t be able to get a critical mass of participants. Their platform just isn’t creating enough value — solving a big enough market friction — to get any momentum.”
- Karen Webster & David Evans “Why most payment platforms fail“
Of course, if anyone is going to get ‘pay’ working it’s Apple, right? You would probably say the same about Google, but to date they’ve had three goes at it and still haven’t found the diamond, only cubic zirconia so far. While regulatory change is forcing evolution in the market, it’s still a tough space to be – and making the payments pay is no easy task so you’ve either got to write-off the costs, which could be billions, or find some other way to finance them – and that’s where the Technodazzle appears, because after all it’s Apple so they must have something else up their sleeve, mustn’t they?