Innovation In Payments: a reality, not a theory

This post is a continuation in my “So…what does IP Commerce do?” series.  Before diving into explanation, I feel it important to discuss a term that is oft misused. 


Innovation can be defined as:

  • A creation (new device or process) resulting from study and experimentation

Or, perhaps, more simply as:

  • The act of introducing something new.

In practice, however, the word is bandied about for nearly every idea that springs upon the market.  The addition of a widget to a web 2.0 site, regardless of how similar in functionality to a previous widget on another property, is heralded as INNOVATION.  (In this case the capitalization denotes the propensity to proclaim such trivialities from the rooftops).

With that said, when I use the word innovation.  Don’t cringe.  Innovation is not always marketing speak…and the inherent relationship between the overuse of innovation in the market and the malaise that many of us feel when hearing the term is indicative how important true innovation really is.

Let’s begin with a quote by David Evans:

Innovation in this business is moving to "the cloud". …Market Platform Dynamics are working closely with the leader in this area, a Denver based company called IP Commerce. It’s developed a software platform that sort of sits on top of the payments system, you can think of it as Windows for the payments system. It works with point of sale devices like Verifone and processing platforms like those operated by First Data Corporation, in much the same way that Windows works with printers and other peripherals.
Other companies can then build applications on top of the IP Commerce Platform; that moves innovation out to the edge of the system away from the old messy plumbing out to the edge of the system. Paysimple, another company we’re working with, has a web based application that allows SMBs to quickly accept multiple methods of electronic payments and to integrate all of their transactions directly into their accounting software.

Presentation given at The Future of Consumer Payments: An Initiative on Business and Public Policy Discussion by The Brookings Institute. September 2008

If you are not familiar with David’s work, I highly encourage you to acquire The Catalyst Code and give it a thorough read.  That work, above all else, explains the nature and complexity of multi-sided markets in an interesting and thought-provoking manner. 

In a blog entry on September 18th, David mentions his speaking engagement at the Brookings Institute Conference.  You can obtain a full transcript of event at the site referenced in the quote above.  If you have the time, and desire, it is worth the effort to consume it.

So…What Does IP Commerce Do?

As mentioned in an earlier post, the answer varies based upon who you are.  For the purpose of this post, however, I will give a more holistic view of what IP Commerce has done.*  A simple analogy, that David uses in the quote, is “Windows for the payments system.”  In essence, an operating system for payments.

To stem off confusion, let me be clear.  IP Commerce has not developed an OS as you know it.  Rather, think of the utility an OS actually provides.  It (and the most succinct description I found was on Wikipedia) “is responsible for the management and coordination of activities and the sharing of resources of the computer.  <snip> one of the purposes of an operating system is to handle the details of operation…This relieves application programs from having to manage these details and makes it easier to write applications.” 

Put simply, payments are hard.  Integrating payment services and creating a comprehensive, valuable workflow can be overwhelming.  But it doesn’t have to be.  Innovation in payments is not only desired by all industry participants…it is necessary.  The beauty of the IP Commerce Platform is that innovation in payments is now quite simple.  And each point of innovation adds value to all other network participants (hence the multi-sided platform).

I will provide several examples over the next few days of just such innovation.  If you desire further detail on the platform and its components, the best place to start is by reviewing the Commerce Platform Infrastructure portion of the IP Commerce corporate site.

What’s your perspective? Agree? Disagree? Anything to add? Critiques? The comment form is below. . .

*NOTE:  It is very cool to say “has done” instead of “can do” or “may do” or “is doing”**
**That is one of those milestones in the life of a company I referenced earlier

October 16, 2008

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