Payments Innovation: a discussion of the future

After being on vacation for a week…I’m behind. Particularly when it comes to reading the feeds/blogs/sites I follow there were several thousands items awaiting perusal (an html-ized version of the OPML file can be found in the blogroll link above*). As you would imagine, there is a wealth of content worth discussing…but, instead, I noticed a theme.

A single word. That was repeated with amazing frequency.

So, I did a bit of digging. A search in my Reader indicated “thousands” of total results, 52.9M results in Bing, 102M results in Google…add the modifier “Payments” and the results “drop” to 6.51M and 6.27M. Yes, the word “drop” is in scare quotes for a reason.

One recurring word, a theme. What is that word?

Let’s begin with the definition. According to the Encarta definition:

1. orginiation: the act or process of inventing or introducing something new

2. new idea or method: a new invention or way of doing something

Innovation. A word oft-used and, perhaps, oft-misunderstood.

What comes to mind when you consider the concept of innovation? Sweeping global change? Or, in the technology space, becoming the next Google?

Innovation depends completely upon perspective.

I enjoy the world of payments. Its intricacies and nuances. What is innovation in payments?

Again, it depends on perspective.

In the past week I’ve read articles on security innovation, on tender innovation, on innovation in mobile payments, on innovation in payments integrations, on virtual currency as innovation…

And, from the perspective of those of us who reside in a similar place in the industry, these represent interesting opportunities for innovation. Some of these opportunities are more tangible than others…some are more immediate than others. So perhaps I should restate my question from above:

Where is the opportunity for immediate innovation in payments?

And this is where the issue of perspective becomes important. The concept of innovation is completely dependent on the “consumer” of the technology. That which is innovative to the merchant is not, necessarily, innovative to the actual consumer. Although, it is worth noting, that there is a tight interrelation as the payment market is multi-sided.

I will give you tangible examples of innovation.

Allowing a small business sending paper invoices and receiving payment by check to accepting payments against their invoices electronically. To that business, this is something new, a new way of conducting their business, of ensuring they are in the best cash position possible.

Or, for the retailer, ensuring the software that is used to manage their business is also the method by which they accept their payments. A dry-cleaner, a golf course, a marina, a restaurant…payment acceptance directly in their daily workflow (when not previously present, or in a way that wasn’t formerly possible, or with more payment methods) is innovation.

As a writer, as a thinker, as an evangelist, as an industry participant there is a tendency to consider innovation only in the context of sweeping changes at a high-level. And, while this is extraordinarily important and worth of lengthy discussion, there is revenue in innovation upon existing capabilities.

Innovation upon rather than innovation from the ground up.

Innovation doesn’t require being the next Google. There is a tangible innovation opportunity in meeting the needs of your current customers…and in capturing new market opportunity by offering value-added workflows and solutions to customers.

For them…innovation. For you…revenue.

The key to success, then, is leveraging the appropriate technology and forming the right partnerships so that your idea for innovation (i.e. meeting needs) isn’t mired in technology woes. Or, as I am known to say, “making decisions for business reasons and not because of technology limitations.”

A somewhat long, somewhat rambling missive. But it is what has been ticking about in my head over the past few weeks. If you desire to discuss in greater detail…you know how to contact me. The comment form is below.

* If you are interested, I can send you the actual OPML file for importing into a reader of your choice.

August 5, 2009

Posted in Trends.