Bank Stories

Everyone has a story about a bank and their (sometime) silly rules and the hoops that they make you jump through. Here's David Birch's and on the subject of rants about banks, here's Paul Kedrosky quoting Martin Wolff.

m-commerce proposition was more pie in the sky than fridge on the train

Interesting take on the reality of the mobile payments arena versus the marketing hyperbole: m-commerce proposition was more pie in the sky than fridge on the train.

Innovate

Now this is good. Boils down to this: Deloitte says that mobile payment etc can't really piggy back on existing bank based payment systems because the margins in the payment game are too slim. And where would the extra payment come from for the payment provider? The banks? The customer? I agree with Dave that participants in an industry are unlikely to originate or back the innovators that bring the industry to its knees, because the "out of the box" thinking that the innovators express cannot originate from within the industry.

Wallet not a wallet unless i t included person to person payments

David Birch says he has a problem with describing payments with a mobile as "Mobile wallet" because wallets should include person to person transactions, otherwise its not really a wallet is it? Its just a payment system. Sounds right to me...

Dave Birch on PayPal

Dave Birch from Digital Money Forums

PayPal has pottering along nicely. The steady growth of their off-eBay business means that they are sitting side-by-side with traditional online acceptance brands (Visa, MC, Amex, Discover, et. al.). Competitively, payments companies and their issuers have looked at this as an online phenomenon. Rightly so, as it has been. Online transaction volume is just north of 10 per cent. One of PayPal's new products is their virtual debit card, a response to customer requests that PayPal be accepted at more online merchants. If you want to buy something at a merchant that accepts cards but not PayPal, PayPal will generate a one-off MasterCard number for you. Now in testing, the virtual card is expected to be rolled out in the Unites States by Christmas. They are also steadily putting together other services that may pose a genuine threat to incumbents, according to Aite Group payments analyst Adil Moussa: deferred-payments options and mobile payments. But why? Surely a bank can work out how to offer a good mobile payments service can't it (or, more likely, wait until someone else has worked out how to do it and then buy it, rather as RBS did with WorldPay and Bibit). Why is it considered a threat to banks? Similarly, the deferred-payment option is already provided by banks in some countries, and if customers show that they want deferred-payment options that it doesn't seem wholly implausible that MBNA or HSBC could provide them. In this particular case it's not actually PayPal that provides the underlying instrument, it's GE Money that is delivering the credit behind the deferred payment and since (as a general rule) providing credit is the most profitable part of the payment process for banks, that is why banks might be eyeing PayPal more nervously than before.

I wonder if the next cycle of nervousness might involve other more novel underlying instruments? We've noted before the kerfuffle about virtual currencies in China, for example. These are now far from niche. The "QQ currency" is substantial: while it was created for use on the web, it is being used in other kinds of commerce (which, since I think that stimulating trade is one of the good things that a payment system should do, is probably a good thing overall). The Chinese government had a bit of a crackdown on QQ coins with the predictable (to economists) result: the price of the money went up (in fact it went up by 70% against the Yuan) which clearly indicates that there is a significant unfulfilled consumer demand for the new currency.

Now, QQ may not mean much to consumers in the U.K., but just suppose that eBay or Tesco or Google were to create their own currency for special purposes and then it were to be adopted more widely? I think this might be rather fun. And rather likely, since the marginal cost of the "n+1"th currency in the electronic world is very low. Just because this was tried before and didn't work -- Beenz, Flooz and others -- doesn't mean that what Javelin call the finite-to-universal currency phenomenon couldn't happen in the future especially given the brand and presence of the big web players. Why would they do this? Well, a few years ago, I contributed to an excellent book by Forum friend David Boyle: The Moneychangers. One of the other chapters is by noted lateral thinker Edward de Bono. It's called "The IBM Dollar" and is based on a 1994 pamphlet he wrote for the Centre for the Study of Financial Innovation (CSFI) -- in fact it was the first CFSI pamphlet I read -- and sets out some reasons as to why a company might want to issue its own money. Well worth a read: in fact, I'm going to read it again myself.

An idea who's time has come

Dave Birch does a great job illustrating how the M-Pesa meme (Person to Person money tranfer via cell phone) is a) growing and b) wide spread. This is an exciting time with the base technology becoming widely available and affordable, and the concepts resonating across cultures and nations. The most interesting part of it all for me is how something cross-cultural (need for p2p payments on mobiles) is constrained by operational difficulties that firms operating in this area face by virtue of the country (ie culture) in which they operate

Cash on the net

There are a few people on the net whose interests marry up with mine on an almost one to one basis. One such person is Dave Birch. He mixes an interest of Virtual Worlds (MMORPGs like WoW) and their economies with an interest in alternate payment systems for e-commerce solutions and payments systems in general. This matches my background, and so its always interesting to see what he pulls out of his hat. In his latest entry he describes the move of ClickAndBuy to address issues of cash on the net.

The Poor Need Bank Accounts

The ever-insightful Dave Birch discusses a recent "action plan" to get bank accounts for the billion poorest people.

My initial cynical response was "Surely they need money to put into the accounts before they need the accounts", but apparently the mechanisms for secure monetary exchange promotes trade and generates wealth, so shame on my ignorance.

25% Discount

Further to my recent post admiring Dave Birch, you can now get his book on Digital Identity with 25% off