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For ISOs, the question is how to find
This allowed it to work with third parties and achieve the right new business model for your
increasing returns as a result of network effects. This is
new territory, not just for investors, but also for consumers. clients. Doing this will not involve you
using blockchain or cryptocurrencies. The
The most important thing to realize is that fintech will
not accomplish anything revolutionary without creating a place to start is to understand how your
new business model. This is not about adopting artificial merchants manage their businesses now
intelligence, using blockchain or getting someone to use and what their pain points are.
your API. The marketplaces we are familiar with will
change when someone implements a new business model
to change how an industry operates. First, the promising one, courtesy of Will Hernandez,
writing in the MobilePaymentsToday blog. He cited a recent
I am talking here about focusing on one industry, not survey by eMarketer showing low adoption rates for
creating a one-size-fits-all platform to compete with mobile payments. He suggested transit as a use case that
Amazon. This requires intense focus, with a healthy might be more successful. The mobile wallet schemes,
dose of creativity and ingenuity. As a trusted payments issuers and networks could promote NFC-enabled mobile
provider, you also have to provide security (tokenization, payments for bus, train and subway.
EMV and encryption), a seamless and consistent user
experience across all channels (in-store, mobile, online, "If NFC-enabled mobile wallets are safer than a card
MO/TO), and consistent branding across all channels. payment, thanks to fingerprint/facial authentication,
That's just for starters. EMV standards, the secure element, tokenization, etc.,
then why charge merchants for such transactions (or why
Thinking long term not incentivize them to accept at a discounted interchange
rate)?" Hernandez wrote. "Retailers could get consumer
For example, in the case of Uber, Tim O'Reilly noted seven usage with loyalty and rewards programs, and benefit
business model breakthroughs: replacing ownership from a lower interchange rate." Will is onto something
with access, on-demand transportation, management here. He is looking at the big picture.
by algorithm, augmented workers, drivers who show
up when you need them, and a magical user experience The other idea is businesses using credit cards for
managed by a whole platform, not just a company.
corporate purchasing, corporate expenses and fleet
payments. The proposition here is that the issuing banks
Today, this looks obvious, but it wasn't obvious when it share their interchange revenue with the corporates using
first appeared. When I worked in Manhattan, "gypsy cabs" commercial cards for payment. The vendor taking the
were not all that different from Uber. For a long time cab card as payment pays the freight – from 2 to 3 percent.
drivers who had forked out $100,000 for a taxi medallion
successfully lobbied the NYC Taxi and Limousine The card brands have been pushing this for decades,
Commission to protect their investment by regulating and you can see why it has gotten little traction – it looks
gypsy cabs. Uber bypassed this regulatory structure, more like extortion than payment processing. There is
which I would have thought impossible at the time. I guess no interchange on taking a check for payment, the check
that's why I'm not an entrepreneur.
clears the next business day, and the documentation
accompanying a check and invoice will be much more
My track record here at CrossCheck is checkered, because comprehensive than Level 2 and Level 3 "enhanced data"
when I first heard a presentation on Square, I turned to my for commercial cards or an ACH addenda record.
boss, Travis, and said, "Without proper underwriting, this
will never work." What I should have said was, "With the This is why virtually all business-to-business payments
pricing that they will need to get market share, they will remain check-based. Corporate purchasing cards do not
not turn a profit for a long time, so they had better find address the real need, which is how buyers and sellers can
a way to finance ongoing operations." Here's a November exchange invoice information quickly, easily and cheaply.
2017 quote from Mark Tepper, President and CEO of Planning a fintech project starts with maximizing benefits
Strategic Wealth Partners, "Square has a good track record for all players, not stacking the benefits in one corner and
of losing money, and there is no clear path to profitability penalizing the other party. We would all do well to keep
in the near future."
this in mind going forward.
Choosing the right business model Brandes Elitch, Director of Partner Acquisition for CrossCheck Inc., has

For ISOs, the question is how to find the right new business been a cash management practitioner for several Fortune 500 com-
model for your clients. Doing this will not involve you panies, sold cash management services for major banks and served
using blockchain or cryptocurrencies. The place to start as a consultant to bankcard acquirers. A Certified Cash Manager
is to understand how your merchants manage their and Accredited ACH Professional, Brandes has a Master's in Business
businesses now and what their pain points are. Let's look Administration from New York University and a Juris Doctor from Santa
at two fintech ideas, one promising, the other not so much. Clara University. He can be reached at brandese@cross-check.com.
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