By Tom Waters and Ben Abel
Bank Associates Merchant Services
The technological arms race in the payments industry entails much trial and error. Companies backed by big bucks launch jaw-dropping products that focus on a core benefit to the consumer or merchant. The problem is that no one knows what the next big disruptor will be. Technology can be useful, but many payment products rely on both consumer and merchant adoption to find success. Large payment firms are forced to keep spending until they reach critical mass, tipping the adoption toward blowout success – or fizzle out during the attempt.
In 2013, Google Checkout was phased out and Square hemorrhaged over $100 million. Companies spend large sums in an effort to become the next big disruptor. Apple recently announced Apple Pay, taking a step toward consumer adoption by making it easier for cardholders to manage payments through their phones. The inch-forward approach may be the best course of action to find widespread acceptance. Utilizing pre-existing technology – including near field communication, transaction tokenization and optical character recognition – Apple found a way to make it relatively safe and easy to back up your credit cards on your phone.
PayPal publicized its own adoption of existing technology: Braintree, acquired by PayPal in 2013, recently disclosed bitcoin acceptance is now integrated with PayPal's traditional payment solution.
It is difficult to find the middle ground of opinion on bitcoin. There are passionate believers and shoulder shruggers. There are those who dive into learning more about the technology and those who do not see any value if it cannot help them today. Many believers liken the disparity to the initial reactions toward the Internet. Until a particular technology becomes mainstream, believers, nonbelievers and folks who couldn't care less will all coexist. With so many technologies coming and going, we checked in with The Green Sheet's MLS Forum to seek opinions on bitcoin. We wanted to know if industry representatives feel it will be a contending alternative to traditional payments, a new solution to provide or a flash in the pan.
Here are the questions we posed to MLS Forum members to elicit their thoughts on bitcoin:
We found that some users took serious interest in the technology, contributing passionate insights about its importance to modern culture. User jestep offered salient thoughts on whether bitcoin has commercial viability:
"Yes in some areas, no in others," jestep wrote. "It offers an absolutely unprecedented ability to do foreign currency exchange and foreign transactions that involve forex fees. Going to be a complete game changer. Banks would be absolutely crazy not to take this feature seriously.
"As far as traditional domestic transactions, it is limited in several ways. First off, the transaction times are prohibitive, and there's almost zero possibility to make them faster because their speed is directly tied to mining. Since the new BTC mining rate is fixed, it inherently fixes the speed to verify a transaction. I don't know about you, but as a merchant, a 10-minute initial confirmation time, 60 minutes until 100 percent confirmed, is unacceptable unless I'm a small store and my customer lives down the street."
Other users seemed to suggest the innovation is reminiscent of a sophisticated pyramid scheme due to the fact that early adopters see increased asset value in their holdings as more consumers buy into the technology. While some dismissed bitcoin as not being backed by anything real, others pointed out that U.S. currency technically isn't either.
Tstreet stated that "basically it is bulletproof authentication without a third party for settlement" and added that it is "pure genius." He likened bitcoin to credit cards in the '60s. "By now (after PCs, the Internet, mobile, search and social) anyone should be able to see that this is the NBT," he said.
Whether or not it is the next big thing, Tstreet feels the implications and consequences of new technology will disrupt the market much more quickly that in the past. "[S]ince we now live in Internet Time, one year is like 10 years in the '60s, and if you have the right idea, it can explode in just a few years," he stated.
Only time will tell us if there is success in the stars for these new innovations. As industry professionals, we should take seriously any technology or corporation that stands to disrupt our industry. We always must learn how it works, how to adapt to it and how to stay ahead of the game.
Tom Waters has been dedicated to the merchant service sales profession since 2001. Currently, he is responsible for cultivating relationships with entrepreneurs in information technology, accounting, sales and marketing in his role as Sales Director of Bank Associates Merchant Services (www.bams.com). Using fresh and matter-of-fact training methods, Tom has contributed to the success of thousands of agents, affiliates and clients. He can be reached via email through t.waters@bams.com or via phone at 347-651-1065.
Ben Abel is Regional Director at Bank Associates Merchant Services. Since joining the team in 2006, he has risen through company ranks with a paradigm that his success was measured by the success of those around him. Ben is a dedicated, pioneering trainer whose methods of merchant services consultation have helped many agents expand their portfolios in terms of processing volume, deal count and profitability. He can be contacted at 347-866-9571 or ben@bams.com.
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