Shopping Malls – Ground zero for so manysocial activities in our consumer-driven lives, a few hundred yearsago the town center or farmer’s market served a similar purpose.For all the hype, Facebook, Groupon, LivingSocial, and all the restof these online gathering places are iterations of the ancienthuman practice of getting together to buy, sell, and talk. However,in each generation the manner in which we do this evolves. From apayments perspective, it is that evolution which most concerns themarket’s stakeholders.
Merchants are rapidly figuring out that they can make fruitfulconnections between their physical and virtual presence. Indeed,with QR codes and mobile couponing, they can even merge theseexperiences into a “seamless” activity. Arguably, traditionalissuers are having a rougher go of it, as more nimble andaccessible competitors are reaching out to consumers in a bid tocapture spend. However, another aspect of these new relationshipsis that the payment provider and the merchant are much more tightlyintegrated. One might remember that when the modern electronicpayments industry was being formed, financial institutions wereoften the issuer and the acquirer. The fact that FIs commonly ownedboth sides of a transaction made value-balancing more of a givenand was one of the factors that allowed the industry toflourish.
In the new normal being created by non-traditional financialservice companies, they also have to pay closer attention to bothsides of the transaction. As we all know, in order to build anetwork, it takes usage and acceptance. This is wheredisintermediation comes in. In their most benign form, these newsocial shopping centers are payment-agnostic. However, forcompanies like Facebook and PayPal, they are focused on bothacceptance and usage. The real threat then, for both traditionaland non-traditional payment schemes, is that in the not too distantfuture, all these shopping forms will begin to merge together. Inthe ensuing battle for market share, the edge that these newpayment providers may have over traditional issuers is theirability to make a stronger value-connection between the buyer andthe seller.