Despite (or perhaps because of) the pallid faces and bow ties, the Brookings Institution is a great place to gather for an idea exchange. I’m not much of a futurist, but the folks who spoke at yesterday’s Future of Consumer Payments conference are. Here are the three most intriguing things they said.
1. Back to the future
Ken Chenault, CEO of American Express, thinks that one future of payments lies in the past. American Express and other cards started as charge cards that were paid in full at the end of every month. Long-term revolving credit was a later (and very profitable) accretion.
Chenault intriguingly hinted at helping cardmembers maintain “spending discipline.” Imagine a more sophisticated version of the charge card where you set your own budget and the card helps you keep it. I’d be willing to pony up my $85 per year for a card that made budgeting painless. And I’m sure Amex wouldn’t mind if I did 100% of my spending on their network.
And he couldn’t resist a little dig at his lower-brow competitors: “I don’t believe a company has much of a future if it earns the majority of its revenues when customers make a mistake or don’t conform to a rule. ‘Gotcha’ pricing is not the way to build a sustainable business model.”
2. Google-izing payments
David Evans, founder of Market Platform Dynamics thinks there’s an untapped advertising trove in the payments system. Imagine buying a winter jacket at REI, a set of planks at your local ski loft, and then receiving a coupon on your cell phone for discounts at the nearest ski area.
Payments systems don’t just know what you’re searching for, they know what you buy, which is much more powerful. Payment companies would have to overcome valid privacy concerns to get this running, but a simple opt-out could solve that. For everybody else, it’s coupons and discounts for the kinds of products you really spend on, not just the stuff you might-someday-maybe-possibly buy.
3. All about the immigrants
Vijay D’Silva, a managing director at McKinsey and Co., pointed to the implications of the recent boom in immigration. With a foreign-born population of 13%, the United States has more first-generation immigrants than at any time in the last 100 years.
Payment products can be loaded in the United States and unloaded by family and friends of these immigrants. A good product could turn into steady income for years.
And finally …
a little fun fact: Drazen Prelec a behavioral psychologist and business professor at MIT’s Sloan School of Business found in a limited study that consumers are willing to spend twice as much when they get to use credit cards vs. cash. In an experiment where students bid on Celtics tickets without a face value, those who had to bid with cash offered only half as much as those who got to defer the payment pain.
Photo credit: DannyAnkle via flickr
Comments
1
For a more robust treatment (and some interesting stats) on how people spend more with credit cards, check out this post from Get Rich Slowly.
Link to this comment