The Week In Payments: The ‘Three Cs’ Edition – Crypto, Connections And Checkout

It was a full week in payment and commerce news this week, as is usually the case. But this one managed to go the extra mile and produce a new theme, as all of the major events in payments and commerce could be categorized as beginning with the letter ‘C.’

But it’s more than a single letter. As David O’Brien, CEO of Agreement Express — a software provider to payment facilitators — told Karen Webster as the two settled in for the latest edition of The Week In Payments, the week’s news was held together by another emerging theme: the passing of the torch from one generation to another in terms of which preferences are driving the direction of the economy.

“The biggest lesson is, we’re so used to how things ran before, because baby boomers have kind of controlled the narrative,” O’Brien said. “But we have this massive population bump coming in — I think close to 50 percent of the workforce are millennials. And they’re starting to get more of a voice, and they’re starting to earn more. They’re starting to drive the economy.”

And they’re driving the economy into some very new, and very unknown, territory — and their growing expectations are raising the level of the game for everyone.

Crypto’s Massive Growth Spurt (and Resultant Safety Troubles)

The cryptocurrency market continues to be a wild ride. O’Brien agreed that it’s a particularly sharp upswing with the big $86 billion Coinbase IPO early this week, and the skyrocketing cost of crypto. But for all of crypto’s growing mainstream appeal, he said, there is still something of a mystery in play — it just isn’t easy to get a good reason as to why something like bitcoin is worth $60,000 a pop.

“You talk to people who’ve invested in it and you don’t get really great answers,” he said. “It’s like speculation. It just seems like nobody can really say why they are investing, other than they just think this is where the future is going.”

Generally, O’Brien said, he makes investments based on evidence, not just a feeling about where the future is headed. But crypto is an “untethered” future, where a user “can connect any which way they want. And it’s all free-floating. It’s all out there and it’s all loose.”

But, he said, as one looks at China’s ongoing efforts to digitize the yuan on the blockchain, it also becomes clear that crypto is a growing future concern. It’s something that no one (including the United States government) can really afford to sleep on, lest they find themselves left behind by those that push ahead.

“When we’re talking bitcoin and other cryptocurrencies, there’s a lot that still has to be figured out, but people are pouring money in it. So it’s definitely not going away,” noted O’Brien.

The Increasingly Connected Economy

This week saw two big pieces of connected economy news coming across the wires, as Apple eyed its latest bite out of the connected home market with new products and Microsoft acquired Nuance to expand and enhance its telehealth offerings. Both stories, O’Brien said, point to the emerging voice-controlled future, where things like the keyboard will become a memory of a bygone era, and also have lessons to teach.

For Apple, the story is about how and if they can come from behind and make a mark in the voice-activated smart home economy. As Webster and O’Brien agreed, making a shift is much more involved than simply switching out a Google Assistant or Alexa device. It also involves switching out all the other devices attached to them and reworking the consumer’s established use habits. It’s not an impossibly onerous task, O’Brien noted, but consumers will need a compelling reason to consider doing it.

“Apple moved slowly,” O’Brien noted. “So what does Apple have to do now? What unbelievable, innovative thing would they have to do for you to make a change? What would be enough to motivate you to make a change?”

The lesson from Microsoft, he said, is a bit different. That move reveals what the team at Microsoft thinks the future will look like post-pandemic. The company is betting that consumers who have flocked to telemedicine in the last year will continue to do so. The time is now, at least according to Microsoft, to build for what’s next instead of trying to rearrange what came before. The message is clear, O’Brien said: Behaviors will be permanently changed post-pandemic, and players looking to win going forward will have to lead the way into that change.

And speaking of change, it won’t just be about the new connections opened to consumers — but about the new behaviors sparked by those options.

Checking Out With Old-School Checkout

GameStop was also a topic of conversation. While the madness has since settled down, GameStop is worth around $158 a share, and is bringing in a new executive team and promising a big digital upgrade. Will it work? That depends on how real the upgraded experience is, according to O’Brien. It will also depend on how well the retailer can remodel its business for a world where consumers are converting to streaming games instead of buying physical copies.

O’Brien isn’t overly hopeful, noting that if he were the CEO, he’d focus on salary negotiations and not stock options, because insofar as the company sells physical games in a streaming world, it runs the risk of remaining behind the times. “I don’t think GameStop has the strategy yet, but they need to get to it fast. They need to give people confidence in what they’re doing, and show that this is not the brick-and-mortar Blockbuster of games,” O’Brien noted.

Because, as he explained, GameStop’s situation points to the need for retail to speak to an emerging generation of consumers who simply expect things to work. They are surprised when they can’t use Apple Pay, and they value their ability to transact how they want, when they want, using whatever payment form factor they want. They don’t expect to have to shuffle up to the POS — they want to be able to click on their phone, finish the transaction and just walk out.

“The traditional brick-and-mortar merchants have to recognize that ‘point of sale’ means different things to different people,” O’Brien said. “A mobile device with order-ahead capability or an app that allows you to scan and check out while you’re moving through the store — that’s where the future’s going. And I don’t think the future is that far away.”

In fact, as this week in payments demonstrated repeatedly, the future, in many regards, is already here. The question is how and when all of the players in the ecosystem will catch up.