Payments and shipping — perfect together?
Daniel Littman, Senior Payments Research Consultant, Federal Reserve Bank of Cleveland took a different tack and compared payments to, of all things, trans-oceanic shipping. Both are old, complex and labor-intensive. And both underwent revolutions that started slowly in the 1950s. Container ships were created in the 1950s and transformed shipping while credit cards and automated processing began during the same period.
Even though the concept of payments is old, even ancient, this mature business is still innovating, Littman argued. “Innovation at the periphery includes PayPal, Google Checkout, BillMeLater, and so forth,” he said. “Most of us don’t need to worry about them for a while because they all are on the same ‘set of tracks’ – they still flow through the ACH system.”
Disruptive innovation includes biometrics, but that won’t be common for 10 or 15 years, Littman said. “E-commerce payments systems are niche products,” he added. “PayPal may be large, but it is still a niche product. Revolution Money doesn’t even have a niche.”
Even cash, the ultimate mature payment method, is undergoing core innovation, Littman argued. Cash recyclers are new-fangled smartsafes that have all the functionality of smartsafes but also put the money into cassettes for the retailer to recirculate. “It’s a revolution because nothing has happened to cash since the ATM in the 1970s and it lets retailers divorce themselves from local banks.”
Tags: Daniel Littman, Payments, Retail
