So, the National RetailFederation’s (NRF) annual “BIG Show” was this past week, andreflection on the event as a whole has this analyst thinking moreand more about the role of The Merchant in the payments universe.Mycolleague George Peabody ably blogged news at the end of each daywe attended NRF this year, wrapping up the main themes andhighlightshereandhere.But hindsight offers more chance forfurther rumination – and ruminating have I been!
Mobile technology has, of course,enabled consumers in ways they never anticipated even five yearsago.Guys who sell stuff to consumers (we know these sellers as “TheMerchants”) are beginning to get antsy as they desire to leverageconsumers’ mobile devices as a part of the overallselling-of-stuff-to-consumers.The facilitators of theselling-of-stuff (aka The Payments Industry) have been slow toleverage mobility themselves, since the slices of pie involved arethe subject of much contention over how many there are and how wide(or slim) each slice might end up being.The biggest reason is thatthe guys who own the mobile space (aka The Mobile Networks)represent one more pie-hole to feed.
So merchants have struck out ontheir own.Case in point: Starbucks.The coffee mecca leverages theircustomers’ phones by linking a prepaid card with a barcode that canbe scanned at the point-of-sale.They’ve had fantastic results, too,with rumors of about one-third of in-store sales going through theprepaid account (not all involving the phone, though), andcustomers reloading their prepaid accounts via the mobile app asthey wait for their espresso to be squozed and milk to bejuiced.Simple, engaging, and oh-so-sweet.
Starbucks’ competitors are payingattention.And they’re itching to try it themselves.The message hereis that the Payments Industry needs to hop-to or The Merchants willinnovate them out of market advantage.Merchant power has beendemonstrated through debit interchange regulation.Why?BecausePayments are still Payments, and valuable as the electronificationof Payments may be, the lack of anything new and truly innovativethat can be leveraged on a broad scale, quite frankly, hasMerchants saying “never mind, I’ll do it myself.”Picture JimmyFallon as Nick Burns, Computer Guy: “MOVE!”
So, with pricing on their side, theinnovative merchant truly has the chance to capture more marketpower, disintermediating the core providers of Payments, andperhaps allowing more nimble and disruptive players to gain somesignificant foothold.Goodness knows, the floor at NRF was crowdedwith several interspersed amongst the vendors of yore.And thoughtheir badges may be turned around preserving anonymity, TheMerchants got an eyeful.
P.S.Prior to posting thisentry, NRF released a revised version of their guidance on mobileretailing to support “retailers in planning and implementinginitial mobile applications, including customer marketing,payments, and internal operations.”It can be foundhere.