3 reasons why CBA Pi pivots retail

Commonwealth Bank of Australia have just launched a video showing their new merchant payments solution called Pi.



This is truly interesting for a number of reasons:-

1.  As with previous innovators in this space such as Square, they are bringing together a number of different parts of the value chain within a single platform.  Watch out if you currently make money out of ePOS, stock control or loyalty!

2. They are creating a platform which is both open and closed - just like Apple.  It's open in that developers can build custom applications that add value (it's based on Android), but closed in the sense that CBA own it and will ultimately control it.  This is not something I've seen before from Square or PayPal.

3. The platform blurs the boundary between the user (the retailer) and the customer.  Any payment terminal allows interaction with the customer, but normally only in the sense of identifying themselves or possible picking their chosen payment type (check / credit account).  With Pi though the customer can truly interact, chosing for example how to pay amongst friends and I would assume select how they want to receive receipts.

The increasing use of tablets within the retail space is opening up more and more opportunities to create engaging customer interactions.  Unlike dedicated terminals or tills, with a tablet the scope is limited only by the imagination of the developers.  By CBA providing a platform like Pi that allows developers to create new functionality they benefit by having a constantly evolving merchant solution which they control.

CBA say on their website, "Pi is the future of business".  I'd argue it's also possibly the future of ePOS, e-receipts, acquiring, stock management, loyalty and anything else the merchant may think of or need.

What we can learn from PayPal's shunning of skeuomorphic design

Skeuomorph is an interesting word.

It's from the Greek for vessel/tool (skeuos) and shape (morphe) and is basically used to describe something which retains the design cues from an original product, even when these aren't necessary anymore. Examples would include digital music players which have the look and feel of a real-world device like a car radio or online calendars that present information in the style of a paper, month by month calendar.

In many ways, a Skeuomorph is positive as it allows us to transition from the old to the new; letting people understand how something works as it replicates the look and feel of the original. The example below shows how the iphone calculator look and feel is based heavily on the extremely popular 1977 Braun ET44 calculator, even down to the button colouring.

However, skeuomorphs can also hold our thinking back. Rather than trying to re-think a problem with newly available technology, it is sometimes easier to try and transfer the existing solution into a new medium.

Digital advertising for example simply tried to transfer the understanding and heritage of the physical world into the digital. The direct mail campaign morphed into the email campaign and the outdoor poster into the banner ad. It took a different kind of thinking from a young upstart called Google to approach it in another way back in 2000. Google did away with the visual aspects and instead focused on the relevancy, linking text based adverts to search terms. Combined with their innovation around ranking/click-thrus, this helped propel Google to the number 1 position.

Google hasn't done too well in another domain however - namely digital wallets. When people talk about digital wallets, they discuss taking your existing payment cards, loyalty cards and paper coupons and essentially digitising these into a smart phone application. Indeed, the Google Wallet even shows a representation of a credit card so you can choose how to pay.

The problem with this though is it's trying to solve a problem people don't have and doing it by simply moving what people have and do today into another medium. In reality, you are simply exchanging a leather folder for a smart phone - it's skeuomorphic design. What it's not really doing is challenging how people pay.

Of course, I'm not a payments expert, so I'll leave it to someone who is, namely Jack Stephenson, Director of Mobile, E-Commerce and Payments at JP Morgan Chase who said:-

"Consumers don't really have a mobile payment problem. Ninety-five percent of the time, paying with cash and credit cards actually works pretty well. Consumers have a mobile shopping problem. There's a difference."

While I agree with the first part of Jack's observation, I don't really agree with the latter. Consumers don't have a mobile shopping problem either, they have a money management problem - and many of them don't even realise it.

As I've discussed in a previous blog, if we're going to change how consumers pay, we should take the opportunity to change how consumer think about payments. Instead of being bounded by a skeuomorphic requirement to replicate the old, we should look to invent the new.

And that's just what PayPal have done.

Paypal are looking to reinvent our relationship with money. Not just our physical money or payment cards, but all of our liquid assests, from loyalty points to gift cards. If it can be converted into cash, PayPal will let you use it.

To support this they have separated the decision to purchase from the method of purchase. After buying through PayPal you then have 7 days to indicate how you'd like to pay for the item and this could be from a combination of:-

• Money you've saved for it such as a travel savings
• Money you have on a retailers gift card
• Money you have in loyalty points from a frequent flyer
• Money you have in your checking/current account
• Money you have access to from your credit card
• Money you don't have access to yet - so it lets you spread the cost over 3 equal payments

Any and all of these types of funds can be used to pay for the transaction. Now you can save for something and then literally pay for it from your savings.

It's worth watching the following videos from Finextra to see how really revolutionary this is.

Skeuomorphs can help us to transition people from the old to the new, but holding onto the old can also limit our ability to truly transform how we do business.

For loyalty, the collecting of points hasn't really changed fundamentally since the original paper stamps back in the 1930'. Even Google startup Punchd is simply transferring the paper punchcard to a smart phone medium.

Maybe it's time to rethink loyalty recognition for a new era. #gamification

The end of the line for payment cards?

Payments cards are a legacy of the last century.

Their design was necessitated by a need to be able to communicate the identity of the holder and the provider/guarantor of the funds. This resulted in a physical card format, originally paper, more recently plastic which has since proliferated in our wallets as both payment choices and payment providers have ballooned.

Originally used in the 1920's, the first payment cards were issued by merchants with customers having a different card for each merchant. Seeing an opportunity to simplify payments for customers and possibly to create competitive advantage, several companies in the late 1930's started to accept each others cards. However it wasn't until the 1950's when Diners Club, Amex and Carte Blanche came about that the wider concept of a payment network was created.

Now customers could use a single card to pay for goods and services and since then the expansion of merchants accepting these has grown to cover almost every conceivable category and territory. Indeed, the latest contactless cards are finally opening up new sectors like transport or fast food which have been stubbornly cash based up until now.

Whilst this has made life simpler by removing the burden of physical cash, it is not however how people think about money.

The use of these plastic cards has forced us to channel our purchases through them as we attempt to manage our finances but ultimately our finances are more complicated and granular. This means we tend to carry more than one card - a debit card for every day small payments, a credit card for personal spend, a second credit card for business spend, an Amex...just in case.

Even with these different cards, they still don't align to our budgeting.

When we save for a holiday then the payment for that holiday comes from our savings (which may then have to be moved to our current account to then pay the credit card). When we incur business expenses, we have to pay for these through our personal account based on payments made by our company which are then paid to our credit card. We're constantly moving money around to make it work in a convenient way and we just accept it as normal. It's how things have always been done.

Then I saw BankSimple and saw what the future may actually hold.

There are a number of great ideas and innovations within the BankSimple interface, but in my opinion, one of the greatest is the ability to manage your money within goals.

Essentially these allow customers to decide what they actually want to use their money for (new car / holiday / home improvement / nest egg) and then can allocate funds automatically to this. BankSimple make decisions about how to invest this (long term/ short term) and the customer is always in control, able to change payments, end dates or simply pause the goal for a while.

This works because they are not forcing a customer to take out a new payment card or setup a new savings account to keep their money separate. Instead, BankSimple lets the customer worry about what they want to do with their money and they will work out the best way to manage this behind the scenes.

This jam-jarring prinicple is how people think about money. They decide on different goals/expenses and make allowances for these on a regular basis to try and manage their finances and keep within their "safe-to-spend" balance as BankSimple term it.

Where I think this could get more interesting is when you look at this combined with some of the recent announcements about mobile payments - from Google Wallet to Visa Peer to Peer. At present, all of these solutions have tended to look at linking in a payment card or bank account to make the solution work. The mobile wallet concept simply moves the payment card from a physical plastic device to a virtual one.

Indeed, Google Wallet allows you to simply swipe the screen to pick the right payment card before a single tap then allows you to pay, redeem a coupon and earn points. Launching Google Wallet they said:-

The launch reflects Google's efforts to simplify and redefine the shopping process for both consumers and businesses. [..] Because Google Wallet is a mobile app, it will do more than a regular wallet ever could

Whilst their desire was to redefine the wallet, instead all they've really done at this stage is substitute it.

Osama Bedier, VP of Google Payments is quoted as saying:-

Our goal is to make it possible for you to add all of your payment cards to Google Wallet, so you can say goodbye to even the biggest traditional wallets.

To me though, the bigger question is whether there is a need for payment cards at all?

In the BankSimple world where money doesn't visually reside within accounts and instead has more meaning attached to it based on goals and budgets, then you can imagine that these virtual wallets may be able to access funds in this more natural way.

• When I go shopping, I should be able to pay from my household budget
• When I pay for a holiday, I should be able to pay from my holiday savings
• When I pay for a car expense, I should be able to pay from the allocation for motoring expenses

Don't have enough money in my budget? Well then simply extend me a line of credit for that purchase in that budget.

This would immediately give me visibility that my car expenses are in the red, and I can choose to pay these down more quickly. Rather than an aggregated, monthly credit card statement with every expense stuffed into a single number, i'd have real visibility of my money as it relates to my life.

Technology like Google Wallet is fantastic and i'm genuinely excited about what it will offer in the short-term. However it's going to take some real visionary thinking like that shown by BankSimple to truly redefine our relationship with money.

When that happens I think the need for payment cards, as shaped by the last centuries requirements may actually become a thing of the past and mobile technology will redefine not only what we pay with, but how we manage that payment.

PayPal banks on convergence in offline retail

A recent PayPal blog by Scott Thompson, President of PayPal gives a strong overview of their future direction - and in a word it's convergence.

• The convergence of offline and online retail
• The convergence of social and retail
• The convergence of EPOS and payments
• The convergence of offers and payments
• The convergence of payments and loyalty
• The convergence of the purchase and the purchase decision

That last point is the most powerful - previously banks and payment providers like PayPal moved money.  It was all about the transaction with little regard for the person making it or the reason behind it.  However as Thompson indicates in his blog, this is changing:-

PayPal is re-imagining money and making it work better for merchants and consumers.  The act of paying for something should be as seamless as your decision to buy it. The future is about creating real consumer choice, flexibility and control over how people shop and pay.

Payment providers are realising the power they have within the data they hold and the relationships they enable, and now they are starting to do something about it.

PayPal are squarely banking on convergence across all of these areas into a single solutions provider - and obviously they would like it to be them.


They're not alone however, both Google and Square, amongst others, are competing in this space, bringing together mobile, payments, POS, offers and loyalty rewards into a single platform / eco-system.

The ability to drive a purchase from demand generation and follow it right through to purchase and post purchase recognition is something that is going to gain traction and there will be winners and losers.

I suspect any single vendor will struggle to dominate and open standards (or mass payment networks) will win out, but it does set the tone both in terms of customer and retailer expectations - and it throws down the gauntlet for all players within the payment and retail transaction space.

Pizza Express app - a glimpse into the future of VRM?

Pizza Express have launched a new iPhone app which redefines the space for retailers and at the same time provides a possible glimpse into both the future of payments and CRM (but more on that later).

The application includes a number of clever features such as allowing customers to view their past receipts (great if you need to expense something), create "favourite" restaurant locations and pre-book a table. The really interesting part however is a deal with PayPal that also allows a customer to pay their bill directly via their mobile by entering a unique 12 digit code printed on their receipt - letting the customer then simply get up and walk out as it's seamlessly integrated into the restaurants POS.

This in itself is an interesting loyalty play as Pizza Express get to know who the customer is, what they purchased and how often they come and there is not a loyalty point in sight. It's a compelling application that smooths the purchase process, making the next purchase more likely.

Whilst this is a really innovative app for Pizza Express it's actually part of a wider trend to disintermediate the payment eco-system and the functionality is quite similar to that offered by payment start-up Square.

Jack Dorsey, Square's founder is quoted as saying that they want to replace cash registers, wallets and loyalty cards. Rather than simply trying to replace a specific part of the existing process - exchanging the plastic card for the mobile phone - Square are actively trying to join the whole process up with Mr Dorsey saying:-

"We think it should be one system"

One really interesting innovation within Square is their application Card Case. This allows a customer to create a list of their favourite places and to setup a tab with them, simply paying by giving their name - no swipe of the card necessary. Like the Pizza Express app it also provides access to your receipts; in essence centralising your payment and purchase history and making it accessible.

This is a really interesting feature that both Pizza Express and Square have in common - the provision of customer data back to the customer - and it is becoming increasingly common as customers begin to expect their data to be collected, but increasingly consider it "their" data. When I shop at Tesco I know they are tracking my purchases, however when I go online and see new products added to my favourites list it begins to actually feel like my data.

This trend of providing information back to customers and giving them access to and ownership of it is also gathering pace.

Within websites and applications for example you are increasingly given the option to login via social networks such as Facebook or Twitter. While you still login, connecting via a social network provides a subtle change. You are actually granting permission to that application to connect to you rather than the other way round. At any time, I can review my relationships with different applications and simply close them down by removing the authorisation. I can also look at the permissions I've granted to those applications and change what information they can see.

There has been a transfer of power within identity management. It's now my identity and I can choose who has access to it, how much access they have and when I want to end it.

Imagine this trend being extended to all your interactions.

Within a supermarket loyalty programme for example you could link your purchase history to an app from a CPG manufacture like Unilever. You'd be doing this in the full knowledge that Unilever could then access your purchases and provide you with relevant offers (or reward points). You'd be choosing how to use your information for your benefit.

This is a really amazing thought and something that has been termed VRM or Vendor Relationship Management by Doc Searls, a veteran technology journalist and key founder of ProjectVRM which he describes, saying:-

Since the dawn of the Industrial Age, large companies have been working to "capture" and "lock" customers inside what we today call "silos" and "walled gardens."... ProjectVRM is a new Berkman Center research and development effort that is working to provide customers with tools that provide both independence from vendor lock-in and better ways of engaging with vendors -- on terms and by means that work better for both sides.

I love the idea of this - letting customers engage with brands on their terms with their data - and can see many applications across different industries.

How far this can go will be interesting to see (and to define), but the principle of making customer's data accessible to customers is a key trend. Facebook, Twitter et al. have already proved that making their systems open and giving customers control has only made their service more compelling.

Brands and loyalty programmes collecting customer data and interactions may have to take a leap of faith and empower the customer for the greater benefit of both the customer and the brand.

As Doc Searls said in his earlier thinking within the Cluetrain Manifesto:-

We are not seats or eyeballs or end users or consumers. We are human beings—and our reach exceeds your grasp. Deal with it."