Ben Paynter (standing) moderated as (from left) Chris Teso, Barb Pacheco and Ben Milne discussed the future of mobile payments on Monday in Kansas City, Mo.
The Federal Reserve Bank of Kansas City is on the verge of its 100th year of operation, having first opened its doors for business in 1914.
Chirpify, by contrast, checks in well shy of the century mark. The Portland-based Twitter commerce platform launched just four months ago.
But on Monday at the Kauffman Center for Performing Arts in Kansas City, Mo., organizations’ disparate pasts were of less consequence than their shared future. What lies ahead for the payments industry was the subject of GO – The Future of Mobile Payments, an event at which three industry experts shared the stage for a wide-ranging discussion.
Barb Pacheco, a senior vice president at the Federal Reserve Bank of Kansas City, Chris Teso, Chirpify’s founder and CEO, and Ben Milne, the founder and CEO of Des Moines online payments startup Dwolla, joined in that conversation at the event, presented by KCnext- The Technology Council of Greater Kansas City.
Talk of simplicity, security and consumer habits dominated the two-hour session, which featured individual presentations by Teso, Pacheco and Milne followed by a panel conversation during which all three speakers fielded questions from moderator Ben Paynter and the crowd.
Simplicity is key
Teso founded Chirplify, which allows people to conduct commerce through natural-language Twitter transactions — for instance, you can purchase something by replying to a tweeted offer with “buy” — because he believed existing ecommerce processes were cumbersome.
“There is no checkout,” Teso said of Chirpify. “There is no shopping cart. The whole idea is to eliminate all that stuff and make it as simple as possible.”
Milne’s startup, founded in 2008, also has a vision for the future of payments that’s simpler than how things work today. But unlike Chirpify, which currently relies on PayPal to complete transactions, Dwolla is not built on top of any existing payments structures. Milne believes money should go from one bank account to another in real-time, circumventing the series of channels through which most payments flow and eliminating costs and exposure to fraud.
“All the money comes from your bank account and then it goes to another one; I think that’s actually how simple payments are,” Milne said. “I think that we’ve made it really complicated just because we continue to build on top” of existing payments systems.
Safeguards against “The Wild West”
As entrepreneurs seek ways to simplify payments, Pacheco said, they must also be vigilant against security threats. “If there’s one thing I could ask of the tech innovators,” she said, “it’s to put more thought into how we secure mobile payments.”
Milne, who touts that reduction of exposure to fraud as one of Dwolla’s main benefits, later explained that businesses which hope to succeed over the long haul can’t pursue innovation at the expense of security.
“Their focus becomes, ‘How do I build a sustainable company?’ not ‘How do I constantly stay on the bleeding edge?’ ” Milne said of payments companies that have staying power.
“Banking is not just the Wild West,” Milne continued. “And I think that’s probably slowed some innovation.”
The speed at which companies innovate is one factor affecting the future of payments, but the speed at which consumers adopt those innovations is something altogether different. It, too, was a prominent topic of discussion.
Pacheco noted that, despite steep declines in the use of checks during the last decade, checks are still relied on “very heavily” for person-to-person payments and businesses’ payments to suppliers. And, despite the pervasiveness of smart phones — nearly half of adults and 70 percent of adults under 35 use them — only about 11 percent of adults have made payments with mobile devices, she said.
“We’re all using our smartphones for a variety of activity, but do we use them very much for payments activity yet?” Pacheco asked. “The survey data shows, not so much.”
She said the determining factor for most would-be users of mobile payment technology is simple: “How does it hold up against the tried and true traditional methods of making payments?”
Teso addressed that question as well. He noted that plenty of mobile payment technologies don’t provide significantly greater value than their predecessors — for instance, he said, using NFC to pay is very similar to the experience of paying with a card. “What I think it will take for consumers to adopt mobile commerce,” Teso said, “is something of value.”
All three speakers seemed to concur that consumer behavior will continue to shift as people that grew up in a digital world begin to represent a larger proportion of the population.
“I think a lot of emotional attachment to money in younger generations is gone,” Milne said.
Teso agreed, portraying micropayments as capable of causing some sort of consumer amnesia: “It’s a lot easier to get lost in ‘How many of those have I sent? How many $5 (payments) have I sent?”
At the same time, Pacheco said, mobile technology can also empower consumers to track their finances more easily, so any sort of purchase amnesia can be quickly remedied. “Mobile technology and the internet gives individuals a better ability than exists with cards or checks to monitor how much money they have,” Pacheco said, “and know immediately what the impact of a transaction is on their balance.”
In one year’s time …
Paynter posed the day’s last question, shifting the focus from the somewhat nebulous “future” to the clear-cut span of 365 days. Where, he asked the panelists, will the conversation about mobile payments go in one year’s time?
For their organization’s very different backgrounds, Pacheco and Milne were fairly similar in their hopes for the immediate future, espousing collaboration as a means to innovation.
“I hope,” Pacheco said, “we’re in a better position to actually envision the intrasfcturcure behind the innovation that supports all of the creativity that these two gentlemen represent.”
Added Milne: “I’d like to think that we’ll probably have more clarity around the way that the … banking industry treats what I feel like are some of our core innovations.
“I’d like to think that that path will be much clearer.”