When we think about the major advances the connected economy has made, particularly over the last 15 months of the rapid onset of digitization, the advances that get the most attention are consumer oriented. Powered often by payments, the emerging digital economy has thus far been about connecting consumers to remove friction.
“Most of the innovation in the last 50 years has been about how I, as a consumer, paid companies,” he said. “But companies are still mailing me checks, right? The worst time of all is that B2C and B2SMB payment process that takes weeks, costs a bunch of money and it is just friction, friction, friction, end-to-end.”
The good news, Edwards said, is the jig is mostly up for the “most time-consuming payment process out there” as their weeks-long payments processes are cut to seconds in a way that delights recipients as well as senders and offers the potential to “create an environment where new business models can come out of it.”
Opening Up To The Opportunity
There are many problems with paying by paper checks. They’re slow, easy to steal and expensive to produce. Another significant issue is that checks aren’t versatile, looked at in the context of an economy that’s becoming more connected around them.
Unlike a digital payment, a check isn’t a conversation — it’s the end of a transaction. However, a digital payment can be the start of a two-way dialogue between the sender and the recipient that can become the basis for layering other services and capabilities.
As Edwards noted, turning a payment into a digital experience means a two-way conversation gets going, one that tends to delight the recipient when it offers up a trusted process that ends with them getting instantly paid.
“And then at the end of the day, you’re also acquiring new believers in that process,” he said. “Everybody that gets paid says, ‘Wow, that was cool. How do I do that again?’ And that then feeds on itself.”
A financial institution (FI) can use digital payments to acquire small- to medium-sized business (SMB) customers, he said.
There are many areas in B2B payments where transformation will be challenging, including insurance, healthcare and even sports betting, all of which are highly regulated and cause innovators in those spaces to move cautiously, he said.
However, the overall market trend is clear. Potential use cases include any recipient who needs money faster. Items like payroll, supplier payments, insurance disbursements, and the like, are “the low hanging fruit” in that they are opportunities to transform the process for the payor and change the experience for the receiver by giving them options.
Overcoming The Resistance
One of the challenges in bringing B2C and B2SMB payments into the connected economy fold, Edwards noted, is the resistance they continue to run into from firms, particularly larger ones, when it comes to being part of a payment ecosystem. They like the idea of transforming how they pay people — but often with the defeating stipulation that their recipients are their recipients. The companies don’t want to share them with any other player connected to the system, which Edwards noted is “contrary to the real possibilities” that this change can enable.
“But if there’s economics involved, like if a recipient is willing to pay for speed or pay for choices, then you can create reasons for those companies to buy into the ecosystem because they’re going to get more customers or they’re going to share in the revenue stream,” Edwards said.
Incentives are also a powerful and persuasive tool, he said. Edwards uses Apple Pay because in combination with the Apple Card, he doubles up his rewards. His employees favor their American Express cards to build up frequent flier miles. Consumers have bought into the connected economy so powerfully because it reduces the friction in their daily lives and gives them their time back as a reward.
He noted that business payments are simply the next natural evolution point for the connected economy to take hold — because the conversations that connection enables allow firms to recreate experiences and build new revenue streams.
“The opportunities exist, and we are only starting to see them emerge, but they are still mostly covered up with friction and time-consuming slow processes,” Edwards said. “This is just a natural place for an ecosystem to evolve.”