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Making the New World of Payments Profitable and Squaring the Circle

Peter Shortall |

“We need to think outside the box!”

Whether you’re saying it or hearing it, if you’re talking about the payments business, make sure you think about the circle as well.


If we’re talking about credit cards, “outside the box” usually means things like expanded mobile functionality, new form factors, enhanced rewards earning rates or ability to use rewards to “top up” airline frequent flyer miles.  The hot idea shops are ready to serve up all these ideas and many more great “disruptive” innovations.  But think about what each of these might imply:

Expanded mobile functionality  Could require merchant terminal upgrades

New form factors  Not all materials are PCI (Payment Card Industry) compliant

Enhanced rewards earning   The P&L may only works up to 100 basis points rewards payout

Airline miles “top up”   Requires partnership negotiations

In reality, the opportunity space may be only the narrow area “outside the box but inside the circle”. It’s often thinner than we think but because it’s feasible; this is where our ultimate success will lie.

So before we spend too much time trying to get outside the box, let’s see where we can push the circle first.

    • • If we partner with another entity, does that give us another 25 basis points to work with?
    • • If we migrate to a new cloud-based processing platform, does that give us more functionality to support multiple rewards currencies?
    • • What PCI changes are expected and what does that mean for our gorilla glass idea?
    • • Are there any M&A or other trends in industries that allow us to partner with significant partners?

In my experience, feasible innovation is led first by an understanding of how we can flex the circle before we start to think outside the box.  Steve Jobs was a master of this—it’s not hard to make the argument that he didn’t think outside the box as much as he expanded the circle for the product development team.


Topics: Payments Strategy

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