A short and not too payment oriented blog post this week due to the holiday…

When I lived in the UK, my favorite date on the calendar was November 5th – Guy Fawkes Day. It celebrated the gunpowder plot of 1605 where Mr. Fawkes and others attempted to blow up parliament. Depending on which side of the fence you sit on, you either celebrate their audacity or their capture with fireworks and comfort food. For me, it was an excuse for my chemistry teacher father and I to make our own fireworks and blow craters in our lawn.

I moved to the U.S. 14 years ago. I have very much made this country my home and have embraced many of your strange customs and traditions. One of these being Thanksgiving – a one day celebration of all of the things we are thankful for accompanied by tryptophan, very large balloons and some sport resembling rugby. It’s my new Guy Fawkes Day.

With so much utter crap going on in the world, it’s a day to truly reflect on just how blessed we are.

So, here’s what I’m thankful for…

  • My incredible family and friends
  • Living somewhere where my children can grow up safely
  • Being healthy(ish)
  • Lucking out by falling into one of the most fascinating industries ever

Please travel safely…




It’s Sh*t to be Square


Yesterday Square (finally) went public on the NYSE, with shares initially trading at $9 and ending the day at around $13.07, a nice rise of around 45%. Looks good on the surface – shareholders like charts that go up.


The $9 trading price could be seen as sandbagging by the company, given that the original trading price was to be around $11 to $13 and the IPO valuation is 52% lower than the $6 billion valuation in the funding round of just over a year ago. The modest increase seen in the last day is at least an increase that looks positive to would be investors and certainly to Square themselves. Today is another day and who knows, maybe it will sustain it’s 45% daily rise. Maybe.

So what’s happened in the last year and why this tepid response to what should be one of the hottest IPOs since Facebook? The plain and simple reason is that, as SOME GUY was quoted as saying in Forbes a few months back, Square “looks a bit long in the tooth.”

Square launched its first reader in 2010, the same year as the iPad debuted. Arguably, not a long time ago, but the consumer electronics world ages in dog years. Square’s NKOTB status five years ago was refreshing and audacious – offering a simple and eloquent solution to enable small merchants to accept card payments without having to put down hundreds of dollars for one of the design abominations from traditional POS vendors. There was a collective industry *facepalm* moment as we got that the audio port was the one universal interface for smartphones across all permutations – Apple, Android and Blackberry – a stroke of genius. This was a smart company that offered simple and elegant hardware along with a pricing structure for transaction fees that were transparent. And the cost of entry to accepting card payments – zero. The readers were given away.

Problems began to set in when other, more established payments players decided to get into the game. Discovering that the card readers could be easily replicated companies including PayPal, Verifone, Intuit and Amazon replicated Square’s initiative of giving away readers and it became a race to the bottom for transaction fees.

Further trouble arose when the collective card networks announced that the US would actually move to EMV in 2012. While the timeline was hardly aggressive (we are still VERY far from being EMV ready), this must have been quite a WTF moment at Square HQ. Mag stripe readers are simple and cheap to make. EMV card readers are not and the bill of materials would necessitate actually charging customers for the hardware.

And now there is the spectre of NFC mobile payments contrasting Square’s archaic card acceptance business. As I mentioned in my last post, I don’t think the payments landscape will switch as fast as some anticipate, but certainly Apple Pay has taken some of the sheen off Square’s innovation crown. Paying with plastic – that’s medieval.

Square has continued to push into other areas – there was a $25 million investment from Starbucks in 2012 which provided Starbucks with preferential processing rates and Square the opportunity to promote Square Wallet – a forward thinking service that allowed both ordering ahead and for the barista to see a photo and name of the customer who they were serving – a stroke of CRM genius. For Square, this could have been the spearhead they needed to gain traction with other larger merchants and to push their hardware products such as Square Register. However, this failed to displace Starbucks immensely successful mobile app. Two years in, the relationship went sour and today, Starbucks has all but abandoned the venture.

There have been other Square initiatives designed to spread the load from the cash cow of card acceptance, but these can be largely categorized as following rather than leading. Square Cash offers P2P money transfer (like Venmo, PayPal), Square Capital (like Kabbage, On Deck, PayPal) and Caviar (like Foodler, Eat24). But fundamentally, Square’s success will probably continue to rely on their ability to adapt and survive in the new EMV environment. Square has an EMV reader available which retails at $29. Not free, but not extortionate for sure. They have also developed a contactless EMV reader which retails at $49. Again, not free but not outrageous. The price point may be something of a deterrent for some small merchants, but actually Square is probably overdue for thinning the herd of yard sale vendors to those that actually put through enough transaction volume to be worthwhile. But, this will place Square in a more competitive environment where more dedicated sellers may opt for a more industrial grade product from a Verifone or Ingenico if card transactions are that critical to their business. And what if the US pivots to Chip and PIN?..

Square’s certainly in a tough environment and I would like them to surprise me again with something that takes me offguard. Dorsey thinks there’s still legs in Square Wallet, and actually, so do I. It’s a move closer to the utopian “Uberized” payments that folks such as myself talk about probably too often. They’ll however need to sell a bazillion card readers to get investors to trust them in such initiatives, particularly post Starbucks.

(A day’s worth of trading data doesn’t make for a solid growth forecast. Currently Square’s trading at $13.60. Upwards is good, right?)



The Death of Cash?! I Don’t Think So, Timothy.


If I had a penny for every time I heard the phrases “the death of cash” or “wallet replacement”, I’d have $1.78. Adding another penny to the jar is Tim Cook, who recently stated to a bunch of Trinity College students in Dublin…

“Your kids will not know what money is”

That’s a pretty audacious claim and one that reflects a mindset I have come across on many times – the arrogance of technologists. It results from being so immersed in your own vision of a utopian future delivered by your technology that you block out the past and present.

Let’s break down Tim’s assumption here that the next generation of kids will not know what money is. Assuming the Class of 2015 are going to pair off and breed within the next 10 years, we’ll have their progeny entering school around 2030 and probably getting an allowance at around 2035. We can assume that EMV will have reached a pretty ubiquitous level of penetration by then on the merchant side and that the US will echo other regions where contactless has become the de facto means of paying by card. So, arguably, the landscape for Apple Pay NFC payments will be there.


Tim’s fallen into the trap that so many technologists do when it comes to payments. They forget what the problem is that they are trying to solve and put simply, for most people payments such as cards, cash and even checks work just fine. Payments are judged by and ultimately succeed due to a handful of attributes – speed, security, convenience, cost and value addition. Apple may have some legs in trumping alternatives on speed and convenience given the rather unpleasant and time consuming UX for EMV. It may also play up the security of biometrics and tokenization, but consumers really don’t care much about that. Cost is not a consideration for consumers, but for merchants the cost of acceptance both in terms of fees and hardware is there. In this, there is no differentiation from credit or debit cards, so no merchant end push towards Apple products. Apple is beginning to associate loyalty cards with Apple Pay, which is interesting but again, probably not enough of a driver from a consumer standpoint. And the last one is ubiquity and this is the most critical because payments require bipartite buy in of merchants AND consumers to work. Apple is doing a fairly decent job in getting issuers onboard with Apple Pay since banks love the halo effect of their stodgy old brands being associated with the pinnacle of consumer technology. But, the merchant side is lagging and Apple is somewhat beholden to the vegetable speed that the US transitions to EMV.

Let’s take a second to look at data from the 2013 Fed Payment Study


Okay, so it’s a couple of years out of date, but the payments industry hasn’t changed much. The above chart doesn’t include cash data, but it does include checks – the other paper payment mechanism. Unsurprisingly the trajectory for checks is downwards compared to electronic equivalents and with good reason – they’re cumbersome and slow. Even carrying a checkbook is a hassle. But, according to the chart, that’s still 18.3 billion transactions. Have another look at the chart and you can see the meteoric rise of mobile payments. No? Can’t see it? That’s because the line would barely appear.

What Tim fails to get is just how slowly the payments industry changes. Unlike the massacre that digital has been seen to commit in other fields (photography, music, printed media, etc.), payments are a different beast entirely, built on lifetimes of trust and a not insignificant amount of habit and muscle memory. If you consider how the cellphone has changed over the last ten years, when the pinnacle of innovation was the Motorola RAZR (which had such features as “flat” and “shiny”) to today’s iPhone or Galaxy (which has features such as “all the information ever available to man”), the rate of innovation is incredible. If you compare a credit or debit card from a decade ago, to one today, you MIGHT see a small gold colored chip as we move from a fifty year old payment technology to an thirty year old one.

Tim’s not so hidden agenda here is the alleged launch of an Apple P2P Venmo killer which broke this week. Some see P2P as a trojan horse for building critical mass and then pivoting to C2B. I don’t see this happening due to again the ubiquity piece of the puzzle necessitating buy in on both sides as well as the what-problem-does-this-solve conundrum. Again, ye olde payment options work fine.

I stand to be proven wrong on this, of course. Apple may actually be catalytic in the demise of cash. They are also very good at simplifying and beautifying everyday tasks, which may be enough.

I am, by the way, typing this on my wife’s MacBook Pro. It’s an exquisite piece of technology, both in terms of hardware and software. Bastards.

Fintech Fight Club


Given the number of people in the fintech space in and around Boston, I decided a while ago that it would be a good idea to arrange a monthly social where we could compare notes. We managed to have one back in February when Boston resembled Hoth and I’ve been itching to get this going again for a while. So… here’s the deal. Second Wednesday of every month, we’ll meet at the TipTap Room in Boston. My mate Poe runs the place, the food is exceptional and the taps are aplenty. We’ll gossip and bitch about the industry in an environment where the one rule is that nothing goes beyond the circle of attendees. The first one will be December 9th at 6pm.

Figuring there should be a monthly theme for these. So here’s the first one… What the feck is the Blockchain and how can I get one? Come prepared with some ideas and an empty stomach. Spread the word – all welcome.

Shoot me an email or DM me if you plan to come so I can keep an eye out for you. Just remember… there is no Fintech Fight Club.

Amazon, Generation AO and The Implications for Payments


It was our wedding anniversary the other week and being the kind of guy who knows how to treat a girl right, I got my wife the gift of her dreams – an Amazon Dash button for Ziplock bags. Before you chastise me for my utter lack of chivalry and romanticism, I may add that A. that wasn’t the only gift I got (there was also a new fanbelt for her Subaru) and B. she has something of an obsession with putting things into Ziplock bags. Any object that has an expiration date gets ziplocked… cheese, crackers, slow moving pets. Suffice to say, she told me she was delighted with her gift as she tucked into her Happy Meal. What could be better than Ziplocks on demand?

The whole Dash Button concept is fascinating to me as yet another example of just how ingrained Amazon wants to become in our daily lives. Need more detergent, press a button. Need a new cat, press a button. It’s an ingenious removal of the requirement for memory from the thought process of shopping – no need to mentally remember you need to add something to a shopping list, it’s already on its way. (I imagine there is a lab somewhere in Seattle fervidly working on 3D printers of FMCGs so that the only real handicap that Amazon has – delivery –  is removed from the equation also.)

In a recent presentation I did in Miami, I spoke about this increasing demand for immediacy from the consumer and how the on demand dynamic of digital content delivery is permeating all aspects of our lives, including payments. Someone in the audience asked if I had any metrics on how attention spans are decreasing and I didn’t, but managed to tuck this away in my memory without the need for a Dash Button as something I should look into. Unsurprisingly, attention spans ARE shortening. In a 2014 report published (rather surprisingly) by Microsoft, it was shown that the average Canadian attention span has shrunk from 12 seconds in 2000 to 8 seconds in 2013, apparently a second less than a goldfish (details of the goldfish testing methodology were not included in the study, but the human methodology is – worth a read). There was also a notable difference between the attention spans of 18-25 year olds compared with 55+ year olds – the younger generation predictably had a shorter attention span. Again, no great surprise.

Generation Always On (AO) are becoming adults. This generation may have never heard a dial up modem and, in the payments world, may have never seen the analog “knuckle buster” of days of yore (looking at you @iankar_). While neuroplasticity is also at play here for the average attention span, Generation AO has not had to be rewired to the same extent as the general public – their expectations of immediacy have been there from birth. In this context, I see the Dash Button as the shape of things to come in retail and payments – people will no longer have the capacity or inclination to write shopping lists, or even to shop. If attention spans continue to decrease at this rate, then old paradigms for the way we pay and the things we buy will no longer cut it.