Every Business is a Payments Business

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Antiquated card systems bring unexpected players into payments. Photo: Sean MacEntee

“Leave a founder and a calculator alone in a room for 10 minutes and out comes a unicorn payments company.”

What are the calculations that would make companies founded on the disruption of taxis or hotels decide they should become payments companies as well?

This is the question of the year for 2016, according to Adam Atlas Attorney at Law, a firm advising on electronic payments and transaction acquiring. As Atlas points out, many companies that have nothing to do with payments have added payments services. Why do they bother?

Because it’s easier to become a payments company than to deal with antiquated card and payments systems.

Some of Atlas’ examples have made news recently by changing the way they pay contractors, like Uber and Lyft. Uber made the first move, revealing a plan to offer drivers bank accounts or prepaid cards when they sign up in order to recruit and maintain their labor force. Following the industry leader, Lyft premiered its Express Pay service, running on Stripe and allowing drivers immediate payout of earnings totaling more than $50.

Others have made different forays into payments, attempting to fill different gaps to ensure better service. Airbnb’s terms of service inform customers that the temporary rental company acts as its own transaction intermediary or “authorized payment collection agent” on behalf of hosts. Chinese ecommerce giant Alibaba created subsidiary Alipay as its payments platform; the service charges no fees, yet Alibaba waited 11 years for a third-party payments license. Even Snapchat, the popular video sharing platform has added a service called Snapcash: a P2P payments extension created through a collaboration with PayPal.

Each of these businesses is looking to solve the same problem: the technology that makes services via internet so seamless and convenient is being held back by the payments industry. The Internet of Value is catching up to the internet of information, the Internet of Things, and the Internet of Service.

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