Web 2.0, host John Battelle sat down with John Partridge from Visa and Dan Schulman at American Express, to talk about the future of payments. "It's a little bit like having Coke and Pepsi up here," Battelle said.This afternoon at
The unlikely duo discussed how the Web has transformed the industry. Value is shifting constantly, and new opportunities are popping up everywhere. Partridge and Shulman showed repeatedly that sometimes, payment companies are better off partnering rather than competing to create the most value. It was fitting that these two leaders from competing payment processors had such an agreeable conversation.
Blurring The Digital Line
Partridge said that 16% of Visa's payments are processed online, and Schulman said American Express was at 8-10%. But both agreed that the digital and physical distinction is actually becoming less important over time. "Distinction between online and offline is blurring," Schulman said. The same information overlay is in front of us now whether we're in the physical store or not. The only difference is whether we can reach out and touch the product after we look at the details on our devices.
Partridge agreed. "There's a convergence," he said. "That convergence is going to continue to happen."
Primary Brands & Partner Brands
Battelle asked these representatives of the old guard credit card companies whether insurgents like Square and PayPal were stealing the spotlight from them. In the pre-Web era, the Visa and American Express brands themselves were associated directly with payments, but online, they're increasingly in the background while these newcomers get all the credit.
Partridge didn't seem to mind. He noted that 46% of online transactions are made with a Visa product, including PayPal, Visa's largest online merchant. Visa and PayPal compete in some ways, but they cooperate in others. That's just part of doing business in the digital economy. It didn't sound like Partridge was too upset about Visa sharing the spotlight with partners.
Schulman seemed more keen to compete. He felt that traditional associations with the American Express brand translate well to the Web, connoting trust, security and responsive customer service. He said that was an asset to Serve, the new American Express direct payment platform, which has begun to move into mobile and compete with a variety of new payment processors.
Redefining The Commerce Lifestyle
"The commerce lifestyle is being redefined," Schulman said. Partridge agreed, adding that this results in the leading companies sometimes offering similar solutions. "It's going to come down to who can execute," he said.
Schulman noted that it's hard for the established companies to adjust to disruption, but it's worth the effort. He said that digital offerings make it possible to serve younger customers who don't want credit or have thin credit. The Web creates opportunities that traditional products haven't been able to penetrate.
Data: The Holy Grail
Battelle noted that payment processors hold some of the most valuable user data out there. It's a massive asset, but it's also highly regulated. "Data is the holy grail of digital commerce," Schulman said, which explains the barrage of daily deals and other ploys to get consumers to share their consumer preferences - and thus their data - on the Web. But those services aren't precise enough. "Data and information has to be opt in," Schulman said. "It has to be held private."
Payment data is not just for tracking consumers. It has broader economic value. It helps detect fraud, it helps merchants plan stores and target products, and it also helps personalize experiences for consumers.
The major payment providers are not just services. They're platforms for the huge amount of data they produce. Both Schulman and Partridge were enthusiastic about opening APIs to developers beginning this year.
Schulman and Partridge want their trusted payment networks to support smart, precise applications of data to create broad value. Paraphrasing Schulman, we'll look back five years from now and laugh about the email barrages in online commerce. That was just the beginning.
Check out the Web 2.0 schedule and watch the events live here.