Blog: Faster Pussycat! Why Payments Need to Be Faster than a Speeding Laptop (May 2013)
By Nick Holland, Javelin Strategy & Research
I bought a new laptop the other day. I won’t bore you with the details of its specifications, but suffice to say, as a professional nerd, I get pretty excited about these things. In fact, I got so excited that I actually bought it as an impulse purchase (thanks Amazon for removing the ability for in-store procrastination). The time of this transaction was late the other evening. The time I got the actual goods—the following afternoon. What an incredible world we live in where the delivery of physical goods is closing the gap on the delivery of digital goods!
It wasn’t always this way—growing up in 1980’s England, the only way for me to experience the instant gratification of an impulse purchase was to visit a store and hand over cash. And digital content was physical too—it came on CDs. As for home delivery, there were a number of companies that provided weighty catalogs where you could peruse everything from Fame posters to Furbies and order them by mail or phone, with an expected gestation time between order and delivery of six to eight weeks.
I may be beginning to sound like the Monty Python skit about four Yorkshiremen, “it wasn’t like that when I were a lad …” But, it wasn’t. We live in a world that is so digital and so connected that anything less than near instant delivery (and gratification) is disappointing. Which is why the case for real-time payments is really hotting up.
For years, I went through vendor pitches around P2P services based on the idea of a bunch of friends going out for dinner and one of them forgetting their wallet (has this EVER happened?) Or, a parent has a kid at college and needs to send them money for a relatively urgent expense (not that urgent, just more urgent than mailing a check). But, the real case for P2P is neither of these—it’s that we have been conditioned for immediacy…
“I can download any song I want, ever, immediately. I can chat to any of my friends anywhere in the world immediately. I have access to virtually the entire history of world knowledge immediately. But, if I want to send (digital) money to a friend, it takes three days to clear?! Come on!”
—Nick Holland, Javelin Strategy & Research
As a 15-year-old, ordering from a catalog, the check I sent along with the envelope was not considered slow compared to the interminable wait for my Morrissey albums via the mail. Now however, transactions from sender to recipient are expected to at least match the speed of one click checkout to shiny new laptop—a day or less. And rightly so. I can download any song I want, ever, immediately. I can chat to any of my friends anywhere in the world immediately. I have access to virtually the entire history of world knowledge immediately. But, if I want to send (digital) money to a friend, it takes three days to clear?! Come on!
The financial services industry is indeed working hard to address new expectations of a radically truncated clearing window and in our recent report entitled REAL-TIME PAYMENTS 2013: Struggling Toward Revolutionary Change, we focus on the initiatives and solutions in play. The payments industry hasn’t lost the battle. Yet. But, times change fast and within a few years, who knows, I could be 3D printing my next impulse purchase.
The payments industry can’t be the weakest link here. Faster Payments! Kill! Kill!
Nick Holland is a senior analyst at Javelin Strategy & Research, leading its payment practice area and working with clients to gain strategic insights into payment trends. Holland has spent the last decade focusing on the intersection of payments, mobile, retail and security, working at Mercator Advisory Group, Pyramid Research, Aite Group and most recently with Yankee Group, heading their mobile money strategies practice. He can be reached at email@example.com. This blog originally appeared on Javelin’s site.
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