26 September 2017
Graham Seel

Banks and Fintech

Graham Seel - BankTech Consulting

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Innovation in Financial Services

Innovation in Financial Services

A discussion of trends in innovation management within financial institutions, and the key processes, technology and cultural shifts driving innovation.

Booking a Taxi and Payments .R.evolution

11 June 2016  |  7009 views  |  0

It struck me today that a brief history of booking and paying for taxis provides quite a nice illustration of what’s happened to payments over the past 20 years or so. Here’s my experience.

Evolution

1980s: hailed or booked a taxi (from my home phone or a callbox), went where I wanted to go, kept an eye on the meter, and paid with cash.

1990s: same except that I paid by check.

Early 2000s:  same except that taxi drivers had stopped taking checks because they bounced too often, so I was back with cash.

Late 2000s: found that some tax drivers would take credit cards. Of course they expected a bigger tip to cover their 3% processing fee. And they used a manual card reader, which was obviously not connected to any network, and then processed the credit card slips through their bank. I usually paid with cash.

Early 2010s: taxi drivers started to use Square (or similar) to process their credit cards. This made it really easy for me to give a big tip (and made me feel a bit mean for “only” doing 15%). It was also network connected so my balance was checked before payment completed. And I got my receipt emailed to me. Progress!

Mid 2010s: along came Uber, Lyft, etc. Suddenly, I didn’t really have to think about how I was going to pay, or whether I had the right cash, check or credit card with me. Instead, payment was an integral part of the transaction. Now, the mobile app that allowed me to see how close the nearest driver is, enter the destination, get an estimate of cost, track the driver’s progress to me, also automatically hit my credit card and allowed me to add a tip (or not) and rate the driver.

Revolution

For me this latest stage of evolution is the biggest of all, and it underlines the quantum leap in modern payments processing for consumers. No longer is the payment a separate step in a transaction, but it is an integral part. As this increases to other transactions – retail, services, etc – it is what will drive elimination of consumer checks, reduction of cash usage (at least in developed countries), and will incentivize movement away from physical cards.

By the way, something similar has been happening for businesses, as supply chain automation has progressed from the days of EDI (“big companies only need apply”). We’ll see analogous growth in integrated payments for businesses over the next few years.

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job title Principal Consultant
location Concord
member since 2015
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Consultant to Fintech firms selling to, or partnering with, banks. Services include fractional Customer Success Executive, custom sponsored webinars, papers, etc.

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