24 October 2017
Alexander Peschkoff


Alexander Peschkoff - TEDIPAY

119Posts 540,915Views 617Comments
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.

Next victim? iZettle et al.

25 July 2013  |  3474 views  |  0

Card fees are to be capped in Europe. There is a lot of debate around that decision, and the jury is still out as to the mid- and long-term implications. For example, although Amex is not directly affected by the capping, they can be put under (a lot of) pressure too, by the retailers.

However, there is another (major) casualty in the making: iZettle et al...

iZettle has already started tightening the noose around their neck by lowering processing fees. By doing that they are attempting to fight off competition and win over customers. However, their business model is based on subsidizing the cost of the dongle (which they buy from Miura) on Day 1. If their profits are slashed, first voluntarily and then by the card fees cap, the house of cards will tumble as it will be taking them longer and longer to reach the breakeven point. Surely, iZettle, mPowa, Payleven and the rest of them are heading overseas to hedge their risks, but that's not going to help much.

mPOS market is over-saturated, with zero true differentiation (9 out of 10 players are using the same - repackaged - device...) With more dongles hitting the market, it doesn't take much to start offering payment processing services to merchants - mPOS dongles are already becoming a commodity, with prices dropping below $50.

Moreover, processing fee are already heading south, as shown above - EU is not an outlier, as some believe, but the first swallow. We live in a small connected world, and it's only a matter of time before the card schemes and the issuers get the squeeze elsewhere too (who likes banks these days?..) The situation will only get worse. 

What does all of that mean? Several things (in my humble opinion):

1. Prepaid cards will proliferate, becoming quasi-bank accounts. We still need to keep our money somewhere, right? If banks start charging (high) fees, where will consumers go?..
2. Payments will be an "excuse" to get customers onboard; to win the game, the service providers will have to offer other value added services (transit, in-store location positioning, tickets, merchant-led deal, etc.) - think of "unlimited SMS" offers by mobile operators to make you sign up, they then make money on other services.
3. As payment rails become more accessible and commoditized, payment form factors will gradually change. Even cards will undergo a paradigm shift - think of a single uber-card that will be used as a universal token to represent any source of payment consumer has.

Exciting times lie ahead. Mobile revolution has not even began.

TagsMobile & onlineInnovation

Comments: (0)

Comment on this story (membership required)

Latest posts from Alexander

Second bite of Apple

24 September 2017  |  3608 views  |  0 comments | recomends Recommends 0 TagsPaymentsInnovationGroupFintech innovation and startups

Loyalty is a four-letter word

06 May 2017  |  5809 views  |  1 comments | recomends Recommends 1 TagsRetail bankingStart upsGroupFintech innovation and startups

Before they move us, we move them

14 April 2017  |  6003 views  |  2 comments | recomends Recommends 0 TagsMobile & onlineInnovationGroupFuturistic Banking

Tap-n-PIN mystery

23 February 2017  |  4322 views  |  3 comments | recomends Recommends 0 TagsCardsPaymentsGroupFintech innovation and startups

Alexander's profile

job title CEO
location London
member since 2012
Summary profile See full profile »
I am the co-founder and CEO of TEDIPAY, the company that is bringing to the market a game-changing platform for secure mobile transactions.

Alexander's expertise

Member since 2012
115 posts617 comments
What Alexander reads

Who's commenting on Alexander's posts

Paul Love
Ketharaman Swaminathan
Anthony Pickup
Alex Lithgow Smith