There is a lot of buzz going on right now about payment systems. First with the huge credit card theft which was seriously just waiting to happen (and will happen again), secondly with Google’s new Payment System which could have the potential to be interesting.
This subject is dear to me as I have spent more than my fair share of time in the payment system business.
So if I was to do it again (and I probably cant stay out of it completely) I have some ideas about it.
First of all these are the things I and google should do:
- Do not worry about integrating with the banking system (in fact banks need only a tiny part)
- Do worry about governance from the start
- Be transparent and open
- APIs , APIs ,APIs
- Allow people to do somewhat worrying remixes keepint the system honest
- Do worry about digital signatures and encryption.
- Create pragmatic= and effective Know your customer rules but don’t let them control and loose your business.
Google have an opportunity to do many of these things. In particular the first point about the banking system.
The banks will do anything they can to kill your business as a payment system. Afterall they have had a near monopoly for years in handling payments electronically.
Even though they do NOT handle the majority of payments in the world. Most payments are still cash and are handled easily and simply without the interference of banks.
This means they have two huge internal sources of cashflow that aren’t currently integrated.
Step 1. Linking the cashflows together to create GoogleBux
Linking those together would be the first step in the puzzle. That would simplify their operation and costs greatly. All they would have to do is to add a simple book entry system to their Google Account system.
Step 2. Allowing transfers between members.
How to turn this into a payment system then? Simply allow people to transfer parts of their GoogleBux balance to other users.
Now we have a payment system with probably a huge circulation of funds within the system.
Step 3. Cutting the cord to the banks
They currently use the banks to receive payments via credit cards to pay for Adwords. They Adsense members using antiquated paper checks or electronic fund transfer if you are lucky enough to have a US bank account.
Personally I would rather be able to spend my adsense money on adwords or other services than wait a year for $100 check that my Danish bank will then charge me $30 do clear.
Also what if I could go transfer my 67 GoogleBux to a friend in exchange for 400 dkk cash.
Someone might even make a business out of it and charge a 2% markup on exchanges to the banking system. Thus outsourcing the integration with each countries banking system to the free market. Google would save tons of moneys, headaches and legal problems.
At Reboot I talked with Malthe Sigurdsson from Skype about this as a solution for them allowing people to buy Skype credits in strange places where people don’t have credit cards. He said that they would like to do something like this, but fraud is a huge issue.
I think though that the clever people at Skype and Google could probably come up with some clever technological solutions for this. Such as not mixing hard and soft money