I suggest one point needs clarifying. You write about why participants join a network, but, IMHO, don't nail one point: the economic model.
Participants must have a reason for joining. The card networks made that very clear when they set them up; in other cases, the benefit is not so direct, as basis points on volume.
Why do banks move money with ACH? Not because it makes a lot of money directly, but for the related benefits of customer retention and acquisition.
This is an unresolved question with payment methods such as stablecoins. Not only do they lack clear governance, but they also lack an economic model. One will develop, certainly, but there is not yet a compelling case for issuing stablecoins. Only a bit of FOMO and speculation on the benefits it will bring.
Much of my thinking on this was influenced by Tom Noyes. He is an enormous payment-network bull, since the networks offered both governance and an economic model from the start.
I might not be as bullish as he is, but his argument is very strong.
If customers are not asking for it, if it doesn't help grow my business or reduce attrition, if it doesn't contribute directly to my P&L, if I don't need it to stay competitive, why do I care?
This is a question new payment methods have yet to solve. And why I still have fun in this business
Yes, I agree. It all comes down to economics: what are end users willing to pay for? Who contributes functionality that delivers those benefits? And how do networks/consoria/platforms generate income and then offer rev share to compensate partners/scheme participants? I've been working on a paper exploring incentives aross the B2B ecosystem. I'll reach out to discuss. - EMc
As usual, a trenchant post.
I suggest one point needs clarifying. You write about why participants join a network, but, IMHO, don't nail one point: the economic model.
Participants must have a reason for joining. The card networks made that very clear when they set them up; in other cases, the benefit is not so direct, as basis points on volume.
Why do banks move money with ACH? Not because it makes a lot of money directly, but for the related benefits of customer retention and acquisition.
This is an unresolved question with payment methods such as stablecoins. Not only do they lack clear governance, but they also lack an economic model. One will develop, certainly, but there is not yet a compelling case for issuing stablecoins. Only a bit of FOMO and speculation on the benefits it will bring.
Much of my thinking on this was influenced by Tom Noyes. He is an enormous payment-network bull, since the networks offered both governance and an economic model from the start.
I might not be as bullish as he is, but his argument is very strong.
If customers are not asking for it, if it doesn't help grow my business or reduce attrition, if it doesn't contribute directly to my P&L, if I don't need it to stay competitive, why do I care?
This is a question new payment methods have yet to solve. And why I still have fun in this business
Yes, I agree. It all comes down to economics: what are end users willing to pay for? Who contributes functionality that delivers those benefits? And how do networks/consoria/platforms generate income and then offer rev share to compensate partners/scheme participants? I've been working on a paper exploring incentives aross the B2B ecosystem. I'll reach out to discuss. - EMc