The Disruption Hypothesis

October 31, 2017

M-commerce, given its relatively one-dimensional nature involving the consumer and a provider, is relatively easy to figure out. After years of trial and error, some of the challenges related to the technology for m-payments are gradually falling into place.

That said, the biggest difference between the two is related to the aggregation of disparate domains.

If we are strictly operating in the virtual environment, we can get away with collating different sources and presenting them to the end-user in the form of a catalog. Once a particular choice is made, a dedicated channel is established between the end-user and the provider domain. The business model is straightforward, and regulatory oversight is relatively simple.

In the real world, we are typically faced with two choices – we can either leapfrog or leverage the legacy environment. If we decide to leapfrog the legacy environment, adoption is relatively simple but then scale becomes a challenge. If we decide to leverage the legacy environment, figuring out adoption is challenging but once we do that, scaling the product or service becomes relatively easier. While there are exceptions to this all around, this is not a bad rule of thumb to follow in the ideation phase.

In many ways, this is also a good way of testing the disruption hypothesis.

The progression of m-commerce to m-payments is not just about moving from the virtual to the real world, but more importantly, it is about figuring out what aspect of the shiny new gizmo should be disruptive versus what aspect needs to leverage the legacy environment. At a tactical level, it is about figuring out all the challenges associated with true aggregation of disparate domains.

The challenges with m-payments are truly multi-dimensional. At a technology level, collation and presentation of a catalog will not accomplish true aggregation of all the disparate domains across the issuance and settlement environments. At a business level, the complexity of which entity pays in versus gets paid out is a lot more profound. At a regulatory level, well, we do not even know where to start but what we do know is that at a bare minimum, we will either need numerous existing regulators to come together in a single cohesive manner or we will need a brand new regulator that can truly understand and weigh in on all the different industries involved.

Given that we are just embarking on largely testing the technology elements of the m-payments space, we clearly have a long way to go before we can start calling the existing business models a success let alone lay the regulatory debate to rest.

While m-payments should get us off to a good start on the relevance scale, we will need to progress to m-transactions to get us to the magical number of 10 transactions a day. If we feel the current challenges with m-payments are daunting, how will we ever figure out what we need to do to drive adoption and consequently scale m-transactions?

Check out Mehul Desai’s August of Money.

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