The subject of how we will be paid and make payments in the future was presented at the DaVinci Institute’s Night with a Futurist on Monday night. The presentations covered potentially major changes in the way we conduct business and interact as a society as technological advances in mobile computing enable new ways of exchanging things of value.
Futurist Tom Frey, Director of the DaVinci Institute, who had just arrived back from a presentation on the future of education to the Turkish Educational Association, led the program. Following his introduction of the subject, a panel comprised of Mark Fischer with Inspire Commerce, Rod Stambaugh (creator of MocaPay) and Arthur Brock joined him. Mike Cote, Editor of ColoradoBiz acted as moderator.
Mr. Frey discussed the concept of a micropayment as a digital transfer of money typically in an amount less than one dollar. Then he walked through a series of examples by different major companies, such as Amazon, Paypal and Google where there is significant growth of these small transactions. Finally, he discussed three trends that included fractal transactions, universal commerce and social currencies.
Fractal transactions address situations in which several different people or businesses worked together resulting in the sale of a product or service. When a sale is completed, instead of the payment going to a single entity who in turns distributes the money to all the participants, the money is paid directly to each participant. This capability is just now coming into existence. It serves to speed payments to vendors and reduce accounting costs. Mr. Frey predicted that this capability might lead to more joint ventures and collaborations where everyone is paid when a retail sale is completed and move away from common multiple tiered distribution channels using distributors and wholesalers.
The concept of universal commerce describes a situation where a person only makes a payment when a product is used. For example, a person may buy a printer and pay a price of $100. With universal commerce, the person would instead pay nothing at the time of purchase, but would make payments each time a page is printed. The machine would have the capability of tracking usage and sending data to the manufacturer who would in turn charge the person’s account. This form of business would be more like going down to the local copy store and using their printers instead of buying one of your own. The result would be to charge more for products that are heavily used by certain customers and less for others. Sales might take the form of fully bundled packages of equipment and technical support – similar to equipment leases for copiers.
The last trend of social currency generated the most comments by the panel and questions from the audience. This form of currency was described as an evolving shift from using money as a means of exchange. Instead, participants in a transaction use a perception of one or both parties where characteristics of knowledge, networks, reputations, talent, extended networks and accomplishments impact the transaction. Social currency typically cannot be bought or sold, but serves to amplify or enable a regular business transaction. Social currencies in the future will often take the form of points or alternative currencies for desired behavior.
When asked about the future of alternative currencies, the panel generally agreed that they would become greater in magnitude over time. And, if continuing currency manipulations continue as governments seek to effect public policy, leading to a loss of trust in ‘real money’, such conduct is likely to hasten adoption of these other ways of receiving and making payments.