As software transforms every industry and mobile brings the internet to everyone in their pocket, the legacy financial infrastructure hasn’t caught up.
Someone in Mumbai can create a website just as easily as someone in Manchester. People in Lima browse it just as easily as someone in London. However, it’s a different story when it comes to these people actually transacting with each other online.
This has left us in a situation where only 2 percent of consumer spending happens online, despite the web being more than 25 years old. We can argue over whether that number will wind up being 20 percent, 40 percent or 70 percent, but it will definitely be orders of magnitude bigger than it is today.
Today, the imbalance between smartphone penetration and barriers to moving money around online is more pronounced than ever. The response from developers and entrepreneurs is to build software to break down these artificial borders on the web and level the playing field for businesses around the world.
Entrepreneurs are bypassing the banks and going to crowdfunding platforms such as Seedrs to raise capital, and then using tools like Stripe to sell to customers globally. This is a far cry from the laborious process of applying for a bank loan, setting up a merchant account and then navigating everything from payment gateways to card networks.
Where does this leave payments?
As the internet becomes embedded in our daily lives, consumer behaviour online is shifting from browsing to buying. Accordingly, the next generation of the internet businesses will be geared much more towards commerce than advertising.
Companies like Airbnb want to connect buyers and sellers, convert mobile traffic into sales and sell to a global customer base instantly. They require a completely different set of payment tools to achieve scale quickly and compete in a mobile-centric environment. By building the tools to power this new generation of internet businesses and making it easy to process transactions from anywhere, we can increase the GDP of the internet.
Powering mobile commerce and the sharing economy
UK startups like Lyst and Grabble are using payments technology to build mobile-first business models and revolutionise the way we shop. Also, now that Apple Pay has arrived in the UK, iPhone users will just need their fingerprint to buy a ticket on Songkick, order dinner on Deliveroo, or book a cleaner on Hassle. This will give a significant boost to the UK’s app economy by dramatically increasing mobile conversion rates and keeping users engaged.
Further, companies in the sharing economy currently rank among the fastest-growing businesses. Payments used to be a blocker for this model, but now it’s an enabler. Marketplaces such as Kickstarter and Airbnb are successful because they bring the entire transaction onto the platform, making for a seamless and enjoyable experience for both buyers and sellers.
A challenge rooted in code and design, rather than finance
It’s just the start of things to come in payments. At Stripe we’re seeing a promising new era of social commerce on the horizon. We’ve secured partnerships with Facebook, Pinterest and Twitter to support ‘buy buttons’, meaning businesses will soon be able to sell things within the most popular mobile apps.
Powering this next generation of businesses and making it easier to move money around online is a challenge rooted in code and design, rather than finance. Taking this approach now is helping us advance the internet and creating a more economically interconnected world.