Over my recent holiday break I read a number of 2015 prediction pieces, including a blog from one of my favorite authors, Walter Isaacson (Author of the Steve Jobs biography) entitled “The Coming Micropayment Disruption”. The snappy title caught my attention (and obviously engendered a bit of titling plagiarism on my part…hat tip to Mr. Isaacson), as did some of the parallels between his focus on Micropayments and my focus of the past few years on Macropayments.
Micropayments, according to Mr. Isaacson in his article are all about reducing the friction in content consumption and making it easy to move money and pay for only what you want, when you want to…directly to the content provider of choice. It’s about being certain about what you want to pay for, enabling a simple means of executing the payment and doing so in a secure way that makes paying and being paid on a very micro level easy
While these are great points for Micropayments, the same values of payment certainty, simplicity and security are the foundational elements of a coming Macropayment revolution as well.
So what are Macropayments?
If Micropayments are small, simple payments made for one specific piece of content out of a menu of possibilities, then I would define Macropayments as relatively large, complex payments covering a host of items. In other words, Macropayments are the daily reality of B2B payments where one business pays another for a variety of goods and services in a single settlement event.
In this type of B2B Macropayment, the actual settlement of funds is the easy part. Connecting the massive amounts of data associated with that payment to the receiving party, however, is anything but.
Leaving aside the anachronistic and incredibly fraud prone practice of paying with paper check still around in the US, even the slightly more modern electronic forms of payment upon which B2B businesses worldwide depend are insufficient for the task. In fact, 97% of all ACH payments in the US contain only 80 characters of data to communicate the vast amount of information needed by the receiver of payment. And in Europe, the SEPA standard allows for only 140 characters.
That’s right, our most modern forms of electronic payment in the B2B realm allow for communication of less information than the common tweet!!
Mr. Isaacson makes some great points about the need for change in Micropayments to make paying for individual micro-content easy. But on the other end of the spectrum, B2B Payments are also in desperate need of innovations to ease the flow of commerce and make payment certain, secure and simple. That’s why I believe a Macropayment revolution is coming..and indeed, the first shots have already been fired.
To discuss more about the need in B2B payments and what the coming revolution will look like, please join me for a free webinar exploring recent B2B payments research by analyst firm Ardent Partners on January 29th at 2:00 pm EST.