Venmo rising: Why PayPal wants you to pay for purchases using the app

The act of posting payment details on an emoji-rich social feed is about to move to payments for purchases.  Venmo, the peer-to-peer payments service said to be most popular with millennials, is expanding its reach so users will be able to have that same experience when buying things.

PayPal CEO Dan Schulman announced this week that the option to pay with Venmo for purchases will be available for any merchant that accepts PayPal by the end of the year. To use the feature, users will need to enable it from within the app. It’s remarkably similar to PayPal One Touch, with the ability to split payments with friends and share what it calls the “excitement for each purchase” on the social feed.

“We think that’s powerful in the long run to think about Venmo being your most intimate social network,” said spokesman Josh Criscoe. “On Venmo it’s people you’re doing most of your activities with.”

But beyond offering users a back-up payment method, what’s really driving the move is a bigger strategy to connect Venmo to brands and generate revenue. While Venmo processed $6.8 billion in payments in the first quarter of this year and $17.6 billion in payments last year, Criscoe acknowledged that the peer-to-peer payments aspect of Venmo is not a money maker for the company. Venmo subsidizes the costs of the transactions, he said, keeping it free for users. But for ‘pay with Venmo,’ merchants will pay 2.9 percent plus 30 cents per transaction — the same price as PayPal.

“In the long term, it’s a way for merchants and brands to get exposure and connect with more users,” said Criscoe. “There’s a lot of powerful stuff here than just the buy button. We hope that Venmo is something that you can use to pay anywhere and everywhere.”

While ‘pay with Venmo’ was first rolled out in 2014 with selected merchants using the Braintree platform (e.g. Uber, Airbnb), the ability to use it with the millions of brands, including Target and Walmart, is significant, especially as the peer-to-peer payments space gets more competitive with the launch of bank-backed Zelle and rumors about an Apple rival to Venmo in the works.

Despite more competition in the peer-to-peer payments space, Criscoe said connecting the Venmo experience with brands has long been part of its vision.

“Venmo has always been on this path,” he said. “We have a really strong base of customers that are really loyal to Venmo and evangelize about it every day — it’s spread by word of mouth with little or no marketing spend.”

 

CardFree’s Jon Squire: ‘It’s hard to decouple loyalty from mobile’

Jon Squire CardFree on the Tearsheet Podcast

When you think about successful mobile apps you — and most people in the retail space — probably think about Starbucks, Taco Bell and Dunkin’ Donuts. Jon Squire and his firm CardFree are behind many of these leading retail apps and they’re just getting started.

Squire joins us on this week’s Tearsheet podcast to talk about what the special sauce is that goes into making a hit mobile app and what questions retailers should ask when interviewing mobile vendors. We also dig deeper into the role loyalty programs play in today’s mobile wallets.

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The excitement around mobile apps
“For merchants who want to embrace mobile, they’ve looked at the success Starbucks had with its app and wondered whether firms could control their own destinies and provide these services. What Dunkin’ proved was that it could work and even work in the franchisee model, where it’s more challenging to roll out new technology stacks. In the wake of Dunkin’s success, we’ve seen a lot of merchants hop on the bandwagon. The biggest driver and buzzword here is data — how do I get to know my customer directly? Is this the first opportunity in 20 or 30 years to market to that consumer on the go, directly to their device when they’re in the most relevant location? Retailers have also realized that if they don’t embrace the space themselves, they’ll have to partner with other people in aggregate plays that downplay their direct relationships with their customers.”

What makes a successful mobile app
“Historically, our team worked on the first Starbucks app and secondarily on the Dunkin’ application through another startup. What we’ve found is that there’s a huge gap in the marketplace for integrated mobile wallet solutions. There are a ton of players that offer payments solutions. But payments aren’t really broken. Then you look at loyalty, which has a hockey-stick effect when coupled with payments. But things like real-time offers, CRM systems, order ahead and beacons — providing an integrated solution for a merchant just didn’t exist three or four years ago.

For Dunkin’s original app, at its peak, there were 30 mobile vendors that needed to be cobbled together for the mobile commerce solution. That’s not tenable for an entity that’s trying to roll out something quickly and be agile. It’s crude but it really is the ‘one-throat choke approach’.”

How loyalty impacts spending and frequency
“With mobile, once you get a person using your service, the customer tends to be your most valuable customer. If you get 20 percent of your audience using mobile, they’re by far your best customers. That’s because they spend 2 times the amount of money in the basket and shop twice as frequently. It’s hard to decouple loyalty from mobile. If you remember when we launched Starbucks the first time around, loyalty wasn’t part of the package. It was literally just leveraging its prepaid card, which admittedly is a freak with a huge number of followers and could be considered its own form of tender in the U.S. When we did add loyalty, you did see that hockey stick of usage. You could see it in line, when that star dropped into the cup or when the gauge went up on your perks account — anything that happens in real time that rewards something a customer just did at the point of sale increases that behavior.”

Big in Japan: How blockchain startup Ripple plans to disrupt Swift

Blockchain startup Ripple has now cornered a third of Japanese banks and is set to reach half of them later this year, but the first mover among providers of distributed ledger technology has been much quieter in the U.S.

Ripple has been so successful with its payment projects that this year it’s pushing to shift focus to its network. The company was a first mover in the blockchain space and has been relatively quiet and productive compared to its “vendor” peers like Hyperledger or R3 CEV. More recently, however, it has been anything but shy about going head-to-head with Swift, the current hub at the center of the global banking – which makes it hard to ignore how few U.S. bank partners Ripple has.

“[Ripple] is looking to bring some of the big boys to the network but as you can imagine, those are some of the biggest beneficiaries of the inefficiencies of correspondent banking,” said Javier Paz, a senior analyst at research firm Aite Groupe.

Ripple’s Patrick Griffin, senior vice president of business development, said the company has developed the first blockchain network with rules and commercial standard legal agreements. Its biggest obstacle now is in growing its sales team quickly enough that it can keep up with its innovation team, Griffin said. The company now has 150 employees.

Although it’s clear cross-border payments is due for an overhaul, it’s not so clear that Swift is. Banks and fintech companies embrace collaboration and partnership and the idea that the latter will come eat financial incumbents’ lunch is now a thing of the past. Most of those banks belong to both the Hyperledger project, of which Swift is a board member, and the Swift network itself.

In cross-border transactions, there are generally multiple stops a payment makes before it goes from the payer to the receiver. If, for example, someone in India wanted to send $1,500 to someone in the U.S., that person would probably visit a local bank perhaps unable to make that transfer, so that bank would send the payment to another Indian bank that could. The payment then goes to a U.S. bank which sends it to the recipient’s local bank, where the customer would finally pick it up. Each stop along that payment’s way eats up time and money in exchange and holding fees.

Swift’s biggest problem is that of “nostro accounts,” basically correspondent bank accounts – and that’s where Ripple can provide real value to the system, said Tim Coates, managing consultant at Synechron. Swift announced it is running a blockchain proof of concept with Hyperledger technology this January – months and in some cases a year after most of its U.S. members began running their blockchain PoCs. Damien Vanderveken, head of R&D at SWIFTLab, said it’s looking to see if blockchain technology can minimize or eliminate the friction brought by nostro accounts, but did not comment further on the project.

“The nostro problem is a big part of Ripple’s value proposition,” Coates said. “If we can do realtime settlements then we don’t need a whole store of nostro accounts. If not, then we always need a buffer of funds in each account and that buffer is just locked away. We shouldn’t have to put a lot of money away so we can exchange money between banks.”

Swift effectively is looking for ways to allow banks to use existing pipelines of connectivity, like Swift’s messenger, that don’t necessarily rely on nostro accounts but use other types of messaging, said Javier Paz, a senior analyst at research firm Aite Group. Effectively, Swift would be willing to disrupt itself to keep away competition like Ripple.

“Ripple’s success has been in cross-border currencies first in the peer-to-peer space and simple remittance and transfer across the globe,” said Ramesh Siromani, a partner in the financial institutions practice of A.T. Kearney, a global strategy and management consulting firm. “But to gain more volume attraction and network growth would require signing up more banks across the globe and in business-to-business payments where volumes are bigger.”

Why Zelle is more than just a Venmo clone

When a product’s name becomes a verb, it’s safe to say it’s caught on. The popularity of ‘Venmoing’ pizza or beer money goes one step further and offers proof that mobile peer-to-peer payments have changed the way Americans interact with money. For its largely millennial user base, Venmo is a social network that lets users add emojis, have a little fun and make transferring money less transactional. For banks, Venmo occupies a peer-to-peer payments space they haven’t been able to crack — until perhaps now.

Zelle, a peer-to-peer payments system run by major U.S. banks, is rolling out this year. Last month, Bank of America was the first major bank to announce Zelle integration into its mobile banking app, and others will soon follow. Zelle has often been portrayed as the banks’ way to go after PayPal-owned Venmo. Recent headlines called Zelle’s launch a “war on Venmo,” or “Venmo killer.” But it may be just a sign that the peer-to-peer payment marketplace is now large enough to accommodate multiple players, including older customers who are less likely to post an emoji every time they’ve made good on their promise to repay a friend back a few dollars.

Zelle itself is a rebranding of the bank-led clearXchange peer-to-peer payments network, run by Early Warning and owned by a consortium of major banks. It’s a network that will let customers of 19 major banks to make instant payments to each other, and through partnerships with payment processors, Visa and Mastercard, credit union customers will be able to use it, giving it huge growth possibilities.

Beyond a new option to send money to friends, Zelle may be out for a much larger piece of the pie than just Venmo users. With $17.6 billion in payments processed last year, Venmo is a force to be reckoned with. But Zelle developers say they are aiming for a much larger market.

Zelle’s marketing strategy focuses on consistent branding emphasizing the user experience — the security and the rapidity of payments — rather than the social element.

“When we talk about Zelle, it’s about a target market that ranges from 18 to 54,” said Jeremiah Glodoveza, vp of communications at Early Warning. “When we did our research, social sharing or those types of features, sure they may have appealed to a subset of that segment, but not all of them, so what we’re really optimizing is for an ubiquitous experience and that’s why some of that functionality wasn’t prioritized.”

Although banks may be behind on peer-to-peer payments, they have a strategic advantage over competitors with control over the payments infrastructure and inbuilt trust among some users. So rather than trying compete head-to-head with Venmo, Zelle is likely to organically draw in a large customer base.

“They just have to have a viable alternative,” said Bob Meara, senior analyst at Celent.

The peer-to-peer payments market may also be a way for banks to keep customers from leaving the bank’s ecosystem, increasing the likelihood that they may use other bank products.

“This is bigger than peer-to-peer payments,” said Meara. “Every time Paypal, or Square or Venmo takes a customer interaction away from a bank, that’s engagement a bank doesn’t have with its customers. If banks can keep their users engaged, then they have more of an opportunity to cement relationships with customers while providing a broader array of services.”

Venmo, however, says new entrants in the peer-to-peer payments marketplace is a net positive.

“The common enemy is cash, which makes up up the majority of payments between friends today,” said spokesman Josh Criscoe. “There’s plenty of room for several more folks in the market, so we think that if any additional folks enter the market, we welcome it.”

Criscoe said Venmo has a loyal user base built on word-of-mouth recommendations and social sharing. While it can take 24 hours or more for money to transfer over Venmo, he said instances when people need the money immediately is more the exception than the norm. He added that PayPal’s recent partnerships with Visa and Mastercard will allow Venmo users instant access to funds later this year.

While Zelle has the prospect of broad appeal due to the ability for bank accounts to interface directly with one another without requiring a third party, Zelle could benefit from taking a page from Venmo through social media outreach.

“Banks definitely should be looking at what Venmo is doing as far as connecting the user base using APIs from Facebook connections and other social media aspects to more easily connect consumers to each other,” said Brendan Miller, principal analyst at Forrester. “That was the secret sauce for Venmo and it’s something banks should try to replicate.”

How financial tech startups are reaching out to low-income Americans

The term “financial technology” may evoke images of wealthy sophisticates using their phones to do their banking and manage investments. Recent data shows that adoption rates skew toward younger urbanites. But financial technology companies like WiseBanyan are looking to new ways to reach lower-income customers, including those who don’t even have a bank account or use payday loan services instead of traditional accounts.

The market is big: According to a Federal Deposit Insurance Corporation study, in 2015, 7 percent of the U.S. households were “unbanked,” meaning no members had a bank account. Unsurprisingly, unbanked rates were higher among low-income customers, and outreach to this segment of the market has been a challenge for the financial services industry as a whole. Among the reasons cited for not having a bank account were insufficient funds and high fees.

The Pew Research Center defines lower-income households as those whose incomes are less than 67 percent of the American median household income, roughly $36,000. This segment of the population, according to Pew, is about a third of the U.S. population. Industry watchers say the traditional banking system isn’t designed for lower-income customers, creating space for financial technology companies to fill the gap.

“Financial technology offers the potential to better serve consumers on a host of issues where current products offered by banks either don’t meet the needs or the products offered by banks are at very high cost,” said Aaron Klein, economics fellow at the Brookings Institution.

Financial technology companies reach lower-income customers through easier access to money, credit and lower-cost services, he said.

One area where lower-income customers haven’t traditionally been considered is investment planning, often called “wealth management.”

WiseBanyan, a robo-adviser app, offers automated investment advice after analyzing its customers’ financial goals. Unlike traditional brokerages, it allows customers to deposit and withdraw without fees, regardless of income category. CEO Herbert Moore said the app’s goal is to reduce barriers to entry to allow individuals of any income category to achieve their financial goals.

“As a firm, we believe that people of any income or asset level should be able to achieve their financial goals,” he said. “We can help folks who would otherwise not be offered a service.”

Moore said a quarter of his 23,000 customers have incomes under $50,000. The app’s revenue stream comes from value-added services, including a fee-based tool that helps users look for tax deductions. These types of money management tools could potentially benefit a large swathe of the American population.

Legacy banks, however, note that low-income customers can take advantage of specially-tailored products to meet their needs. These include including low-fee accounts, like the Citi Access Account, and prepaid visa cards that offer many of the features of checking, like Chase Liquid or PNC SmartAccess prepaid visa card. Citi Access Account customers pay a $10 monthly fee that can be waived if they meet certain conditions, while Chase Liquid and PNC SmartAccess cards both cost around $5 a month.

“Our goal is to get people who are out of the mainstream— often for reasons that aren’t their own fault— to give them the tools they need to get back in the mainstream and hopefully become PNC customers,” said a PNC Bank spokesman.

Still, industry watchers say that financial technology companies have an opportunity to fill a void by offering banking and financial services to lower-income customers, said Courtney Robinson, policy counsel at the Center for Responsible Lending, a non-profit whose mission is to ensure a fair, inclusive financial marketplace for borrowers. “There is a gap that’s being filled for lower income borrowers, borrowers of color.”

Despite the advantages that financial technology companies offer, Robinson stresses that the lending space among startups still skews towards higher-income borrowers, and customers still need to be vigilant against high fees and lending rates.

“While some are masquerading as something different or unique, they’re offering almost payday loan-like prices,” she said.

For legacy banks, partnering with financial technology entrepreneurs may be the best way forward to enhance access. Through a $30 million contribution to a five-year partnership with the Center for Financial Services Innovation, for example, Chase aims to support financial technology innovation through funding, mentorship and support for early-stage entrepreneurs.

“It’s going to be us working together that’s ultimately going to reach low-consumers,” said Colleen Briggs, executive director of community innovation at JPMorgan Chase. “That’s how we’ll move the needle.”

‘When you start, you don’t know people will pay’: Zuora is shifting ecommerce from products to subscriptions

When publishing platform Medium announced it was shutting down its advertising sales group as it pursues direct payments from readers, it wasn’t solely about the brokenness of ad-supported media. Something bigger is going on that speaks to all of ecommerce. The results point to a massive shift to subscription payments. New data shows that subscription-based companies are growing nine times faster than those in the S&P 500.

From owning products to subscribing to services

Customers no longer need to own products in order to use them. The sharing economy, popularized by firms like transportation-on-demand platform, Uber, is dramatically changing the definition of what companies do and how they provide value to their customers. Examples abound: GM, arguably one of the flag bearers of this old-school product-centric focus, no longer defines itself as a car company. The GM of the future is all about personal mobility.

The company launched Maven in 2016, which organizes its activity in ride and car sharing programs, including in-house technology development, the firm’s $500 million in Lyft, and its partnership with Uber. Users of the firm’s Maven app can personalize their transportation experience by accessing their music and maps in Maven cars via an integration with Apple’s CarPlay and Android Auto.

“Maven provides on-demand access, choice and ease of use. The right vehicle and right mobility service for the right trip at the right time,” said Julia Steyn, GM vice president, Urban Mobility Programs. “With more than 25 million customers around the world projected to use some form of shared mobility by 2020, Maven is a key element of our strategy to changing ownership models in the automotive industry.”

Putting customers in the middle of the business model

Subscription companies growing faster
subscription companies growing 9x the S&P: Zuora

Powering payments for companies making the transition from products to subscriptions is Zuora. The 10 year old company services three types of enterprise customers, including technology players, media and entertainment firms, and companies undergoing big, transformational moves to subscriptions. Zuora works with multinational manufacturing firms like Schneider Electric, NCR, and Arrow.

For media firms like Medium, moving to subscription commerce isn’t as simple as ripping out ads or replacing buy now buttons with recurring payments. The entire focus of the business changes, and it begins by treating users as more than just a set of eyeballs.

“We don’t define subscriptions as just charging a monthly fee. It all begins by putting the customer at the center of your business model,” said Tyler Sloat, Zuora’s chief financial officer. “Then you have to figure out how to acquire customers, engage them, and after earning the right, to monetize them.”

Designing the offering and optimizing pricing

One of the major challenges in moving to subscription commerce is determining the optimal product and pricing mix. Its early work with large firms transitioning to this new model gave Zuora insight into just how hard it can be to get a subscription offering right. “When a company launches a subscription for the first time, you can’t be sure that people will pay,” said Sloat. “Until you start charging a customer, you really don’t know the assignment of value he places on what you’re selling.”

To begin the transition to subscriptions, product-centric firms need a whole new set of metrics. Late in 2016, the payments company launched its Insights product. By crunching financial, behavioral and demographic data, Zuora can now help clients develop a deeper understanding of their customers, using metrics like usage intensity trends, user similarities, engagement level, churn probability, and user personas. Companies can then begin testing how this information impacts growth of new subscription products until they ultimately find what works best.

Subscription in the media industry

Medium’s move away from ad-supported content was really more a statement about its entire business model. Putting readers at the center is certainly a departure for media firms that have had to employ sensational headlines and annoying page breaks to juice pageviews. For media firms reliant on ad revenue, the tradeoff  had always been choosing just how far to sacrifice the customer experience to keep advertisers happy.

Not everyone thinks that media firms will be able to successfully wean themselves off advertising and cross the payment chasm. “Medium’s move from ad-supported to subscription supported is just out of the frying pan and into the fire,” said Wheeler Winston Dixon, a professor of film studies at the University of Nebraska, Lincoln. “With so much free content available on the web, I think people will resist the idea of paying any subscription fee at all for content, especially when Google News offers more than 90% free content, supported by ads. People just get AdBlocker, and view it for free.”

For now, Zuora is doing more than just processing recurring payments for subscription businesses — it’s helping businesses experiment with the model. Sloat thinks Medium and other firms will find that it’s not one-size-fits-all and that the attrition that comes with putting up a paywall can be mitigated by making multiple offers.

“Medium can look to Adobe’s launch of its own subscription product,” he said. “The company saw the writing on the wall and that the business was moving away from buying software. But it rolled out its subscription product, including some products in the subscription and excluding others, as it gradually migrated users away from licenses and upgrades.”

Real world blockchain applications with ACI’s Mark Ranta

On this week’s episode of the podcast, Tradestreaming reporter Josh Liggett interviews Mark Ranta, the global head of digital banking solutions at ACI Worldwide. Mark is responsible for the day-to-day management of the consumer digital banking offerings within ACI.

Josh and Mark discuss tough issues about the changing payments landscape, zeroing in on blockchain and distributed ledger technology. Mark shares his views on the acceleration of payments and what’s really holding things back.

Can blockchain really be the future payment rails? Listen on to find out.

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Below are highlights, edited for clarity, from the episode.

The speed of blockchain

When you look at blockchain and its potential, the biggest thing for us about the speed of payments is the transparency at the final piece of the puzzle — the running through the final clearance of the payment and the money moving from account to account through a central bank. That final clearance of the payment is probably the hardest thing to speed up today. With blockchain, the movement is instantaneous from ledger to ledger. The clearing and final settlement would work in an instantaneous and transparent manner.

Getting institutions together on the blockchain

There’s another piece of competing technology that has a say in the discussion: open APIs. The idea of working together as an ecosystem is being driven hard by open APIs and the Payment Service Directive II in Europe. You see us coming together as a community to work through how we’ll set up our APIs to enable third party payment providers to come into the ecosystem and elevate the pool for everyone. The mental shift that’s happening around APIs — that innovation can happen outside our walls — can help our blockchain discussion regarding working together as part of an ecosystem.

ACI’s PoC with central banks

At a high level, ACI was looking at blockchain from a payments perspective. We wanted to take a look at whether blockchain could be the future payment rails. We found that the blockchain can work. We also wanted to see where the technology is on its maturity curve on the consumer side. The current technology, though, is too immature to handle the amount of volume from a consumer payments perspective. We do see blockchain as being mature enough to move to market in corporate payments and some of the cross-border remittance cases like the kind Visa and Plaid announced at Money 20/20.

With Go store, Amazon understood what mobile wallets missed

Mobile wallet adoption at retail stores is all but non-existent. Mobile wallets at the register saw ZERO growth in 2016, and accounted for a measly 0.6 percent of Black Friday sales in retail stores.

The problem with mobile wallets is that it is not easier nor more convenient than swiping plastic. It doesn’t save time but actually adds friction and uncertainty whether or not a user’s mobile wallet will be accepted at a random store.

What does seem to work, at least to a certain degree, are branded payments solutions that also act as loyalty programs. Most famous here is the Starbucks app, widely considered the most successful mobile wallet, responsible for approximately a quarter of the chain’s transactions. When there’s some added value, customers are happy to pull out their phone.

And now along comes Amazon and schools everyone about how to get it right. The retail giant’s Amazon Go store went the extra mile and addressed the true point of friction in the purchasing process: checkout.

The Seattle-based store, which is slated to open to the general public next year, uses computer vision technology and other sensors to know which items the customer took of the shelf. You swipe your phone once when you enter the store, choose the items you want and just walk out.

Now that Amazon’s done it, it is not hard to imagine new offerings of checkout-less stores-as-a-service to SMBs connecting brick-and-mortar stores to cloud-based payments solutions. Perhaps Google, Apple, Samsung, and Alibaba will give such sensors for free when a store joins their payment services.

What Amazon understood better than mobile wallet operators is that customers are not looking for a better way to pay — they are looking for a better way to buy. That’s a big difference. Mobile wallets solve a problem customers didn’t care about.

This is good day for commerce and a very bad day for impulse buyers.

Through AppExchange, Salesforce is going deeper into financial services

What started as a CRM has turned into a platform that helps companies manage the full customer lifecycle: from marketing, to customer adoption, all the way to processing sales.

Fintech companies have helped turn Salesforce into a platform with broad financial capabilities. There are countless apps and companies specializing in bringing finance to Salesforce. Just check out the Salesforce AppExchange, which currently  has 178 specific apps under the finance tag.

Accounting apps like Quickbooks enable companies to run their accounting departments from Salesforce. Companies like Jungo bring automation to loan officers. The Albridge integration lets wealth managers consolidate client information, update positions, and provide reports.

“Other companies are working on wealth management, accounting, and other financial integrations for Salesforce, but we chose to go a different route,” said Micaiah Filkins, co-founder and president of of sales and product of AppFrontier, a provider that brings payments to Salesforce. “Over the past few years there’s been a trend in frictionless payments for financial services. We saw the incorporation of seamless payments into Salesforce as a no brainier.”

AppFrontier is part of a growing group of companies designed to help customers get the most out of Salesforce. Its product, Chargent, works natively with Salesforce, communicating with payment gateways and connecting payment processing to the platform. This allows CRM administrators to manage one time and recurring payments from Salesforce, providing a one-stop organizational tool for users.

Technology companies have jumped on the opportunity to provide new services to Salesforce customers, but these companies exist only because of the ability to customize the platform through third party apps.

Salesforce’s skeleton structure allows people to create an experience that caters to their needs. Individuals can integrate apps listed on the app exchange or hire a consultant or developer to create a more personalized service. For companies that use Salesforce for accounting, incorporating payment capabilities to the platform can be a smooth and simple transition.

Though there are many companies that specialize in providing third party services, there may be an issue they’ll have to deal with in the near future. If Salesforce decides to develop its own financial services functionality into the platform, third party apps may seem themselves competing with Salesforce itself.

“Third party apps, like those providing payment processing, are one way to put a nice addition to the structure while keeping everything under one roof,” said Dan Pelberg, founder of Pelberg Consulting, a Salesforce consulting firm. “There are countless third-party companies creating additional functionality for use within Salesforce. But the game will really be changed once Salesforce decides to allow for payment processing within the basic structure of the platform itself.”

Salesforce has its own suite of services for financial firms. The Salesforce Financial Services Cloud was launched in August 2015, providing tools for advisors at wealth managers, insurers, and banks.
The firm has also started to rollout in-house payment processing with its $2.8 billion acquisition of Demandware, an ecommerce service provider, earlier this year. At the 2016 Dreamforce conference, the company was rebranded as Commerce Cloud.
Though Salesforce is getting involved in payment processing, Filkins believes it won’t impact Chargent. Commerce Cloud targets retail ecommerce sales specifically, not broad payments processing. Creating an ecommerce solution is one thing, but moving into the regulatory nightmare of payments is a whole other ballgame.
“Salesforce doesn’t get into specifics. It’s primarily a platform company, and has been successful staying horizontal,” remarked AppFrontier’s Filkins. “They are dabbling in payment processing, but going deeper into payments and getting elbows deep into regulation and compliance is something they don’t want to get involved in.”

Hi 5! The top five fintech stories we’re following today

top 5 weekly fintech stories

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Traveling with invisible payments

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Credit scoring that’s old and new

Online credit scoring doesn’t have to be alternative to be innovative. While there seems to be room to change things up, some tech firms are trying to improve existing scoring methodologies, instead of throwing the baby out with the bath water.