Why I think I can disrupt the payments market
It was Spring 2000 and I was convinced we were going to disrupt the world of on-street car parking payment, replacing coin-based ticket purchases with the convenience of electronic payments. However, it was the advice that “trying to change consumer habits can take 10 years”, by a senior executive of Schlumberger, a French technology company who were global leaders in parking meter technology, that provided a sharp dose of reality.
Back then, almost all forms of remote payments were conducted over the phone. Websites were mostly information-based, and eCommerce was still quite basic. It would be another decade before the iPhone was born, but we believed the mobile phone would be central to the ease and convenience of payments, and with this backdrop, a friend and I launched our first business on New Year's Day 2000 (Y2K), called Itsmobile.com. We managed to blaze a trail in mobile payments in an era that utilized SMS, WAP, and IVR technologies. We launched Europe’s first online cinema ticket booking platform with seat selection using WAP, an early protocol used by mobile network operators before data networks. Amusingly, we added the web option as an afterthought. However, with the low adoption of WAP by consumers, it was the afterthought that succeeded. Lessons were learned. We then launched an IVR and SMS-based payment mechanism for car parking, branded as mPark and later Parking Tag, with services live in the UK, Ireland, Germany, Belgium, USA, and Australia. This success led to Payzone acquiring Itsmobile in 2003. Today, almost every city in the world has mobile phone-based solutions for parking.
As the years went by, technology and innovation accelerated. Mobile devices got smarter and broadband access gradually rolled out to every home and business. In parallel, online banking became more sophisticated, eCommerce steadily took hold and phone payments moved online (Web & Apps). Within a B2B context, cheque payments were decreasing and swiftly being replaced by electronic bank transfers. The days of needing to visit the bank daily to lodge cheques and fill in giros were gone – Almost.
There are a significant portion of merchants who still cannot sell online. This is usually due to the product or service being too bespoke or custom to lend itself to self-selection. According to a Federal Reserve Payment study, these transactions account for $630 billion in the US every year and they typically take place over the phone. This is where Prommt Payment Requests comes in.
It took over 10 years for eCommerce to proliferate the ecosystem to the point it is today and in parallel, technology was slowly catching up through the development of new mobile devices and faster mobile data service. Today, change is happening faster. While changing customer behaviours may have taken 10 years at the turn of the century, it is now taking 36 months - or even less.
COVID-19 was a trigger for customer behavioural change in payments and was also pivotal for merchants. Overnight, we saw new clients such as luxury retailers like Selfridges, Lunns Jewellers, and Bulgari adopt branded payment requests to help them sell while their doors were closed. For example, a Rolex can only be sold as part of a personal consultation and can’t be sold as an online shopping cart purchase. Instead, they were able to offer online personal consultations and add Prommt payment requests as part of that conversation, all done within an online context. Since then, luxury retailers and other verticals such as hospitality, automotive, and builders merchants are choosing to innovate their remote payments process. They are protecting their margins by reducing fraud, chargebacks, and eliminating card fees with the adoption of open banking payments.
Overall market dynamics are more favourable now for the disruption of the remote payments market than ever before. Consumers have a desire for convenience and frictionless purchase experiences, they are routinely transacting online, are familiar with 3D secure and SCA steps (Strong Customer Authentication) and typically use a mobile banking app. Added to this, is the arrival of open banking payments. While the open banking initiative has been around for some years, favourable market conditions, such as the availability of mobile devices, penetration of mobile banking, and such initiatives being supported by strong regulation are driving more rapid permanent change than ever before.
So what does the future hold for remote payments? For certain verticals, we are seeing our clients favour bank payments over cards, indicating a huge sway toward the desire to eliminate card fees, reduce fraud, and collect instant account-to-account payments. For example, one of our clients is the largest independent auction house in the UK, they have been using our card-based payment requests for a few years and launched open banking payments in late 2022. Within just a few months, they now drive 85 per cent of their remote payments through pay by bank, with just 15 per cent being paid by card. They have driven customer adoption through a range of payment orchestration tools that subtly nudge the customer to pay by bank, or if over a certain value, all payment requests pushed present a pay-by-bank option only. Customers are embracing this new payment method as it’s easy, and fast and they no longer need to go through a cumbersome setup of a payee via their bank.
Platform wide, we are seeing the average transaction value double that of a card value and while there are scenarios always more suited to card than bank, we are seeing that merchants are converting bank transfers with a more slick, convenient way of payment with open banking payments.
With market conditions driving change and consumers and merchants willing to embrace change, Prommt is perfectly positioned to disrupt the remote payments market. There have been many lessons learned as we pioneered and navigated the unchartered waters of payment transformation of twenty years ago, but the timing is perfect right now. The payment rails are in place, the consumer technology is in place and the consumer understands what to do.
About the author
Serial entrepreneur Donal McGuinness is CEO of Prommt. He studied Computer Science at DCU and Telecommunications Engineering at DIT and spent the early years of his career in the telecommunications industry. His experience in mobile payments dates to 1999 when he founded his first mobile payments company, ItsMobile. Donal was also a Non-Executive Director of the Irish Internet Association from 2009 to 2011 and a movie distribution business from 2002 to 2020.
In 2016 Donal joined a silicon valley startup in the identity verification space called Danal inc, where he set up and grew the global business outside of the USA as General Manager of EMEA until 2019 when the business was acquired by Boku Inc for $112 million USD.
Donal joined Prommt as CEO in 2019. He is an innovator and is passionate about payment innovation.
Founded in 2016, Prommt is a payments success platform that is revolutionising remote payments for enterprises and their clients. Its innovative solutions enable fast, frictionless card and open banking payments. Prommt is an enterprise-grade solution that is built for teams, supporting multiple locations and out in the field, reporting, and alerting capabilities. Based in Dublin, Ireland, Prommt is used by businesses today across Europe and the USA.