The payments industry has been recognized as the most exciting place in technology right now; in fact, payments is an industry that embraces disruptive technologies. Globally and in the U.S., startups recognize that electronic payments are customers' preferred way to pay. Our industry is becoming more innovative, with technology that promotes safety, security, reliability and usability. So, what does a startup really need in order to succeed in payments?
First off, you need a truly innovative idea. A startup has to offer a clear value-add in order to attract investors and customers. As you develop your idea, do your research. What is the market segment where you can offer the next best thing? 2015 is a big year for payments, and there is still room to engage customers before their behaviors are rote and their brand allegiances are formed.
For example, mobile payments are poised to take off following Apple Pay's debut. As people further embrace mobile wallets, other areas will also grow, such as peer-to-peer, contactless, frictionless and beacon payments. On the security front, customers are concerned about protecting their personal data from the advances of increasingly sophisticated criminals, and companies are eager to employ the latest safeguards. And, for merchants, there is a strong desire for seamless, real-time card-linked loyalty programs. There are many avenues for innovation and the payments industry is anything but static.
You also need a strategic business plan. How much investment in both time and money will it take to get your technology to market? And where will you secure your capital?
The importance of payments partnerships can't be overstated. Ours is a complex industry, and partnerships between incumbent players and startups drive payments innovation. Events and conferences are a great way to build relationships and develop those partnerships. The Electronic Transactions Association (full disclosure: I'm its CEO) provides a platform for payments tech startups to do just that at TRANSACT. This year the annual event is in San Francisco to maximize relationship building between venture investors, startups and established industry players. No matter what event or conference you attend, this is often the best first step to establish a partnership that will take your technology to market.
Once your idea is formed, capital secured, your partners on-board, and your product market-ready, finally, in order to be successful in this crowded marketplace, payments technology startups must ensure that they are bolstered by robust compliance practices--whether their own in-house policies, or the industry guidelines--and have a strategy to navigate the increasingly complex business and regulatory environment. Trade organizations, like the Electronic Transactions Association, actively advocate for federal and state policies that don't stifle innovation and allow the best ideas in payments to become reality.
The payments industry is open for innovation! So, what's your billion-dollar idea?