The final end of BitPass, the micropayments service, is just another data-point that shows the increasing hegemony of PayPal and Google in the online payments space.
BitPass provided payment services to significant content producers like MSN, Time, Disney, and ABC. And the micro-content market, primary users of the BitPass service, is growing in leaps and bounds.
How is it then, even with all these pluses, good technology, strong backers, and an experienced management team, BitPass isn't financially viable?
Is it even possible for other alternative payment systems, bank or not, to enter the online or near-line market any more? Back in July, I posted on this question. My conclusion was that if anyone, banks especially, wanted to get on board they had better hurry up and do so. PayPal and Google aren't waiting.
The thing is, the value of a payment system is in proportion to the number of people who are signed up to use it. So the key question is not how cheaply you can make a payment, but how you can get enough users to create a self-sustaining network that will support the system.
It is my view that any alternative payment system that is not intrinsically linked to a transaction flow is doomed to failure. Google is tied to Adwords. PayPal to EBay. Even Oyster, the payment system used by the London Tube, backed by Barclays Bank, is tied to payments for fares. BitPass was not intrinsically linked to such a transaction flow.
Mobile telephones, especially in the context of mobile banking, are a source of transaction flow where there is still opportunity, albeit one where the door is already starting to close on banks. Clearly, telcos have an interest in protecting their existing customer relationships, but they also have an interest in getting them to use more data. Mobile banking, coupled with a clever payments play might be one way to do that.
Comments