A Template for Defining, Designing, and Expanding Your Payments Universe

Sometimes a business, either at its inception or throughout its lifecycle defines what it does by the product it chooses to offer.  There is a classic example taught in business classes which asks the question, "what does the consumer want, a drill or a hole?"  This is an important marketing question.  It is important to consider what solution the consumer is seeking.  If you sell "drill bits" not holes and ignore the advent of new hole alternatives (laser?) will you become obsolete?  By looking at the customer desired solution instead of the product you can protect your business. 

Product Lifecycle Management requires a periodic review of internal and external influences.  This methodology is intended to help with a structure that can be adapted to many needs.

In terms of payments or money movement this was once done exclusively via paper; checks, money orders, bank drafts, commercial paper, etc.  This is no longer the case, in fact within a country there are multiple types of currency exchanged in their various forms as well.  Complete industries that relied upon the movement of paper, float, and related services are in heavy decline or now essentially defunct.  An analysis of the evolving Payment Universe may help companies determine their Strengths, Weaknesses, Opportunities, and Threats (aka SWOT Analysis) and adjust portfolios, priorities, strategies and tactics.

One of the areas where many payment providers stumble is the definition of the payment universe.  Many tend to look at the universe as a finite place that only encompasses what they do.  Acknowledging the entirety of the universe can be instrumental in understanding the competing methods, alternatives, trends, and possible extensions and expansions a company should consider.

Additionally the payments universe is continually evolving and concepts that were unfeasible even months ago may be poised for greatness due to changes in technologies, laws, and internal appetites.  This is not a "One and Done" type of exercise it is a recurring project.


The following graphic provides a simplified framework to consider in defining the Payments Universe.



Where Money Moves and Payments Are Made

This is a simplistic view and a template for looking at various aspects of payments.  While there are many forms of movement as well as many service levels, etc., money generally moves between these three types of entities, Individuals or Consumers - "C," Businesses (profit and not for profit) - "B," and Government (its various agencies and levels) - "G."  So in simple construct a payment from a Consumer (C) to a Business (B) is referred to as C2B, an identifier common to much of the payments industry.  This is adopted for all payment branches.

For example if we choose the Consumer to Business or C2B branch, there may be multiple elements that are worthy of defining further.  Areas to look at may include Tender, Direct/3rd Party, Industries, Retail/On-line, Class of Trade, or nearly any other category of interest.

As a brief, but incomplete example here is a fishbone framework on considering ways that money is represented or through which it is Tendered within C2B.  This can easily be worked up by an individual, but group input is better.

After defining the various means that money can be transmitted from a Consumer (C) to a Business (B) - C2B, we may choose a branch to define further.  For this example we will look at ways that Cash is Tendered, more particularly let us look at the definition Agent Programs.

Note:  An Agent Program is one where an entity, typically a biller, such as a public utility, contracts with a 3rd party to collect payments on their behalf.  An Agent Program is typically different than a money transfer in that the collecting party is acting, as the name implies, as an agent for the biller, whereas in a Money Transfer the collecting party is acting on behalf of the consumer.  Also, once payment is received by the collector in an Agent Program it is considered received by the biller, whereas a Money Transfer is only deemed collected when received within the systems of the biller.

Within the heading of Agent Programs there may be many types of questions we want to explore, for example we may want to look at the major providers.  We could simply list them.

• MoneyGram
• Western Union
• In Person Payments (IPP)
• etc.

We could then expand on each of then to identify what other products or services they provide.  Why?  Among the reasons is to see how else they affect the Agent Programs landscape but it might also provide insights into other Tender types involved in Agent Programs that may have been omitted.  For example, in Agent Programs checks are also accepted  on behalf of the biller yet 3rd party checks is not included on the Check branch of tender.  Remember the purpose of this exercise is to fill out and define the entire universe, create awareness and establish expertise.

This could also be done via an outline structure but since most people think and are able to expand on thoughts with visual stimulus this is a method that helps, each branch could be built out to ever more detail.  Here is an example of how an outline might look.
 

1)      Payments Universe

        a)      C2B
              i)        Tender Types
                      (1)    Cash
                              (a)    Agent Programs
                                     (i)      Competitors
                                             1.  MoneyGram
                                             2.  Western Union
                                             3.  In Person Payments (IPP)
                                             4.  etc.

Now and then new "bones" get added to the universe.  Each organization will need to identify how to deal with these, whether they are primary, secondary, etc., and identify their tactical, strategic, competitive, pricing, service level etc.

Foremost this is a template for adaptation and evolution.  It is simple in its form but properly developed can help a company define its Payments Universe as well as provide insights and visibility to those opportunities not yet capitalized upon.  If a company is willing to get out of its own way there are new ways to expand their role and stake in their (and adjacent) industries as the landscape changes and the product lifecycles evolve, go into decline and eventually die.