New technologies could instantly pay all providers behind your purchase.
Imagine yourself sometime in the future sitting in front of
a television, watching your favorite show, and a pizza commercial comes on.
This is one of those commercials that hits you at exactly the right time and
you instantly start craving pizza. For the next few seconds you stare at the
screen and your mind thinks of nothing other than pizza. Finally you give in
and utter the single word, Yes.
Thirty seconds later, a flying pizza drone docks at your
house to deliver a piping hot pizza with exactly the right toppings. In
addition to the pizza the drone also drops off a six pack of your favorite
imported beer. Your "yes" command to the pizza drone launched an information
chain reaction, so the drone automatically knew what you wanted.
The marketing world has long tried to figure out a way to
combine the buying moment with the marketing moment. In this example, I take
it one step further and combine the marketing moment with the buying moment
and the fulfillment moment. There is no time to second-guess yourself,
because the transaction is complete: You will very likely have a slice of
pizza in your mouth before you realize how much money you spent.
Not only that, but everyone involved in putting that pizza
in your mouth will have been paid the moment you said "yes." This scenario
suggests the ultimate dream of marketers--a system providing instant
gratification, instant money exchange, and satisfied customers.
As marketers and retailers know, speed sells. Technologies
such as wireless handheld devices are helping automate the sales process by
eliminating the concept of both the store and the line to stand in. For
example, the emergence of a combination mobile phone and electronic wallet
will allow consumers to purchase items instantly; payments made by mobile
wallets can provide instant feedback as well as the location of the
consumer. For marketing people this creates value far beyond the dollar
amount of the transaction. Experts on the Internet have often theorized how
the targeting and feedback potential of the online marketplace will
dramatically change things.
Every transaction involves two sides of the equation, the
payer and the payee. While some version of the mobile wallet will be
changing life on the payer side of the transaction, we are also setting the
stage for some major changes on the payee side. Traditionally, non-cash
money transactions such as checks and credit-card payments have involved a
time float to allow time for the money to clear their respective accounts.
The initial recipient of money was always in the driver's seat controlling
the speed, timing, and amount of payment transferred to the secondary and
tertiary recipients down the financial food chain.
Today, the timing of transactions has accelerated, and the
traditional time float has gotten squashed to zero. We have begun to see an
era of real-time, nonlinear, fractal transactions.
A fractal transaction is simply an automated form of money
distribution. Money flows into the transaction, from one or more sources,
and instantly leaves the transaction, automatically distributing money to
one or more recipients. This may not sound like anything earthshaking, but
it is.
To begin with, fractal transactions remove the bottlenecks
between the paying customer and all those whose added value to the purchased
product or service requires compensation, such as retailers, warehousers,
call centers, trucking companies, factories, advertisers, and design teams.
When a purchase is made, money flows into a transaction and is distributed
instantly: no wait for payment to be authorized, and no wait for money to
clear.
For example, when you buy a book from Amazon.com, your
payment is instantly divided four ways in a split between the author, the
publisher, Amazon, and the shipping company. Additional recipients built
into the fractal transaction may be a co-author, a referring Web site that
gets a commission, or a warehouse worker filling the order.
The amount of money going to each recipient is determined by
how the fractal transaction is set up, and in the middle of the transaction
will be a bank or financial institution serving as a checks and balance
entity for the system. A typical e-commerce transaction will involve
multiple splits, such as among the manufacturer, distribution center, call
center, shipping company, and the point of sale, which in this case is a Web
site operator.
Ideas surrounding real-time distributed financial
transactions like this are still in the formative stages. Building a core
architecture for fractal transactions that is both open and flexible, yet at
the same time secure and accountable, will be the key to its success.
I'm aware of several patents that have been filed in this
area, but working models and functional business systems are still in the
experimental stage. The basic setup of the fractal transaction for selling
your new product will involve establishing payment strategies and building a
distribution plan. This information all becomes part of the fractal.
Once the fractal is set up, the product will be offered to
people in the online world who will decide if they want to distribute it.
Properly executed, a fractal transaction architecture will make it extremely
easy for Web sites to market your product. With good margins, an interesting
product could organically be posted on hundreds of thousands of Web sites
overnight.
Accountants and bookkeepers will need to rapidly become
better acquainted with the automated spreadsheets and structures necessary
to track and monitor these types of transactions. But the introduction and
growth of fractal transactions will happen quickly because they unlock an
efficiency the financial world has not yet known. The tempo of business will
ratchet up a few notches, new business models will begin to materialize, and
the old ways of doing business will begin losing participants as the flow of
money short circuits and passes them by.
About the Author
Thomas Frey, a former IBM
engineer and designer, is executive director and senior futurist at the
DaVinci Institute in Louisville, Colorado. Web site
www.davinciinstitute.com.
