Dimpledough, Inc

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by Shawn Barrieau, CEO In the third grade it was stickers. By fifth it was baseball cards. I haven't thought about collecting things as a kid until I recently saw my own children trading the newest fad; Silly Bandz. You know, those colorful rubber bands that come in all different shapes? They're everywhere. As assistant coach for my six year old’s t-ball team, the biggest challenge used to be keeping players from building sand castles on the field. But the last game was quite different. Most of the kids had Silly Bandz and while one kid was batting, the rest were huddled in near the bench trading Silly Bandz! I'll trade you a blue seahorse for a red pirate hat In just a few short months these little rubber bands have become a new currency for kids, and it’s made me think about lessons for the payments industry. Silly Bandz represent the "whole" trading of goods – kids enabling trades on their own after agreeing to terms -- while players in the payments industry typically handle just one part of the full trade. Some companies enable monies to transfer, others confirm transfers at an agreed upon price, and still others record the transactions. If the payments industry were handling the trade of a Silly Band from one kid to another, the kids would stand at either end of the field and one company would communicate a kid’s desire to trade a blue seahorse for a red pirate hat; another company would confirm the second kid’s desire to trade the red pirate hat; and yet another company would actually transport the bands from one kid to the other. In fact, the payments industry charges quite a bit for this type of service. Sometimes we even broker a piece of the price (albeit small) that may affect human trading behaviors. For example we influence spending through things like interchange fees, or points on debit or credit card, loyalty credits, or fees on a prepaid card -- thereby influencing what payment mechanism is chosen to make the exchange of goods possible. Where's the value? As a payments professional, I spend a lot of time thinking about the ways in which our industry adds value to transactions. With Silly Bandz, all of the value is bound up in the product itself. The process of transferring the band from one 6 year old to the other creates no value outside of the transfer. But in the payments industry, we strive to add value during the transaction. Examples of value created during the transaction includes enabling the exchange of products and currency over long distances, moving products store to store, or enabling payments from the Web. Sometimes the value we bring is hidden from consumers, such as providing a payment gateway on Amazon.com. Sometimes it is quite visible, such as when we enable buyers to add a photo of little Sally proudly wearing her Silly Bandz on a gift card – and thereby influence how the funds on that gift card may be spent or even the addition of more funds to that payment mechanism.

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