Peeling The Blippy Onion
Where are you? What did you buy? How much did you pay? Did you get a deal? This might sound like your teenager on their phone, but it’s what a new company called Blippy hopes to answer with a new Web 2.0 service.
Here’s the basic premise. What if you could broadcast everything you bought in real-time to friends that breathlessly follow your whereabouts? I’m at Starbucks and just ordered coffee. I just swung by Best Buy and got a great deal on an LG flat panel. I’m at Macys and just bought a new Le Creuset pot. You get the idea. Sort of like Mint meets Twitter. Yeah, the company says, there might be some privacy issues, but what if you logically separated your payment cards into ones for private purchases and ones for public purchases? A designated Blippy card so to speak!
Lets set aside whether this idea will get, or deserves, any traction and focus instead on how it works and the compromises that had to be made to get this sort of a service off the ground. Broadcasting something to a community of friends or followers in real-time in today’s hyper connected, super integrated world is easy if you know what to broadcast. And knowing what to broadcast only requires access to real-time purchase data. Ah, there’s the rub.
Let’s dig into the purchase data problem first. The initial challenge is that the open loop payment model is inherently private to some degree. Whether that is noble by design or an historical accident is open to debate. Nevertheless, very few, if any, participants have a full view of the purchase.
Merchants know, for example, what you buy, but don’t know who you are. Banks that issue cards know who you are, and where you shop, but don’t know what you buy. The payment networks see their branded transactions, but don’t have any idea what they represent. And because there are multiple payment networks, nobody has a total view of all transactions. That’s a gross over simplification, and there are exceptions to every one of these points, but it’s good way to think about it. The only party with a full view of all purchases is you, the individual cardholder.
For the opportunity that Blippy is chasing, this is a big problem. The best they can hope for is that the name of the merchant is indicative of what is being purchased. Perhaps people can figure out that Crystal Village Laundry is a laundry service, but good luck figuring out what purchases from Higgins represent. And while everybody recognizes Macy’s, no party in the open loop model really knows that you bought a Le Creuset pot except you and Macy’s (and they don’t know it’s you).
The second challenge is real-time aspect of the value proposition. Whether or not the issuing bank knows a purchase has happened depends on the type of card being used, the nature of the purchase, and the business practices of the merchant. A debit card used with a PIN authorizes and clears in real-time, actually in a single transaction. By the time you leave the store, a PIN debit purchase has already posted to your bank account along with the merchant’s truncated descriptor name. This is the best case scenario.
A credit card purchase or a signature debit purchase, on the other hand, is a two message transaction: one message to authorize the transaction (and hold the funds) and a second message to complete the transaction and capture the funds for the merchant. For many merchants, this happens at the end of the day or the next business day if on the weekend. Even though you were in Starbucks on Tuesday morning, the transaction might not clear and post to your account until Wednesday morning.
Taken together, it becomes somewhat unlikely that Blippy can broadcast in real-time where you are and what you are buying with any consistency. But no worry. Blippy has been able to come out of beta and get started. The company has shifted its focus to online merchants. Because these merchants hold actual purchase data that is mapped against user accounts, Blippy users can just share their username and passwords to relevant sites in order for Blippy to scrape the purchase history and broadcast it to friends. Blippy is up and running now with their scraping engine optimized for about a dozen leading merchants, including Amazon.com, iTunes,and Zappos.com. A far cry from the 500,000 plus online merchants in the US, but a start.
Focusing on online merchants is perhaps not quite what the company had in mind when it set out. But it’s an interesting starting point that clearly demonstrates the model. That’s probably what matters most right now. And while I probably won’t be sharing my account names and passwords with them anytime soon, it is fascinating to watch what people are buying in real-time. Even if I don’t know them.