Payments Views


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, iTunes,and 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.

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Steve Klebe
11 years ago

Great points!!
This reminds me of conversations with some senior folks at Ariba early on during the bubble days. They had all of these grand plans about automating BB procurment and payment. Unfortunely these folks were utterly and completely clueless about these same sorts of issues that you point to in your note.
At a recent media conference where I was on a panel, the question from the audience was, “what technology was likely to solve the micropayment challenges?”. I explained that technology has little to do with it. It isn’t a technology issue. There are many issues but probably the largest is that people seem to care regardless if they get shafted over $1 or $100 and the customer service costs of handling a $1 tx just won’t scale.

Deborah Davenport
Deborah Davenport
11 years ago

You’ve eloquently fleshed out what went through my mind in the first couple of seconds after reading the initial Blippy announcement.

Blippy isn’t unique in being an insufficiently thought-through proposition. The bigger picture, which Steve alludes to above, is that the Social Networking investment environment feels eerily like the Dot Com era. Not everything cratered when the Dot Com bubble burst – think Amazon – but an awful lot of money vanished into the mist. Investors and hedge funds should be asking themselves where they will be when the Social Networking bubble bursts.

Philip Andreae
11 years ago

Thanks for opening the dialogue. When I first heard about Blippy I pondered the privacy and where in the network the data could ALL be extracted and did not get it. The idea of screen scrape, I get. Not sure I’d want a Blippy client sitting inside my computer. Who knows what else it will try to collect about my behavior.

Orwell maybe should become mandatory reading for anyone on a social network. The ability to communicate is fabulous the risk of Big Brother watching is horrendous.

Albert Drouart
11 years ago

I have trouble thinking that this is really the right way to go about this type of service.

For CNP/Online merchants why not empower their shopping cart/order management systems to have additional features that allow at-checkout sharing directly to the social networks? Are people going to sign up for another network just to track friends buying? There are some awesome light-weight tools out there that would give the maximum control to the consumer and the merchant and potentially increase repeat buying because of the social features. Online merchants are probably making these investments anyway given the overall social, real-time movement.

For Card Present, I guess they might have had a solution, but it probably would mean going to the POS terminal (if they were all running iPhone OS… aaah) and just make it part of the platform… make it part of the checkout decision.

Like others are saying about the FB privacy issue — it isn’t whether people want to share — that they want to — but you need to give them good experience and control. I’m not convinced yet.

8 years ago

Could someone explain to me how blippy or mint get the purchasing data? Are they working together with the credit card company or bank issuer?
Please, this doubt is eating my brain away.