The Machine Economy
The most recent phase of ecommerce innovations make it easier for individuals to buy things and for merchants to sell them those things.
But there are many transactions where ‘easier’ is arguably not easy enough. 63% of US adults are trying to limit smartphone usage (2019) and anywhere from 20% — 80% claim to suffer from information overload.
Buying things is expensive. Deciding to buy things is cognitively expensive.
Individuals don’t need to be part of the decision-making loop for many transactions. The Machine Economy, composed of Machine-to-Machine (M2M) Payments, aims to solve this need.
M2M payments forms the intersection of two technology macrotrends: the rise of connected devices (IoT) and the removal of explicit payment decisions by automation (invisible payments).
There are two key requirements for the machine economy: (i) a network of connected devices with payment capabilities and (ii) the intelligence to decide when payments should take place (with the details of that payment).
IoT provides an infrastructure that allows autonomous payment when triggered by the behaviours of consumers (e.g. fridges ordering milk), workers (e.g. printers ordering paper) or the machines themselves (e.g. engines ordering replacement spark plugs).
Machine Learning provides the ability to take this IoT-generated data and convert it to a payment decision that removes explicit decision-making by the user.
There is a third BIG requirement for the Machine economy. Solving a real customer need.
If this “need” is removing payment frictions to the point that consumers don’t have to think about them at all, M2M payments must be highly reliable, trustworthy and (when things go wrong) reversible.
To justify the upfront cost of setup and the upfront leap of faith, selling the consumer on a single M2M payment use-case seems unlikely.
Why go to all that effort for some milk?
M2M appears to be one of those problems where steady-state, ubiquity sounds attractive, but the path there seems less clear.
An inadequate equilibria of sorts.
— — —
This article originally appeared as a tweetstorm here.
— — —