Payments Week: Commerce Takes Shape in the Metaverse
The connected economy saw big news on multiple fronts this week, with the buzz around Elon Musk’s takeover bid on Twitter, Meta disclosing its metaverse trading plans, Goldman Sachs preparing to launch checking accounts and Amazon overtaking Walmart in retail spend.
The first item on the agenda was Elon Musk’s decision to buy Twitter.
Read more: A Twitter takeover by Elon Musk holds the power to shake social media — or sink it
“It’s obviously a platform with huge influence, especially in the tech community, so you have no choice as a venture capitalist to pay attention to what’s happening on Twitter,” Birnbaum said. “It’s a platform that people use for a lot of different reasons, and whoever owns it, I don’t think it’s going to change the nature of how people use it for a while.”
Trade grows in the metaverse
The news also made headlines when Meta announced plans to take nearly 50% of sales from creators who want to move into Meta’s metaverse.
See more : Meta is opening its Metaverse platform to payments, and it’s not cheap
Birnbaum said Meta sees a huge opportunity to shape payments in the emerging metaverse and become a dominant player in the space — no surprise from a company that has telegraphed its intentions to be the go-to brand for all about the meta when she changed her name from Facebook.
He said he also expects there to be a continued push-pull between the FinTechs that have been so successful over the past decade and those that are building pure-play payment infrastructure, in especially new metaverse platforms.
And while some detractors are quick to point out that the metaverse is still only used for games and virtual events, Birnbaum said those entertainment segments still account for a large chunk of gross domestic product (GDP).
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“Even the development of esports over the past decade has been quite instructive for many investors in the market,” Birnbaum said. “You just need to track user behavior, track the flow of developer talent, and then see what happens.”
Everyone is becoming a FinTech
Also in the news this week are some earnings reports from the banking sector. Among them was Goldman, which announced an impressive volume of credit card loans and said it would launch checking accounts later this year.
See more : Goldman puts former lenders under scrutiny with plan to offer digital checking accounts
Birnbaum said FinTech offerings are becoming table stakes for almost any business looking to scale their payments strategy, pointing to Amazon’s long history of providing financial services to its merchants, platform financing offerings -forms such as Shopify and online marketplaces, and the Apple Card.
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“I don’t know if consumers actually know what they want until you really give them something really tangible to hold on to,” Birnbaum said. “We thought about the last decade of consumer FinTech, and most of the time there was a really specific hook that created a brand.”
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He cited the examples of Betterment making investing accessible to many people who didn’t have access to advisors, SoFi having the hook on the student loan refinance trade, Robinhood offering free securities trading, and Chime incentivizing consumers to create accounts by giving them access to their paychecks sooner.
Amazon takes over from Walmart
During the week, PYMNTS released data that shows Amazon has taken the lead over Walmart in retail spend for the first time. While Walmart is still very strong in groceries, it has lagged Amazon in many other retail categories that represent an opportunity for growth and spending.
Read more: Why Amazon is winning the retail battle against Walmart
“People focus on their needs,” Birnbaum said. “I know that as a family we are very busy, we need a lot of stuff for the kids and we don’t have time to go anywhere, and Amazon has a lot of contact with [consumers] just with the ease with which we buy things.
See more : 5 things you need to know about the Amazon-Walmart duel
Walmart has expanded its own FinTech presence to make inroads with households buying groceries from their local Supercenters.
“I think that’s in some ways even more interesting than what Apple has done, because if Apple products are loved and so widely owned, we’re talking about essentials,” Birnbaum said. “Anytime you can be financial services around things people need to have, not want to have, that’s a different ball game.”
Evolution of mortgage loans and installment loans
There have also been changes in the mortgage market with companies disrupting this value chain and the news that the 30-year average rate was up 5%.
“I’m really interested in what this will do,” Birnbaum said. “There have been a lot of really interesting PropTech companies that have popped up over the last 10 years and I think they will be well positioned.”
Awaiting news that will come from the FinTechs that have been made public, Birnbaum said he will be watching to see how factors such as the current economic climate and geopolitical factors such as the Russian-Ukrainian war will affect consumer sentiment. .
“I think some of these companies aren’t necessarily the perfect indicators of consumer behavior, but really interesting, and to see what default rates are really like,” Birnbaum said. “Whether it’s the installment loan players – everyone calls it BNPL, I call it installment loans – or some personal loan providers, I think the data will be really interesting to look at. “