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This Week In Payments: Fresh Revenue Streams, BNPL Fraud Watch and Solutions for Real Problems

One emerging retail and revenue model trend that appeared in a number of stories PYMNTS covered this week involved big companies turning to non-core businesses to scrounge up fresh revenue, such as General Motors’ decision to boost its subscription business. It’s a move that not only comes in response to the increased digital connectivity of the auto industry, but as a new revenue driver too.

In a talk with PYMNTS, Payoneer Chief Strategy Officer Charles Rosenblatt put that in context.

“With basically cloud-based product and with cars becoming literally a consumer product — you have Sirius XM, you have what the companies want to do themselves — it allows these companies to move off the transaction-based model into a subscription-based model and I think inherently that’s where everyone wants to go,” Rosenblatt said.  “If every time you turn on the radio GM makes a little more money,” he added, “I think that’s a good model for them to go by.”

Read more: GM Plans To Boost OnStar, Vehicle Services Subscriptions

The Online-to-Offline Inversion

Another “alt-rev” move this week was seen in the rollout of Amazon’s 4-star stores in the U.K. which marked the latest effort to boost its offline income, sales and presence.

“I think it tells more than anything the power of a brand,” Rosenblatt said. “If Amazon didn’t have a brand, someone opening up a 4-star store that was hawking random products all around the globe wouldn’t be opening up on high street and getting massive attention.”

The move allows Amazon to move further into omnichannel, which Rosenblatt noted was hot 10 or 15 years ago when brick-and-mortar companies started opening online stores, many of which became online-only during the pandemic when that was their only option. But now offline is going to become a major presence for online players as well.

“Now I think there’s a craving for normalcy of going out to an actual store more so than there was 24 months ago,” Rosenblatt said. “I think this combination between online and offline is going to continue to grow as online continues to grow at the rapid rate it will and that’s not going to stop.”

Related news: Doors Open At First Amazon UK 4-Star Store Outside The US

Amazon is not only competing with Walmart’s 10,000-plus domestic and international physical store footprint, but countless other contenders too, all of which are pitted in a battle to solve the “final-mile delivery” problem which has never been more demanding. Rosenblatt said delivery is “beginning to become table stakes” for all retailers, and pointed to the Drizly’s new TV ads for alcohol delivery as an indicator of what’s to come.

“I think the world is turning into a just-in-time place, whether it’s in payments, whether it’s getting money through open banking or faster payments in places like the U.K. and other parts of the world, or whether it’s dropping off products in an hour or two,” Rosenblatt said.

Also read: Walmart GoLocal Signs Home Depot As First Retail Client

Phish or Cut Bait?

In the wake of reports that thousands of Barclays account holders were tricked into handing over personal information via a phishing scam, fresh questions arise as to the security nuances of open banking.

Rosenblatt said that as new technologies come in and start taking personal information, as open banking does, there’s going to be more and more data breaches and fraud. He noted that some players in the space are sophisticated, but others are not.

“I think there will be a weeding out of the really strong players versus the not-as-strong players over the course of time, but I think that there will be some major growing pains in the middle,” he said.

See: Barclays Hit In Phishing Scam Using Monzo Account, PISP

It’s difficult to teach every account holder in the world to be leery of such scams, he said, and even when a financial institution puts up warning labels, they still can only do so much.

Another burgeoning business on Rosenblatt’s radar for new types of fraud is buy now, pay later (BNPL), where he predicts there’s likely going to be an increase consumer fraud but also a rise in merchant fraud.

Related: Security Breaches Underscore Questions On Local Banking’s Data Liability

Apple Pay in Play

Apple Pay earned its share of headlines this week, following recent PYMNTS data that showed the uptake rate for the 7-year-old digital wallet is just 6% of iPhone users, Visa was reported to be pushing back on the rate that the tech giant receives on certain recurring transactions.

If Apple Pay were a standalone product it might struggle, but Rosenblatt said it actually exists to get people to buy phones and other Apple products and engage with them so was unconcerned that a fee cut would have much impact on the $2.4 trillion company.

Learn more: Visa Could Take A Bite Out Of Apple Pay Fees

“I’m not sure if it stays at 6%, it’s still not good for Apple overall because on those 6% they make so much money,” he explained. “And, really, what costs do they have on the other side for the 94% who aren’t using it? … They installed it on the phone and it doesn’t cost them anything to do it, so if 1% of the people were using it, they should be happy.”

Contactless payment in general and Apple Pay in particular may be solutions looking for a problem. Rosenblatt observed: How hard is it to take a card out of your wallet and either tap or swipe? What is the problem you’re trying to solve?

Rosenblatt concluded, “Businesses in general — we can talk about GM, we can talk about Walmart, we can talk about the open banking and Barclays — should build things to solve a problem, not build a product without knowing what the problem is.”

See also: Seven Years Later, Only 6% Of People With iPhones In The US Use Apple Pay In-Store When They Can

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