Progressive payments

The seductive Wild West of hyper efficient transactions

Payments are still stupid.

I rented a car on Getaround last week. I set an initial reservation period and was charged the reservation fee up front.

During the rental period I could extend the reservation at anytime.

This model is inefficient. As a customer, you’re incentivized to book the absolute minimum possible time upfront and then extend as you need (there are no extension fees). Obviously, you don’t want to pay for time you don’t use.

The ideal scenario is if I use the car for exactly the amount of time I need. Not only do I get charged appropriately, but Getaround gets more availability per car in their fleet. The fleet is more efficient, Getaround needs less cars, they pay less insurance, and spend less on supply side acquisition.

Most are aware of the per-transaction fees credit card companies charge, but I think Getaround’s fleet inefficiency is a good example of a larger, system-level problem with today’s lump-sum payment infrastructure.

Money Actually Can Equal Time

Despite the age old adage “time is money,” money generally doesn’t behave like time. Money generally comes and goes in chunks while time, in contrast, elapses consistently.

Often, money is moved in chunks due to transaction costs. Nobody wants to pay more fees than the minimum. As a result, there is a system-level incentive to minimize the number of transactions.

Crypto currencies like Bitcoin have the promise to completely transform the current time-money relationship. Because Bitcoin doesn’t cost money to transfer and because it’s infinitely divisible, you can perform micro transactions that very much embody the notion of “time is money.”

It’s a big deal.

The Wild West of New Business Models

Imagine paying for a museum not as a ticket price up front, but based on the amount of time you spend inside. Imagine a website devoid of ads but that costs you one hundredth of a penny every second you’re on it. Imagine paying for cable television per minute instead of monthly.

Because there are no transaction costs, you can be charged as needed, for whatever amount need, in perpetuity.

It’s the beginning of a more efficient system. The way the internet crippled traditional content delivery systems, bitcoin has the ability to cripple current payment methods.

New payment companies will emerge. New processors. New points of sale. New wallets. New regulation. New theft.

Not only is calling Bitcoin “The Internet of Money” appropriate from a functional analogy perspective, it’s also appropriate analogy for it’s potential disruptive impact.

Giddy up.

—

Thanks for reading. My name is Will Dennis and I’m currently building Hollerback. I think you’ll like it.