Creating value around payment – will Offers disappoint?

There is a coupon information bubble right now, but its interesting to see how different it is depending who is talking Offers.

For banking and payment, Offers seem to be still seen as the future of revenue. Whether it is Google, which decided not to take a cut on the payments through google wallet but make money via offers, Serve (American Express) who will power the local offer play of Path, or various PFM providers who source offers as via the credit card transactions, the next big thing is coupons (a little bit of a caricature on my side I agree)

On the other hand, the coupon model has received it’s fair share of criticism since Groupon filed it’s S-1 for its IPO. Outside of the interesting accounting, buy-in of existing investors, recent posts have explored how coupons model such as Groupon, LivingSocial, Google Offers are actually detrimental to businesses and may plateau or dwindle once the novelty wears out (or the economic conditions improve). To read more about Groupon business model, Techcrunch has an passionating series of post on the topic:

Groupon Was “The Single Worst Decision I Have Ever Made As A Business Owner”, Google Offers Is A Cheap Knockoff, Why I Want Google Offers And The Entire Daily Deals Business To Die , Why Groupon Is Poised For Collapse

Yipit teardown is also very interesting:  Groupon S-1 Reveals Business Model Deteriorating in Oldest Markets

To resume: Offers may not work for most small businesses, as their cumulative costs can be higher than what a “regular” marketing campaign would costs, the traffic generated may not create a new customers, and so on…

So is this the end of payments’ next best business model? (dramatic tone)

As said by David Lee during one the Internet Week New York Event : “the closer you are to payment, the more value you capture”

“Owning” the payment data (especially with the ability of connecting a single customer id on each transaction) opens the door to more ways to generate value on payments, for example:

– Analytics on spending patterns for advertising – a possibility of the Google Wallet offer

– CRM/ERP for businesses (dashboards with Google Analytics in mind, in ease of use and richness) – hinted in Square recent releases

– Extensive customer loyalty programs  – (with offers, customer care, … a la Apple)

– Personal Financial Dashboards

What do you think? Are Offers overvalued in the payment / banking industry? Do you see other business models around payment?