1 Click checkout revisited,
I’ve taken a bit of time off with a slowing news cycle, boredom reporting on crypto, and an inability to fairly comment on a handful of big tech companies who are now my rivals, peers, or business partners.
One-Click Checkout redux
I appreciated the below tweet. Several of the recent checkout companies imploded spectacularly. The idea is a strategic challenge, but it could be worth pursuing in the right context.
I’ve personally noticed that the Cash App is being promoted as a payment option at an increasing share of Square terminals. Perhaps the $8 price tag for an iced coffee at Blue Bottle won’t sting as much with reduced checkout friction. Unlike the startups that tried to tackle this problem from a cold start, Square has pursued a very disciplined ladder-up approach
The Cash App is a functional standalone tool for consumers, and it is incredibly popular. Ditto the Square checkout terminal for SMBs.
Existing install bases are an easy way to launch this checkout ecosystem.
Square’s purchase of Afterpay for Buy-Now-Pay-Later expands its reach into checkouts across the web.
With adequate momentum, it is an easier sell for Adyen to support Cash App checkout across their portfolio.
Two other notes here. The first is that Stripe would be a game-changing addition, but they have their own checkout solution. This gets at a major strategic issue for these one-click checkout solutions. Ubiquity matters, and it will be near impossible to get a dominant share of the web using your solution. I can’t imagine Stripe (powering much of the internet’s payments), Shopify, Paypal or Amazon playing ball here. Facebook+Instagram are playing ball with Shopify to combat Apple’s IDFA changes, but I can’t imagine they want to help Square either. Even ruling out just those pools of opportunity eats at a large chunk of the volume.
The second note is that another company has been chipping away at this problem, and the effort is bearing fruit. Apple Pay is the other credible contender for a one-click checkout (at least in-person and on iOS).
Coinbase proprietary trading
Ok fine! I couldn’t resist this one. The Wall Street Journal reported that Coinbase considered proprietary trading, in addition to running an exchange and other crypto activities. While it appears that the effort never went anywhere (and Coinbase currently lacks the financial health to wantonly speculate), this idea would have been a disaster.
The first issue would be the perception of impropriety. The NYSE and Nasdaq are forbidden from doing this in the US equities market. Coinbase makes most of its money from fees on retail users. Robinhood is under scrutiny for selling its retail users out to professional sharks. This would have made Coinbase a shark themselves. I would bet on the destruction of the brand in a future downturn where retail loses money.
An equally big issue is that we (yet again) learned this lesson multiple times in “Tradfi”. Financial entities like banks are prone to combusting every couple of decades. Coinbase’s value proposition is to be the trusted, regulatory-friendly, and stable crypto company in the US. Wild speculation puts that in jeopardy. Even worse, FDIC protections would not help traders in the event of a bust. Coinbase was recently forced to disclose that your tokens could be considered collateral in a bankruptcy court, leaving end users with nothing. I’m glad that they didn’t go down this path - it could have been the end of the company in May.