Exploring the Future of Money, Banking and Philanthropy

Archive for April, 2011

Grappling With Groupon — Payments Views from Glenbrook Partners

Last weekend, my wife and I stopped into a downtown Spokane restaurant and I noticed on their Chalkboard a message to Groupon customers, pointing out some of the features and limitations of their Groupon coupon. I asked the proprietor about their Groupon experience. She said she was very surprised by the number of sales, which approached 1000 customers, but was ambivalent about the whole deal, believing a lot of the purchases were made by deal-hunters versus the attractive new customers she was hoping for. She also mentioned another local restaurant which had sold over 2,000 certificates… and was worried about their success in a program that nets them about 25% in face value for each coupon sold.

I think it’s great that small, local merchants can use Groupon to offer marketing deals and potentially attract new customers… but I also worry for them. My worst case scenario is that the unique community merchant down the street signs up for a Groupon deal expecting a few new customers, but instead finds thousands of coupon-bearing price shoppers walking through the door, slowly, slowly putting that merchant out of business.

Small business owners, like the ones featured by Groupon, have to wear many hats each day: CEO, CIO, CTO, COO and CMO to name a few. As such, it will be the rare owner who has the time to sit down and really think through the consequences of a “successful” Groupon campaign on their business — both positive and negative — and make sure that the deal they negotiate with Groupon is a good deal for all parties concerned. I think this will happen more frequently over time, as the merchant community gets more familiar with these kinds of deals, and more deal performance evidence, both anecdotal and data-driven becomes known.

…But in the meantime, to all of my local, favorite Spokane merchants, please, before you do your next Groupon deal, make sure that you think long and hard about how your business will be affected if a whole lot of new (and existing) customers are standing at your door with their 75% off (to you) coupons!

via Grappling With Groupon — Payments Views from Glenbrook Partners.

Facebook Credits $600 million virtual economy – Apr. 28, 2011

NEW YORK CNNMoney — With more than 500 million active users, the population of Facebook exceeds that of many countries. And like any empire, Facebook has its own currency — one that got a big boost with this weeks launch of Facebook Deals.Facebooks new daily deals offering, available in five cities now with plans to expand to more, puts it into direct competition with Groupon and its army of imitators. Facebook members will get deal offers right in their news feed — and if one catches their eye, they can pay for it with a credit card, PayPal or Facebook Credits.013EmailPrintIts the first time Facebooks virtual currency can be used to buy real-world goods.”Those folks now have the money to buy a massage or a meal,” says Dave Martin, senior vice president of media at online marketing agency Ignited. “Beyond the simple idea of renting content, now youre actually getting durable goods.”

via Facebook Credits $600 million virtual economy – Apr. 28, 2011.

Financial System Riskier, Next Bailout Will Be Costlier, S&P Says

The financial system poses an even greater risk to taxpayers than before the crisis, according to analysts at Standard  Poor’s. The next rescue could be about a trillion dollars costlier, the credit rating agency warned.

SP put policymakers on notice, saying there’s “at least a one-in-three” chance that the U.S. government may lose its coveted AAA credit rating. Various risks could lead the agency to downgrade the Treasury’s credit worthiness, including policymakers’ penchant for rescuing bankers and traders from their failures.

“The potential for further extraordinary official assistance to large players in the U.S. financial sector poses a negative risk to the government’s credit rating,” SP said in its Monday report.

But, the agency’s analysts warned, “we believe the risks from the U.S. financial sector are higher than we considered them to be before 2008.”

Because of the increased risk, SP forecasts the potential initial cost to taxpayers of the next crisis cleanup to approach 34 percent of the nation’s annual economic output, or gross domestic product. In 2007, the agency’s analysts estimated it could cost 26 percent of GDP.

Last year, U.S. output neared $14.7 trillion, according to the Commerce Department. By SP’s estimate, that means taxpayers could be hit with $5 trillion in costs in the event of another financial collapse.

Experts said that while the cost estimate seems unusually high, there’s little dispute that when the next crisis hits, it will not be anticipated — and it will likely hurt the economy more than the last financial crisis.

via Financial System Riskier, Next Bailout Will Be Costlier, SP Says.

Paypal Is About To Get A Bruising From Facebook And Square

2011 is going to be a big year for payments, with more startups and mature companies getting funded in the space than almost ever before. It’s important to make the distinction between the headline chasers, the slow moving giants struggling for a piece of the pie and the companies that have a chance at real disruption. For my money Facebook and�Square are both very interesting companies to follow in this space.

In�my last post on TechCrunch I discussed Google and Apple and their efforts around payments, and explained why I don’t yet think they are serious players for the whole payments pie. The post ended with some ideas around what serious contenders could look like, and who are other potential large companies that could step into user-to-user payments.

via Paypal Is About To Get A Bruising From Facebook And Square.

Digital Coupons, March Spending Pulse, A&F Expansion – Retailer Daily

Digital Coupons, Use Increases by 33% Last Year

The number of digital coupons available at major online distribution sites increased by 33.6%, and the number of manufacturers offering them (290) grew by 17% in 2010, according to Supermarket News.

via Digital Coupons, March Spending Pulse, A&F Expansion – Retailer Daily.

New Moneeey

Feds go after wacky Liberty Dollars- MSN Money

Its perfectly fine to issue private currency in the United States, and that currency can be bartered, exchanged or used as payment in transactions. Entire communities have experimented with private currency, and several businesses in Detroit began accepting new Detroit Cheers bills instead of official money in 2009.But when your private currency starts to resemble real money, federal prosecutors get very interested. And when your currency looks and feels like a real coin and says “Twenty Dollars” and “$20” on it, thats when the feds take action.The maker of silver Liberty Dollars, Bernard von NotHaus, 67, was convicted last month for making and selling the private currency in the form of notes and coins, The Associated Press reports. And now the government wants to seize his stash of five tons of the silver dollars and precious metals, estimated at $7 million.The question now is whether the maker of the Liberty Dollars tried to pass off the medallions as U.S. currency. The Constitution says that only Congress has the power to coin U.S. money and that only the U.S. Mint can mint and issue legal coins.Van NotHaus medallions had the words “Liberty,” “Dollars” and “Trust in God” on them and showed such images as the Statue of Libertys head and a flaming torch. They were advertised as “legal” and “constitutional,” according to the U.S. Mint. People called the U.S. Mint asking whether the money was real, prompting the Mint to issue warnings that the dollars were privately produced.Van NotHaus has claimed repeatedly that he never tried to pass the dollars off as real currency. He says he wanted to give local communities a transactional network based on an alternative, private currency. The medallions were reportedly made at a private mint in Idaho.Private currencies are fine, but Liberty Dollars skirted too closely to the edge of legality.

via Feds go after wacky Liberty Dollars- MSN Money.

Tag Cloud

%d bloggers like this: