Swell 2018: How Blockchain Can Learn from eBay, the Original Digital Cross Border Payments Company
Former eBay Chief Product Officer R. J. Pittman and Fortune Senior Writer and The Ledger Editor Robert Hackett took the stage at Swell in a session entitled The Future of Commerce. As part of that conversation, Pittman dissected some of eBay’s early learnings in tackling cross-border payments and how those might inform strategies for blockchain and digital asset companies.
Pittman rightly set the table by pointing out that eBay is one of the largest cross-border trade companies in the world. In fact, he shared that the very first transaction on eBay took place across borders – the sale of a laser pointer from the U.S. to Canada. Today, eBay spans 190 countries.
According to Pittman, that ability to access buyers and sellers in 190 countries is “one of the most compelling value propositions of eBay.” And the opportunity remains for eBay to make trading globally a largely seamless process.
But, prompted by Hackett about the impediments of cross-border payments, Pittman acknowledged the challenge is daunting and the hurdles to international payments laborious. That is why he feels there is still an opening to advance the global selling experience 2-3 steps further down the road.
Small Changes Yield Big Results
The potential impact of these experience improvements was a central theme of Pittman’s remarks. Recounting experiences at eBay and even earlier roles at Google, he repeatedly hammered home the point that making minor process improvements to remove friction can result in enormous positive downstream impact for a business. Examples included the larger resizing of the buy button at eBay or faster search results at Google. In both cases, small tweaks led to large revenue and business gains.
With such inherent friction in international payments today, there are a number of places to remove barriers and deliver improvements. Pittman reminded the Swell audience that the U.S. stands at only 10% of transactions occurring online, compared to China at 40% and the world overall at roughly 18%. His point being that when you consider process improvement in relation to the astounding marketplace growth potential, the benefits become very compelling.
He issued a challenge to the incumbents that given this inevitable growth, it was less important to be worried about losing nest eggs and more critical that they think about “widening the aperture” to take full advantage of the opportunity.
Of course, as you begin to approach maximum penetration for global ecommerce, Pittman noted, it will only exacerbate the massive payments-related pains we already experience today. To make his point, Pittman asked the audience rhetorically whether the industry has the proper payments infrastructure, cost models, and ability to scale in place.
Blockchain to Address Challenges in Global Payments
Asked by Hackett what role blockchain might have in addressing these challenges, Pittman again drew on his prior work experiences as examples. He views blockchain as a cousin of MapReduce, a technology employed by Google to break down complex computing tasks amongst distributed server farms and virtual servers to increase speed and accuracy. In his mind, blockchain employs a similar decentralized approach that can reduce the friction of payments to create higher speed and efficiency.
He also highlighted the Interledger Protocol (ILP) as the “TCP/IP of value” and its potential to enable the same growth and scale as that original web protocol.
These efforts to rethink the foundational challenges of payments allow solutions to emerge on specific business issues. Pittman pointed to the example of eBay and escrow as one problem in need of a solution. He called the complexity of who is holding the money in a transaction, when goods ship, and when payment settle “a big guessing game” that is one of the big taxes on the eBay call center. The implication being that blockchain and ILP can help settle those mysteries.
When Hackett raised the question of digital assets, Pittman was more measured in his thoughts. He stated that digital assets have a brand problem and expressed concern that the early focus on value and trading had led to “losing the plot before we even shoot the movie.” He suggested that companies might need to take a big step back and invest in communicating the value of digital assets and the role they can play in payments, commerce and banking before pursuing applications.
However, he did proclaim the use digital assets, like XRP, as a bridge currency as one of the first great use cases, calling it the “lubricant in the flywheel” of cross-border trade for companies like eBay.
At the close of this compelling conversation on the future of commerce, a question from the audience reminded everyone of the higher level opportunity for blockchain. When asked during the Q&A how blockchain could lead to wider financial inclusion globally, Pittman answered by giving another nod to eBay.
He noted that eBay is committed to economic empowerment and the idea that “everyone in the world has something to sell.” While it’s hard today to create liquidity for one-click trading globally, especially for the unbanked, Pittman is hopeful that ILP and blockchain can make true point-to-point transactions and payments possible.
He closed saying the goal is to “make the technology so powerful that it simplifies access and engagement for everyone.” Today, he acknowledges we’re just scratching the surface but that our responsibility is to “get after it.”