The Elephant in the Payments Room

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by Jon Matonis
APR 29, 2013 1:00pm ET
The payments industry has been ripe for disruption for as long as I can remember. Historically conservative and non-experimental, banking and financial services always appear to be the laggard for any new technology. But none of that has stopped recent innovators from pursuing things like Square, Stripe, Dwolla, FaceCash, ZooZ, Affirm, MangoPay, and Balanced. The Internet and mobile payments gold rush is in full swing and venture capitalists are lapping it up.

The amount of money raised by a startup in the space can be staggering too, ranging from $3.4 million to as much as $200 million in the case of Square. But are venture capitalists truly funding disruptive “home runs” if licensed banks and legacy credit card networks are required for their so-called innovations? Also, most would agree that the states’ money transmitter licensing infrastructure acts more like a barrier of entry protecting incumbents than providing any protection for consumers.


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