7 failed fintech ideas that might succeed today

Published
  • January 26 2018, 11:22am EST

Sometimes an idea is ahead of its time. Many of the most ambitious products in payments and fintech were dismissed as absurd or over-ambitious at the time — only to feel perfectly normal years later as culture and consumer habits evolved.

Here are some of the ideas that seemed outlandish in their day, but became common sense by 2018.

Blippy's crazy card-sharing social network

Long before millennials took to over-sharing their financial lives on Venmo, a startup called Blippy tried to build the market for social payments.

It launched in December 2009, allowing users to register a credit card with the site to track — and publish — users' purchases at merchant sites including iTunes, Amazon.com and Netflix.

The idea horrified many who feared that this information could be used for identity theft or other nefarious purposes. And these fears were validated when, in early 2010, Blippy confessed to a mistake during beta testing that exposed raw transaction data to Google's search engine, rendering it visible to the wider internet. This data included sensitive information such as airline-confirmation numbers, which could be used to impersonate a flight passenger.

Blippy patched the issue and explained what happened, but the issue compounded itself when alarmed customers tried to remove their card accounts from Blippy — only to find their accounts inaccessible due to an overload of site traffic.

The idea may have fared better in today's age of social oversharing, where platforms like Venmo, Snapchat and WeChat built a loyal user base despite the risks of making too much personal information — and payments information — accessible in one place.

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Pay by Touch gets too hands-on at the point of sale

Back in 2002, most people still associated fingerprinting with being arrested. It was a tough market to approach with a fingerprint-based payment system, but Solidus d/b/a Pay By Touch made a strong effort.

It wasn't the only one. BioPay LLC had a similar concept, and the two companies battled in court over patents. Ultimately Pay By Touch reached a deal to buy BioPay in 2005.

Pay By Touch sold point of sale hardware that allowed shoppers to present a fingerprint instead of cards and cash for payment. The fingerprint would call up a linked payment account, which could be a checking account to reduce costs for the merchant, and the company's clients included Piggly Wiggly Carolina Co. and Shell Oil Co. Pay By Touch also began offering its own loyalty program in 2006.

But Pay By Touch was too far ahead of its time. It filed for bankruptcy in late 2007 after failing to meet payroll obligations, and shut down its payment system in March 2008.

These days, fingerprint payments are common and even expected in digital environments. The 2013 debut of Apple's Touch ID and its subsequent inclusion in Apple Pay built a market for fingerprint authentication that far exceeded anything Pay By Touch or BioPay was able to build. Even so, the use of NFC mobile wallets — validated by fingerprint scans on the user's phone — renders the need for a point of sale-based system like Pay By Touch redundant.

How Beenz and Flooz predicted bitcoin

It's never been painless to shop online with credit cards; 16-digit account numbers are still a poor fit for e-commerce. In the early days of the internet, companies like Beenz and Flooz thought they had the perfect solution.

Beenz launched in 1998, and Flooz followed in 1999, building on the vision of earlier companies like CyberCash and Digicash which, much like bitcoin, were founded by technologists and cryptographers. Beenz and Flooz built on those ideas, but with a plan to link up to traditional payment methods for funding. Beenz, for example, operated like a loyalty program (people could earn Beenz by filling out surveys and such), but also had a cobranded Mastercard issued by Columbus Bank and Trust. Flooz could was accepted for payment by BarnsesandNoble.com and had the celebrity endorsement of Whoopi Goldberg.

By mid-2001, all of these systems were gone. Like bitcoin, their heydays were marked with an effort to promote the merchants that accepted them on so-called beenz counter websites like BeenzQueen and GotBeenz.

Perhaps they would have fared better today amid the popularity of bitcoin and other digital currencies. But even bitcoin isn't a clear success; despite the cryptocurrency's rise in value over the years, it has fallen out of favor as a means of payment. Stripe, a processor that began supporting bitcoin in 2014, recently announced its plan to stop doing so. Bitcoin transactions had gotten too slow and too expensive to remain practical, it said.

When PayPal met Skype

eBay paid $2.6 billion in 2005 in hopes that the two-year-old video chat service Skype would power new communications and commerce opportunities for users of its booming online auction site, where PayPal was the favored payment option.

The idea was for PayPal and Skype to eventually integrate, allowing Skype users to send funds to family and friends in other countries. Before that could happen, eBay unloaded Skype to a group of private investors in 2009 for $1.9 billion in the depths of the financial crisis. Microsoft later paid $8.5 billion for Skype, and eBay spun off PayPal in 2015.

Somehow, the idea became reality in mid-2017. Skype became the latest in a series of partnerships PayPal initiated with other communications platforms including Apple, Slack and Microsoft.

As a result of that deal, Skype users in 22 countries could transmit funds to other Skype users with PayPal via the Skype app.

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The dark days of mobile payments

Before the 2007 launch of the iPhone and the 2008 launch of the App Store, companies were scrambling to find a way to move money over mobile devices. Many initiatives used text messages.

The 2006 version of PayPal Mobile asked entertainment companies like MTV, NBC and Fox to print codes in advertisements. Consumers would send text messages to those numbers, initiating payments billed to their PayPal accounts. At the time this was a big deal for PayPal, which was not accepted by many mainstream merchants and was eager to move beyond its role as a tool for eBay sellers.

Around the same time, Obopay was working to build an audience for its own pre-iPhone mobile payment system. Obopay had trouble finding its niche; despite winning a pilot with Citigroup and marketing its technology to banks, Obopay found its system was more appealing to the underbanked. By mid-2007, the underbanked made up a quarter of Obopay's user base despite the company doing no marketing to them.

Instead, its marketing focused on "social money" such as settling debts among friends. Obopay's service could be used by sending text messages or using special software built for the so-called feature phones that predate smartphones.

Those systems were rendered obsolete by the launch of the iPhone app store. And yet, today dedicated apps are considered too clunky for certain types of payments. Uber, famously, buried the payment behind the scenes of its ride-sharing service. Apple recently developed an Apple Pay Cash system that operates through iMessage rather than the company's standalone Wallet app.

Never forget a Face (ID)

Sometimes a technology seems so implausible, people dismiss it as a joke instead of an opportunity.

This was the case when Adyen "invented" Face ID as an April Fool's Day joke in 2012. The company's satirical video — which it has since removed from YouTube — showed how a consumer would stare into a tablet's camera and allow software to scan his or her face to initiate a payment. The customer then approves the payment with a "thumbs up" gesture.

Then, in 2014, a company called Eaze tried a real-world adaptation of the concept by using Google Glass headsets to scan a QR code shoved in front of a shopper's face. LevelUp tested the approach, but the poor fortunes of Google Glass removed any potential for innovation on its platform.

By 2016, the Selfie Pay concept had left the realms of satire and novelty. Mastercard had begun testing a face-scanning system called Mastercard Identity Check as part of 3-D Secure. The concept uses a phone's built-in camera to scan a shopper's face for authentication (it could also use the phone's fingerprint reader).

And in 2017, Apple used the Face ID brand — the very same one Adyen jokingly invented in 2012 — as a key feature of its iPhone X, which uses an array of cameras to identify a phone's user for unlocking the device and approving payments.

Blink and you'll miss it: Contactless cards' false start

Over a decade ago, the U.S. attempted to put a contactless payment card in every wallet. It didn't last.

Perhaps the most prominent example was JPMorgan Chase's portfolio, which used its own Blink brand in a product that began testing in 2003 and issuing widely in 2005. Other major banks were on board with contactless payment chips embedded in plastic cards, keyfobs and other form factors. And the card networks each had their own branding for this model: Visa payWave, Mastercard PayPass, etc.

But by 2010, it was clear that the "tap and go" model had come and gone.

Even as issuers mailed out contactless cards by the millions, consumers rarely used them as anything more than magstripe cards. The technology suffered from a chicken-and-egg problem: Merchants had little incentive to deploy terminals for a format that was not universally embraced by consumers, and consumer demand remained low as long as merchants failed to show their support. In 2011, Chase formally dropped its Blink branding.

In 2018, the chicken-and-egg problem was solved by the spread of mobile wallets. The same Near Field Communication readers deployed for Apple Pay and Android Pay could be used for contactless plastic payments, and the card brands are giving the technology another shot. Visa began a high-profile TV ad campaign with Starbucks in the 2017 holiday system, and Capital One has also begun marketing contactless cards directly.

More issuers will have to come on board to give contactless cards a true chance for success in the U.S., but according to Visa, approximately 40% of its transactions already at contactless-enabled merchant locations.