20 years ago, my father would receive a paper invoice from a merchant and pay by sending a check in the mail. As he scribbled his signature across each one, sealed the envelope, neatly placed a stamp and walked to the mailbox, I couldn’t help but think there must be a simpler way. Paying at a store wasn’t any more advanced: a store associate would take an ink imprint of a plastic card and secure the transaction with another scribble, hoping the money would arrive days later. The internet was in its early days but it was obvious that it would be used to connect his bank account to pay automatically and electronically. It could save time, be more secure, and eliminate the expense for merchants to accept his money. Like other digital innovation, the Internet promised so much.
Today, the US has an abundance of digital payment services - it seems a new digital wallet launches daily - yet the cost to accept money has only risen. The fragmentation of these services creates an ugly consumer experience. Over $100 billion a year is extracted from the economy in various fees known as interchange, swipe fees and other charges. As a percentage of revenue, these fees represent an egregious tax on merchants, stifle financial innovation and ultimately cost the consumer. One of the most embedded business models of our generation, the payments ecosystem, has established itself as its own ATM machine, freely withdrawing fees on demand. It’s not just the cost that is the problem, the complexity of the system focuses on confusion to obfuscate the real burden. For instance, these fees are changed twice a year and have over 150 permutations.
It doesn’t have to be this way.
Existing networks and banks have embedded themselves into day-to-day life almost to the point of no return. The fee pool is so large that current innovation further embeds this ecosystem: avoiding the elephant in the room. My experience as a founding team member at Softbank Vision Fund gave me unique insights into the financial health of a large range of businesses. In particular, we invested in a number of marketplaces which pay fees on gross merchandise value (“GMV”) and immediately pay out the majority of GMV to an end service provider. This led me to speak to some of the largest merchants across the US, and it was clear there is a big need to solve this problem.
And so, Imagine Financial was born. We exist to serve our merchant partners, to plug the holes in the ecosystem, to rethink payments, and to rebalance financial services. Merchants will have greater control and flexibility with the customer experience and eliminate the friction associated with existing payment modalities. We haven’t forgotten about consumers in this quotient: they deserve more, they want protection, convenience and less confusion around loyalty and payments. We have some exciting plans to announce soon in this area.
Imagine is being built from the ground up, to do things right from the beginning, without the attachments to incumbents who serve themselves. We believe the impossible is possible and our commitment to fairness will embed a culture of equality that will allow our customers to thrive. We think long term to align incentives with our partners. You prosper, we prosper.
Why are we doing this?
We want to build a company that has a lasting outsized impact on the world, and we believe solving this problem is it. Financial services should be about empowering its constituents, providing opportunity to thrive and enabling people to enjoy the things they love doing. We are going to unlock this potential by creating fair and transparent financial services, make a dollar worth more than a dollar, create value for our customers so they can prosper.
So, what’s next? We’re at the start of this very long journey. We have a growing team of exceptional technologists hungry and able to solve this problem, we have some incredible financial backers who believe in this vision, and we are obsessed with delivering value for our customers. We’re excited to get going and look forward to announcing more soon.