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Podcast #56 - David Hershfield Discusses Payment Gateway Integrations

Global Payment Gateways, Central Banks, Bitcoin, Currency Baskets and Marketplaces. David Hershfield of hershfieldconsulting.com discusses global payment processing and payment gateway integration with multi-party transactions. 

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Adam: Hi everybody. Adam here with David Hershfield. Now, have I pronounced your name correctly, David?


David: You have, Adam. Thank you. It’s great to be here.


Adam: Very good. And you’re with hershfieldconsulting.com. And from your bio, we just missed out on meeting each other in person back in the day at Adobe. You’ve covered some ground.


David: Yes. It’s been a wonderful experience both at Adobe and beyond. And yes, we did miss each other by just a tad.


Adam: Well, we’ve definitely had some common contacts as far as connecting with different technology sets PayPal being one of them. I use that pretty regularly and was around back in the day when eBay took that technology on. But before we dig in to some of this conversation around ecommerce in particular and your expertise around payment gateways, global payments, et cetera, what got you to where you are today? Can you take us back to the start of your story?


David: Sure. Well, what’s interesting is it started off really with my parents. It goes way back. Both of whom are really sort of involved in cutting edge kinds of things. My mother is in teaching people about different languages. She grew up in France and went to French schools and did some really groundbreaking work on how to teach people multiple languages. And my father was a tinkerer when he was working. He worked for a number of universities. But before that, at USAID, he was the guy who went to developing countries and helped them set up their broadcasting arms. So he had to find unique and creative ways to get the technology to work in places where technology typically wasn’t even thought of.


So when I look at those days, that sort of set the tone for me through my career to be able to one, really grasp technology and understand its application for a lot of different purposes and two, because I came from a family that was largely global and we always had people in and out from different countries. I had a great appreciation for how important it is to make sure that you think of things from the perspective of people all over the world. And that’s really where things kind of took off for me. So I’ve been working in Silicon Valley for the better part of 20 years. I had some great experiences at Adobe as we discussed, at PayPal, also at an e-learning company and then most recently wound up in Europe as a Chief Product Officer for a startup and an auction house. And now, I’m continuing my consulting work through Hershfield Consulting which has been and continues to be a lot of fun.


Adam: That’s brilliant. So it sounds like the foundation for your life is all around communication. Your mom being a polyglot, I’m guessing you’ve got a couple of languages under your belt.


David: Yes.


Adam: And your dad in broadcasting and now with you on a podcast. So communication, it sounds like you’ve got that down pat. I’m looking forward to then digging into some of the hairy conversations that happen around payment gateways. And in particular, we are focused at Near Me around marketplaces. And I guess the evolution has gone from a one-to-many ecommerce experience where ecommerce stores are set up. There’s the merchant of record. They have all the products that they sell out to many, many customers. And it’s a straightforward transaction. Then marketplaces came along like Airbnb and Uber and so many others. We’re also powering at Near Me now. And it’s many-to-many, many vendors, many customers. And you now have a buyer, a seller and a marketplace owner. What insights can you give us into your feeling around the state of the union in the way that global ecommerce and payment processing is happening?


David: Well, you’ve hit the nail in the head. It is really an environment that is changing as we speak and it will continue to evolve. Being the merchant of record is a very challenging thing these days because there are all kinds of complications but there are also opportunities. And I think the main thing to keep in mind here is when people think about how commerce is changing and how payments are changing, we always think of it within the context of our, first of all what our experience is like as a consumer. And then as a merchant, you see the complexity that’s often hidden from consumers. And so of course, the thing that I think is most salient about what you talked about is the merchant of record really being held financially responsible by the acquiring financial institution that processes the credit or debit card payment or whatever we’re talking about here, for full or partial returns, the customers’ account or charge backs.


And it can be very, very challenging to really try to get your arms around that especially when you think about it within the context of a global payment system or taking, working with people in other countries and the different cultural expectations and not to mention the actual mechanics that can vary widely from country to country. So as I see it, it’s a great opportunity for merchants because you can differentiate yourself with the type of service that you provide. And your understanding of the nuances of this can also create that kind of loyalty where people will come back and say I’ve been buying this, whatever it is, service or product from this particular merchant and I enjoyed the experience. Maybe I had a problem. And because it was resolved quickly, because they understand what was happening, I’m going to be more loyal and I’m going to come back to them again. And I think there are many other opportunities but that’s the one that sticks out.


Adam: So the marketplace that focuses on a great customer service where they, as the merchant of record. And maybe let’s just highlight exactly what the merchant of record is because it’s a term that you and I use.


David: Yes.


Adam: But some of our listeners even in the enterprise go, what’s a merchant of record?


David: Yeah.


Adam: And the liability that goes with that if you could just highlight that.


David: Sure. So the merchant of record, definition is really the company, organization, firm that is held financially liable by the acquiring bank which really is the financial institution that processes your customer’s credit, debit, whatever card transaction or whatever payment transaction they’re going through for all full and partial returns to the customers card as well as their charge backs that might be initiated, other things that you really are the one who’s responsible for this. And that’s how it’s looked at within the context of the entire financial transaction chain.


Adam: Nice. In the context of a marketplace where you have the buyer, the seller, the marketplace owner in some cases – and let’s take Etsy as an example where I’m looking at lots of products from lots of people and I add them all to my shopping cart. And I’ve got 15 items from 13 different vendors and then I wonder – as a customer, I just want to pay that.


David: Right.


Adam: And give me the stuff.


David: Right.


Adam: At the back end as you said, the merchant of record understands the complexities going on behind that because what if one or many of those in that payment chain fail on their obligations to deliver or I need to get a return.


David: Right.


Adam: Can you highlight some of the problems with that?


David: Yeah. So there’s an inherent problem and you just described it which is it’s the one-to-many. So as a merchant, you’re sitting at the apex of taking something that, to the consumer, looks just like a simple payment which in fact it is. But then of course, you have to handle all aspects of it, divide it into pieces. You might be dealing with something like PayPal’s chain pay or adaptive payments where you literally have to think about how does this thing get divided up? You have to worry about taxes and all kinds of other parts of the transaction that have to be settled. Now, the great thing about this is there are – this is the – although it’s complex and it can be complex, it’s not rocket science. In other words, it’s not – once you understand how it works, it’s not too difficult to predict where the problems might arise.


So for example, in the case where you have someone as you mentioned who for one reason or another one portion of the payment – these people – it hasn’t, it’s not settled. So your order has a charge back involved. Now, what’s happened is you have a customer whose financial transaction is not necessarily going to be settled in the time frame potentially that they would expect or something might happen within the context of communication that you have to address because of this one piece. How do you communicate that? How do you ensure that you’ve kept that customer and you’re not losing the transaction as a result of this? And that’s where I think there’s an opportunity to really differentiate yourself from other merchants.


Adam: And what would be a way that happening? Obviously, with technology, you can solve all problems?


David: Yeah.


Adam: But there’s obviously a human element that is involved in this whether it’s an email or getting on the phone settling a dispute. I think some of the marketplace owners are scratching their heads saying how scalable could that be for me? And do you have any idea on what might be the percentage of fails in their environment giving your experience with PayPal? And you mentioned PayPal express, chain pay and adaptive payments which provide this sort of multi pay out and pay in process. What’s generally the percentages from your track record in working in this area of failures?


David: Well, let’s start with that and then I’ll get to how the merchants are going to handle this. So those failures can range – and this is really dependent upon the type of business and also the geographic distribution of the business. Because with both of those things, you can increase complexity in some cases exponentially but it can range anywhere from less than a percentage point all the way up to even five percent which may not sound like a lot. And in worst case scenarios, it can even be slightly higher than this. But there are things that you can do to manage this down. And one of the things you have to keep in mind is that everybody in your chain of payments which would mean if you’ve divided, split this up amongst a number of different entities, everybody has different expectations. And this is the hardest thing for, I think, people to understand. The consumer has expectations and so does every single split in the chain.


And so when we get to then how do we address this, it really gets back to what you said around human nature or having a human aspect to it. Of course, the technology can make things happen very quickly and keep people informed. But it’s as much the message as it is the frequency of the message, the timing of the message and the follow up. And I think the biggest pitfall for people is the follow up. And you’re right. Merchants will say gosh, how am I going to scale this? I mean, I can’t be on the phone all day long explaining to somebody how, why their payment, transaction didn’t settle. Well, you don’t have to.


So let’s give some examples. There are multiple ways to keep people informed. And remember you aren’t necessarily giving them all the answers. It’s just that in most cases humans just want to know that somebody is there, that somebody is listening. So it doesn’t mean you then have carte blanche to send out a meaningless message. It just means that if you have a sequence of messages – and what we used to do is and what I like to do is think about what is going through someone’s head during each stage of this. Okay, I just bought something. Now, I’m thinking about how am I going to – when am I going to get it? And is my payment – I’m not even thinking if my payment is going to go through because I assume that it is. Now, something happens. It’s a delay. I have to send the messages to a merchant or contact the customer in some way to let them know that this is not going to go as smoothly as they might have expected.


And so now, it becomes a point of – at this point, it’s really critical to tell people and this can be done through a text message or email, any way that you feel. At some point, a call may be necessary. But it’s great to say look, here’s what we’re going to do. We’re going to keep you informed every step of the way. You’ll hear from us within 48 hours or 24 hours no matter what. And this point of being able to tell people even though I may not have an answer for you, I am going to get back to you at this time is something that is very easily forgotten. And of course, you have to follow through on it. Because if you don’t do that, that’s when you start to see significant dropoffs in customer satisfaction regardless of whether the situation is resolved. So you continue to do that until you have an answer. And you can do much of this from a technical perspective. And yet, there are certain use cases and you have to understand what those are where you know that it’s going to be too confusing for a customer to understand what’s happening and a call may be required.


So when we talk about scaling something like this, you have to think of it within the context of the 80-20 rule. Eighty maybe even ninety percent of the time, you’re not going to need to actually have to make a call but it will be important to know that there are certain percentage of those calls that have to made. And that’s a really critical thing to understand before you actually make the call. So you can look at that quantitatively and say okay, I have this many transactions. This percentage of them suffers from some sort of glitch. I know that a certain percentage of them will need, require to have a call. It becomes something that’s more manageable once you start putting numbers around it.

Adam: Got you. That’s great advice. What about the payment providers themselves in guarding against fraud, fraud from the seller or the buyer side? I know that online payment has exploded. Everyone is using it. Apple Pay and Google Wallet, you got Bitcoin which we’ll get to later. What are the payment providers doing to safeguard? Behind the scenes, are they sharing information? Are they sharing data so that whether it’s a MasterCard or a Visa or if it’s in this country or that country – is there a sharing? I know back in the day when I was in retail as a 15-year-old, we used to get a piece of paper mailed to our store every week which had a list of all the numbers, Visa numbers. And manually, we would look at someone’s card and say are they on that list? Are they on the list? No, sorry, I can’t accept that card because you’re marked as a baddie. Or sorry, I’m going to have to keep this card and cut it in half. Is that happening in the background now with payment providers?


David: Well thankfully, it’s not happening on paper. So that’s the first thing.


Adam: Thank goodness.


David: Yes, it is. And there’s much more sharing. Look, everybody realizes in the payment industry that’s in everybody’s best interest except for the fraudsters to share the information and to understand what’s happening. Now, that doesn’t mean that there’s a level of sharing that would indicate that all these payment providers are giving you customer information about every single customer. However, there is a sharing that goes on and it does happen now in a way and a speed which is really even more important that can help detect and make the necessary adjustments whether it’s cutting someone off restriction, cancelling a transaction, all kinds of things that you think about very, very automatically.


So one of the things that really set – I enjoyed my time at PayPal tremendously for many reasons. But one of the things that really I’ve learned there that really sets us apart is that the focus, and it continues to be the case today, on casting just a wide enough net – by that, I mean you don’t want to cast too wide of a net where you grab a whole bunch of people because you said okay, here’s the criteria that we’re going to use to identify which people we are suspecting that there are some fraudulent behaviors going on. When you cast two out of a net and you get too many people, now you’ve brought people into this hole who are really not deserving of whatever is going to happen which can be in some cases a hold on an account for weeks, in fact even 30 days, et cetera or potential reversal of transactions and a very challenging dispute mechanism.


But if you can understand where are your touch points here – in other words, where are the places that you think fraud is most likely? So a great example, certain types of things that start to get sold, electronics. Fraud is usually higher when it comes to selling electronics than it is with, for example, people buying clothing. So you can start with that which is a very relatively easy one. And then when you start to think about what kinds of transactions, what parts of the world, what types of transactions with certain payment device mechanisms, now you’re getting the net to be a little bit smaller. And this again is all about scalability to your earlier point just in general. The hardest thing for merchants to understand is that they can’t – they see something happen and they just worry and they should at times but not most of the time that this is going to be something they have to spend all their time on and they got many more important things to do.


The main thing is that the companies are working, the payment companies are working together to maximize their sharing of information from a fraud perspective. But you as a merchant actually have more control and more power than you might think. So what I just described is focusing on those accounts and those transactions that you think are more subject to fraud than others just by virtue of the type of thing you’re selling in a location. And once you do that, now you can start to say okay, now what kinds of things can I do? Do I have some people who review the high, the very expensive transactions maybe above a certain threshold? And I say I’m going to check, have us check, do a spot check on 25 percent of transactions over a certain amount. And I’m going to do that once a week or whatever. And this is where you start to get a little more control and be more proactive around managing fraud.


So it’s a scary topic but it doesn’t have to be that scary. And the good news is that many of these companies are getting better and better at handling this going forward.


Adam: And I think one of the points that’s (0:19:30) many marketplace owners or people, entrepreneurs and even incumbent enterprise businesses who are looking to go from the account business model which is to sell new items only and move into secondhand re-commerce with a marketplace which allows them to get line of sight throughout the entire product, service of life cycle. Those people are probably thinking oh, it sounds like a lot of work. But given the percentages of that occurring, it might be that it’s a good problem to have. If you’re starting to have these sorts of issues, then you’re getting traction, you’re getting transactions through. And I guess for the types of marketplaces that we’re powering at least, there are many vertical industries where the community of practice that are involved in the transactions, they do not want to end up with an untrustworthy record.


David: That’s right, that’s right. That’s a very, very good point because the key part of that is it’s a lot more manageable than you might think it is and because you can learn along the way. And everybody has to just accept the fact that there will always be a certain percentage of transactions that will be fraudulent and you’re going to have to manage through them. However, over time as you learn about where these problems can happen, what the symptoms are, what the typical resolutions are, you start to gain that knowledge and confidence just like you would in doing anything that makes you feel as though you know what, we can handle this. Yes, there are going to be the occasional really difficult ones but it’s manageable. I know what percentage of my business is going to be affected by it and I can account for that in my planning and in my forecast for what I’m doing. So I think it’s an important topic. This is always going to be something that merchants are going to have to worry about but they can certainly get a handle on it.


Adam: And as you said, things are getting tighter and more cooperative between all of the payment gateways to ensure that they all share as much information as possible to mitigate against that fraud.


David: Yes.


Adam: One of the things that does come up in conversations with marketplace owners who are looking to build and deploy a solution that fixes a big main paying point in a particular niche or vertical whether it’s an Airbnb or it’s a recreational vehicle rentals – we’ve got dog walking. We’ve got book a fish. The guy is out of Australia. We’re going global with their marketplace and booking experiences and all very narrow focused. And they put a lot of work into it. And they go off in a market and they get supply and demand and it’s fantastic what they’re doing. And then in that chained payment, the payment gateways are taking a transaction fee plus a percent on both sides of the transaction leaving the marketplace owner in the middle with little or none unless they’re charging appropriately.


But for all of the work that these marketplace owners are doing, the payment gateways seem to be taking a disproportionate amount of the fees. What are your thoughts around there? And I know with PayPal and Braintree and Stripe, they’re doing some good things with marketplace owners where they don’t charge the marketplace owner themselves on the transaction fees which is fantastic. It’s a huge burden off the marketplace owners but not everyone is doing that.


David: Right.


Adam: What are your feelings and thoughts and ideas around that?


David: Well, I think first of all, I think that over time when it’s clear that something is happening in a particular area like this that is not sustainable, it eventually corrects itself. And it can correct itself in a number of ways. Market forces are wonderful things. So what you just described is exactly what’s happening now. The people who are – when you think about Stripe and you think about PayPal and of course Braintree being part of PayPal, you think about them being much more merchant friendly and this is a strategic competitive advantage for these companies relative to the others. So as they start to gain market share which they are, over time this becomes one of those things where eventually the companies that are really not friendly to merchants in this way start to feel the pains. So now, that can take a bit of time obviously.


So the question is what do you do in the meantime? I equate this a bit like the big push to free shipping, right? So we know that over time, there are many companies that, Amazon of course being a leader in this, just went off and said okay, we’re just going to offer free shipping. And then they started to find ways to make up the money in other parts of the business because they realized that it was a competitive advantage. And then of course as time went on, more and more companies begin to recognize that hey, if I’m not offering free shipping at least on some things or in some ways, it could be a promotion, it does not have to be free shipping all the time, I’m going to be losing business. And so in a similar way, these payment providers are also seeing this. I just think over time, it’s going to get better.


And what can merchants do about it? They really have to think of it as something that – unfortunately, they don’t control who’s going to charge what. But they can think about other ways and other services to provide that may make up the difference or may help deal with this sort of gap they have. And I think it’s – every business is different and so there’s really some creative thinking that has to be in place there. But it’s all about understanding the numbers. What percentages are we really talking about? How material is it to the business? And where can we make it up long enough for us to then see how this plays out? Because I don’t think it’s going to be years and years from now. It’s just that there are shakeouts happening constantly in payments and there’s more on the way.


Adam: More on the way.


David: Yes.


Adam: Well, thank you for that by the way. That makes a lot of sense and I think it’s reassuring for vendors to understand or marketplace owners to understand that there is some power that they have in the negotiation with payment gateways to ensure that they build a sustainable business model. The trends – what about Bitcoin? Is that something that we should be factoring into our check out processes?


David: Well, I think it’s – first of all, it’s fascinating for anybody involved in payments and anybody involved in transactions to see what’s happening there. I think it’s something to watch. The biggest concern I have with Bitcoin becoming widely adapted is I just don’t think many governments want to give up currency manipulation yet.


Adam: You said the right word, currency manipulation. And is it the governments or is it the Central Banks that are privately owned? And that’s another whole discussion.


David: Yeah. Adam, it’s both. It’s really a mindset because once people – once there’s a tipping point where Bitcoin becomes a preferred currency, then Central Banks and their governments are beginning to lose control. And that is a very difficult thing for them to understand. If you go back and look at the history of the last 100 years of currency manipulation, it’s incredible how much of that has happened. Many people don’t realize how often it happens and I’m not suggesting that – and the term manipulation obviously has a pejorative context and people don’t think of it positively. But there have been times when currency manipulation has been done and it’s been very beneficial for a large population. But that’s probably the single biggest sticking point and the ability to regulate Bitcoin in a way that satisfies the Central Banks as well as the governments is very difficult.


Now, that said, I don’t think it’s – Bitcoins are not going away and it’s not something that I think people have to worry about next month or next year being widely adapted for most transactions. But it will gradually gain adaption. Let me give you – it may sound like not so much a similar situation but what effectively happened over the last decade, about 10 years ago, 10-12 years ago, there was a small number of developers who began to talk about open source technology and how it could be so wonderful to have code that was widely available that everybody could play with and put their two cents into and improve. And then we wouldn’t have to rely on these proprietary monolithic frameworks that developers were using.


And for those of you who are not technicians or technologists, this is really all about two topics. If I’m letting anybody in the world who’s a developer make a change to code, then where are the competitive advantages for me as a business? And secondly, what security am I giving up? So I make this comparison to Bitcoin because at that time, there were many people who are saying open source will never be used in ecommerce situations because you just don’t want to have it happen there. There are too many problems with fraud possibilities, security issues. How do I know that something is going to be supported if there’s not anybody that has any reason to support rather than their goodwill, et cetera? Well, what we’ve seen is that’s actually completely gone away in most cases, obviously in highly secure, and government is a good example, situations that isn’t the case. But wow, the adaption of open source technology has just gone off the charts.


So I expect it to be a very similar kind of gradual rise with Bitcoin until we reach a point where it’s something that people will begin to adapt and see that there’s this almost tipping point. And then governments are going to be forced and Central Banks forced to figure out how to deal with it. They’ve already started having the conversations. They already have a point of view but I do expect over time that it will have some traction and be much more widely accepted than it is today. So as a merchant, the take way from all of that is yes, keep an eye on it. If you are the kind of person and it really depends on the type of person you are who likes to be at the forefront of things and you feel that your customers, maybe a good percentage of them fall into this category, then you might want to consider a sort of early adaption of Bitcoin. If you are not like this or you’re in a business that you don’t think is going to, that you’re not going to have a lot of traction with this, then you may not want to spend in the effort.


It’s the same with anything you’re going to do. What’s the return on your investment? What’s the return on your resource investment? Is it a wise thing for you? Are you going to gain from it? So that’s how I view the Bitcoin evolution.


Adam: Very interesting. I think probably if Bitcoin was going to be killed, it would have been legislated out of existence by now. And obviously, the banks are keeping an eye on it and involved in a conversation in the background somehow. And I guess as a vendor or as a marketplace, what are your customers doing? And if they are using it and they’re not using feared currency elsewhere, then maybe that’s a means of exchange that you have to consider but that’s great advice. I really enjoyed hearing that part about Bitcoin. Well as we’re a global economy now, what’s unique that our listeners, marketplace owners, merchants of records need to know about for global commerce?


David: Well, there are two things that are very important to understand. And one of them is something that I think is very hard to change in some cases and over time it will moderate and that is just the cultural differences from one country to another as it comes to payments. And the second thing is how global fraud which we talked about a little bit earlier is trending from a global perspective rather than something that’s been confined to certain parts of the world, how that’s going on. So let’s take those one by one.


First of all, for those of you who are not fluent in various payment cultures around the world, I’ll just give you a couple of examples. I’ll give you one where I worked just recently in the last 18 months in Germany. German payment is very unique in the world. Germans exchange their bank account numbers like you or I would exchange a telephone number. And this is how they transfer money back and forth. And for those of us who – and so their credit card penetration is very low. And so for those of us who don’t understand this, it can be very challenging to think about what’s the right way to do business with people from Germany. Now, companies like PayPal and others of course offer the ability to transact and the culture is changing a bit but still this is the core of their culture. It’s all predicated on security.


Go to the other part of the world, go around the globe to South Korea which has the highest penetration of credit card usage in the world. The average South Korean has eight credit cards in their wallet and a myriad of gift cards.


Adam: Wow.


David: Yeah. Now, you’re talking about a culture that is all about credit and they’re all about points. So you can get points for literally walking down the street and waving a card at somebody and they’ll talk to you about what kind of points they can give you for this, that and the other thing. So these things are important to understand because as the world becomes more connected and commerce becomes more global, everyone has to adjust a bit and also understand more. So it’s important to know for example that if you are coming from Germany which has a long history of really wanting secure transactions to two-factor authentication an occasion even multiple-factor authentication, things like this, you can’t take for granted that the first thing that might be on a German customer’s mind is how secure is it what I’m doing? That’s very likely.


And as opposed to South Koreans, okay, I need eight choices for the kind of credit cards that I have because at any given day, I might decide that I only have 2000 points in this card but I want to have the points in this other card so I want to use that. And this has all kinds of implications for merchants. So that’s the first thing that I think is really important from a global piece. And it’s fun to watch because as a merchant when you realize that you have these differences and you can do things to help people in these other countries feel at ease, you really are beginning to create a competitive advantage for yourself because not everybody is thinking this way. So I think that’s an important piece.


The second one of course is fraud. We talked about a little bit earlier fraud on a global scale. It used to be many years ago that you can identify where the pockets of the greatest hackers were in the world. Now, it’s everywhere. There are good hackers and bad hackers and fraud comes in all forms and shapes and sizes. As I said earlier, this is all about trying to keep things in perspective and recognizing that fraudulent behavior is not typically a high percentage of your transactions. It can be alarming if it is a growing percentage of your transactions. And that as a merchant is something you have to watch but there are people out there to help you. And since everyone except the fraudsters understands that it is in everyone’s interest to reduce fraud, you can reach out and get help from a number of sources.


So those two things from a global perspective, I think, are really important to watch and as a merchant making sure especially if you are doing any cross-border trade that that’s where you are looking.


Adam: Well speaking of help, obviously you are providing boatloads of help to those listening to this podcast now and your expertise is shining through. I think this has been a fantastic advice to anybody whether they’re building a marketplace with multi or chain payment system or just basic ecommerce. I think these are all insights that have been highly valued by our listeners. Are there any, just in the last two questions that I’ve got for you, regulatory considerations that might impact anybody thinking about jumping into the brave new world of ecommerce marketplace?


David: Yes. So we touched on one of them. I think just watching what happens with Bitcoin is going to be very interesting. And it doesn’t affect a large group of people at the moment but it could have implications in the coming years and that’s one to watch. I think just in general governments especially post the 2008 financial crisis are much more attuned to what’s really happening in the world of finance and of course within that context ecommerce, payments, et cetera. And so we see everything from new tax schemes to try to do better when it comes to collecting taxes, to also the idea that consumers are, when there is an outcry or there’s a concern around consumers getting fleeced that we’ll see something whether it’s debit card fees or whatever it is. You can expect that there is going to be more really, I think, more focus on these types of things.


And then really where it starts to get interesting and we haven’t seen this yet but I’m looking at this as sort of the next level of global regulation is now we start seeing cooperation on a global level across various types of things. Financial aspects of ecommerce are right on the radar. So when you start adding as what just happened recently about the IMF, the Chinese Yuan to the basket of reserve currencies, now what’s happening is that requires a whole level of collaboration and cooperation around the world since this is now in the basket of accepted currencies. And this is just one step removed from more regulation that’s global on global commerce. So expect that. It doesn’t mean that it is going to be happening overnight but you can expect that it is going to be something to watch in the coming years. It’s just bound to happen. There is no way around it.


Adam: Wow. So global regulation. We’ve seen the Chinese Yuan being accepted into that basket, as you mentioned, of reserve currencies. We’ve got Bitcoin on the side.


David: Yes.


Adam: Is global currency down the track?


David: Well I think that – yeah, that’s even more scary to the Central, the Central bankers and governments because then the question becomes who runs it. I don’t think it’s out of the realm of possibility. In one sense, one can argue that some reserve currency, the US dollar for example being reserve currency for a long time was in fact a global currency and still is to a large degree. So I think it’s going to have to get more complex before it gets simpler. And I think that means that we can expect obviously with the Chinese currency being accepted in this basket. In effect, what’s happening is this basket of currencies is going to become the global currency.


So I know that may be a hard thing for people to visualize and understand because it’s sort of in the clouds but think of it almost like you have, the relationship of coins to bills, to paper money. Certain amount of these coins actually equals a certain denomination of paper money. Well similarly, a certain amount of Chinese currency, British currency, US currency, et cetera, they equal a certain amount of what’s called spider currency, SPDRs and SDRs. And this is part of these depository receipts that in effect have the potential to become the global currency at a high level. I don’t think – that’s not going to be something that you and I transact or merchants transact with consumers anytime soon. But the foundation is being built for that. It’s scary for governments and Central bankers to accept it but they will eventually have to.


Adam: I’m guessing that many of the Central Banks are owned by the same people anyway in which case that would be an easier leap but we won’t go down any conspiracy theory paths in this interview. Absolutely awesome to talk to you, David. You’ve just been a bonanza of great insights. And to be able to share as candidly as you have, I really appreciated it. I’ve got one last question for you.


David: Sure.


Adam: And it relates to just general life experience and something I like to ask everybody for my own personal edification. What’s the one piece of advice that’s been given to you in life? And it sounds like you’ve had some great life experiences and wonderful parents that have brought you up incredibly well. But what’s that one piece of advice that was given to you in life that resonates with you every time you are facing a difficulty?


David: Oh, that is such a good question. I’m glad you asked that. It really is rooted very early in my life. I was told and I live this and I encourage people to live it that you really are your integrity. If you do not conduct yourself in way that is viewed as trustworthy and open and people believe what you are saying, you really don’t have anything. And I unfortunately have witnessed enough people in my career and in my life who have not lived by that. And it’s sad to see them realize it after the fact. So sometimes, it’s hard. Sometimes, you got incredibly difficult, we all do, difficult ethical dilemmas both in personal and business life. And I think it’s served me very well to just hold your head high and take the high road. Even though sometimes it may feel very challenging, it’s always served me well. And that’s the best advice I’ve ever gotten and I try to give it to all the people I work with in my consulting firm, in all the clients as well as people who’ve worked for me over the years.


Adam: And that absolutely serves all of our marketplace owners very well too because you are your integrity and I think that’s a fantastic take away. At the end of the day, that’s all you’ve got. Billy Joel also said it. Honesty is such a lonely word.


David: That’s right. Very good.


Adam: Good song. Well, how can people reach you, David?


David: Thank you. First of all, this has been terrific. I’ve enjoyed it immensely as well, Adam. You can go to hershfieldconsulting.com. We are a global consultancy with a presence in California, Florida and New York. And we do very much a technology product type of consultancy, deal with operational issues as well and even help from a financial perspective although we are not finance guys. And so they can reach me there through email. And I look forward to hearing from anyone who needs some help or would just like to follow up on some of the topics we’ve talked about today.


Adam: Oh, you bet. And what we’ll be doing everybody is the transcript of this podcast will be typed up and you can read it if you are not listening to it. And we will have David’s website link as well as his LinkedIn profile and other social media assets pointed to so we can make it as easy as possible for you to connect with him. Wonderful, David. Well, thanks again. And I look forward to our future conversation. We’ve got to do this again.

David: Sounds great, Adam. I look forward to it as well.



Topics: The Crowd Podcast Interviews

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