Electronic Payments and their effect on CRE – What Does Bitcoin and the Ming dynasty have in common?
Both ushered in new payment methods that revolutionized commerce. Just as the Ming dynasty popularized bank notes in the 14th century, electronic payment platforms from Bitcoin to PayPal change the way society conducts business. Creating more efficiency in the business cycle by simplifying the transfer of payments. Bisnow recently published an article titled “ What the Future of Money Means for Real Estate” which explores the adoption of electronic payments and highlights potential impacts to commercial real estate. Consider the combination of automation and electronic payments on retail and e-commerce. If you can swipe, tap, waive, press a button, or insert your desired payment method tied to the currency of your choice (crypto, yuan, dollar etc.) anywhere in the world, this is a good thing…correct? Bisnow’s article points out adoption rates of the various forms of electronic payments and how they are contributing to the decline of hard currencies.
Blockchain for CRE – Bitcoin and other crypto currencies have offered alternative payment methods, but it’s not necessarily the crypto currency that is the story. As pointed out in the above referenced Bisnow article, crypto currencies are just one of many payment options and carry certain risk. It’s the distributed-digital ledger technology offered by Blockchain that is revolutionary.
Lisa Stanley with OSCRE International, a leading consultant on information exchange and standards for CRE, published an article in CoreNet Global’s June 2017 edition of the LEADER magazine which provides foundational understanding of blockchain and its potential for change in the world of CRE. From tracking chain of title to managing lease payments or maintenance records, blockchain offers CRE portfolio data management efficiencies not available today. Tech adoption in general for CRE has been slow. However, owners and users can look at the potential benefits blockchain can provide other industries for inspiration. Jeremiah Owyang lays out the benefits of “Blockchain for Every Industry” in an article posted on the NewCo Shift blog site. Read Owyang’s post and see if some of the applications for other industries could be beneficial to your organization. As Stanley points out, blockchain is more of a foundational change than a disruptive change; and disruptive change occurs more quickly than foundational change. That’s good news for CRE, we have time to get on board.
I’ve experienced the efficiency of e-payments first hand. In the cafe’ in our office building the operator takes all forms of electronic payments, but doesn’t even have a cash register. Whenever there is a line at check-out, I’ve noticed it’s because someone is paying in cash. When using my chip and pin debit card (the lowest common denominator of e-payments), the checkout takes about 10 seconds. When paying in cash, it can take up to a minute. The Bisnow article explores the impact on commercial real estate use, employment and buying habits. It also points out some of the pitfalls of e-payments, primarly the emotional detachment from hard currency tends to go away, so consumers will purchase more. Good for the economy, bad for consumer debt.