3 Unique Opportunities for Payments in the Sharing Economy


In 2004, Yochai Benkler, Professor of Law with Yale Law School published an essay he titled, Sharing Nicely: On Shareable Goods and the Emergence of Sharing as a Modality of Economic Production. Benkler sought to understand “sharing—on a large scale, among weakly connected participants, in project-specific or even ad hoc contexts” that seemed to increase with the growth of the world wide web. Sharing Nicely goes so far as to define the social sharing economy as an “underappreciated modality of economic production”, pitting its economic impact against price-based, firm-based, and state-based production whose economic prominence is “sensitive to technological conditions.” This emerging “social-sharing” phenomenon brought about by enhanced connectivity had already emerged in the form of eBay and would lay the theoretical groundwork for companies like AirBnB, TaskRabbit, and many others. In fact, Uber - often dubbed the mastermind of the sharing economy - was founded five years after Benkler published his discerning research.

In the many years since social sharing took root, marketplaces have sought to enable greater collaboration between supply and demand pushing technological advancement to improve efficiency and access to an increasingly wide range of assets. From condos, to language lessons, to umbrellas, there is hardly a corner of the commercial universe that has not been disturbed by the rise of the sharing economy.

While marketplaces strive to compete on a progressively crowded playing field, the ability to facilitate the entire “sharing” experience has propelled dependent demand for payment and regulatory technologies. Marketplace companies who are shoveling resources to platform development struggle to support expanding volumes, regulatory burden, and stringent merchant and customer expectations when it comes to payment and due diligence functionality. Such a shift has opened the gates of opportunity for third-party payments organizations to step in and fill the gap, and that is where this paper focuses its effort.

This whitepaper will cover global trends in the sharing economy and the opportunities that payments firms might uncover in the sector. Further, we’ll discuss how the payments function can add value to the marketplace by enhancing user experience, shouldering risk and compliance responsibilities, and revealing opportunities for growth through data aggregation and analysis.

“I define the collaborative economy as a system that activates the untapped value of all kinds of assets through models and marketplaces that enable greater efficiency and access. Increasingly, those assets include such things as skills, utilities, and time.” - Rachel Botsman, Harvard Business Review

Sharing Economy: Growth and Global Trends

Asset sharing, once reserved for local co-ops and communities has proven itself a solid foundation for viable enterprise. Since 2010, more than $24B USD in venture capital has been funneled into the future of the industry with 8 of the world’s 10 largest startups by valuation now based on the sharing principle:

1. Uber $68B - United States - Transportation

2. Ant Financial $60B - China - Financial Services

3. Didi Chuxing $50B - China - Transportation

4. Airbnb $31B - United States - Hospitality

5. Lufax.com $18.5B - China - Financial Services

6. Meituan-Dianping $18B - China - eCommerce

7. WeWork $17B - United States - Office Space 8. Spotify $13B - Sweden - Entertainment

Valuations as of May, 2017 in USD

The list itself reflective of the geographical state of the industry, China, The United States, and Europe are most actively adopting collaborative economic trends. Respectively, the addressable market in the U.S. is $785B, $645B in Europe, and $503B in China. However, Southeast Asia, India, and Latin America have also been identified by Nielsen as markets facing particularly notable disruption due to the sharing model.

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