Net Settlement For Everyone
BillMonk announced the release of a new feature they call debt shuffling. It’s like net settlement for a group of people (e.g. a social or person to person network of friends). Makes one wonder why the concept of net settlement cannot be implemented at the individual business and person level.
Billmonk is a site in the social finance category (which includes other sites like Buxfer and Wesabe). It allows you to track expenses, who you owe and who owes you. It is also owned, appropriately enough, by Obopay which has a nice person to person mobile payment scheme. The Billmonk blog illustrates a common social situation:
There are only seven friends here, but they will have to write 21 checks to settle up!…Enter debt shuffling…The monk will think of a way to reduce the number of checks you have to write to settle up.
Source: Notes from the BillMonk
As an aside, while at first I thought person to person (P2P) was an interesting application for mobile payments because it was something not easily done via existing payment systems like credit cards, ACH, etc., I have become tired now of how this or that product that supports P2P pay markets itself by explaining how their product will allow “a group of friends to settle the restaurant/bar bill”. I mean how prevalent and troublesome is the “let’s settle the bar tab” problem? Here is a very effective low tech solution: separate tabs. Here is another: cash… That being said, this is a very cool idea - net settlement. Banks do it all the time within the cheque clearing system - why can’t individuals?
Consider the following simple scenario:
- My employer pays me $100
- I pay the gardener $20
- I buy something at Home Depot for $50
- The gardener buys supplies at Home Depot for $10
- I pay my credit card bill of $30
That’s five payments. There would only be three payments if my employer simply paid Home Depot, the gardener and my credit card directly. It could get even better if the credit card company, Home Depot and/or the gardener is a client of my employer. I know, its crazy and there are all kinds of practical issues that I am quite sure make this “impossible”, but I like the concept.
