Disrupting Transactions: 7 Examples of AI Driven Smart Transactions that will Mess with your Mind

The banking world is in trouble.

Our entire world is primarily built around one central activity – transacting payments. Today we’re seeing an emerging breed of non-bank companies coming out of the woodwork, maneuvering quickly, to reinvent transactions in ways we find hard to imagine.

Whenever I purchase a loaf of bread, pack of gum, or gallon of milk, I’m performing a transaction.

A transaction causes a change in ownership. It also creates a change in your bank balance, your personal net worth, and the data profile associated with your personal identity.

While we tend to overlook the significance of a transaction, entire industries have been constructed around them. In fact, most of the world’s entire labor force is somehow tied to the cause-and-effect relationship we have with transactions.

Each time I make a purchase on Amazon, it’s based on a transaction. Amazon wouldn’t exist without them.

When I click on a Google ad, every click forms a new transaction. Google also wouldn’t exist without transactions.

In fact, the same holds true for Apple, Microsoft, Facebook, General Motors, Coca Cola, Pizza Hut, Procter & Gambles, Best Buy, Red Lobster, Dress Barn, and Forever 21.

Every paycheck, stock purchase, trade, commission, subscription, fine, toll, membership, and gift card swipe all involve transactions. Even most free things require transactions because people are trading personal information for what’s behind door number three.

Most people today would find it impossible to live a “no transaction” lifestyle. Only those coming from a minimalist setting, living off the land and sea, making their own clothing, building their own homes, and treating their own diseases could even come close.

Our lives are immersed in transactions and we simply take them for granted. At the same time, we rely on the banking industry to safely and securely manage our transactions.

Regulating Transactions

Governments are responsible for all our systems. Since transactions are part of our systems designed for public commerce, governments are responsible for ensuring everything is happening as it should.

But governments have also decided to make every transaction a tax point decision. Is this deductible or is this not? And with literally trillions of transactions happening every day, the intrusiveness of this system becomes quite onerous.

Even though technology has become the “great complexity-enabler,” anything involving a piece of human decision-making, no matter how small, places an untold burden on the flow of commerce.

Human decision-making, in this context, becomes the friction that slows the speed and fluidity of society. At the same time, we’re on the verge of automating the entire process in ways that are seamless, painless, and invisible to the end user.

With this in mind, any entrepreneur wanting to disrupt the transaction industry should first consider which transaction types and industry characteristics to attack first.

Anatomy of a Transaction

While we don’t consciously think about it, every transaction is packaged with a bundle of attributes and characteristics that govern the overall nature of this seemingly insignificant activity.

Merchants pay close attention to things like cost, speed, and risk. Consumers pay more attention to security, transparency, and convenience.

Simply put, the distance between what you want, and when you get it, is a simple transaction. But it is the flavor and characteristics of these transactions that determine whether or not they will ever happen.

For this reason, it’s important to break the cause-and-effect relationship of a transaction into primary and secondary results.

Uber has mastered the “no click” payment system where the transaction is agreed to before the service is performed, and it’s finalized when a passenger simply opens the door and walks away.

Spotify has designed its entire operation around complex algorithms that track every song you play and credit the artist with a micropayment proportional to the entire song catalog you listen to each month.

Next generation transactions will be even more disruptive.

Here’s a quick look at transaction types and some of the most relevant characteristics to help illustrate an approach to uncovering where the current industry vulnerabilities are possibly hiding.

Transaction Types

1. In-store vs. online purchase
2. Voice commerce (i.e. Alexa, Google. etc.)
3. Online or live auctions
4. Barter or trade
5. Rental or lease
6. Purchase of services
7. Subscription or membership
8. Donation
9. Investment in a stock or bonds
10. Mortgage, loan, or lease payment
11. Refund or exchange
12. Voided transactions
13. Applying for credit
14. Savings
15. Single vs. double click

Transaction Characteristics

• Speed – Conversion before distraction
• Cost – Who pays and how much
• Privacy and Security – Validation and awareness process
• Convenience – Ease of use
• Transparency – Knowing your balance before and after
• Size – Macro, micro, or nano scale
• Friction Level – Number of decision points
• Taxable vs. Non-Taxable

Seven Shocking AI Managed Smart Transactions

With this in mind, let’s think through some possible ways a disruptive entrepreneur might approach rewriting the rules of transactions.

1. Complex Purchase Scenario

With the combination of AI and nano payments, it may indeed be possible to devise some truly exotic transactions.

Let’s suppose you want purchase a new $5,000 bedroom set for your home and the deal you cut is to trade for:

• One 5-star review on Google (Value $100)
• 6 posts on Facebook (Value $600)
• 1 post on LinkedIn (Value $100)
• One lawn-scaping service valued at $400 (store owner’s yard)
• A mint condition Spiderman #6 comic book valued at $3,600
• Two unused $100 gift cards

Since the AI is aware of all the purchaser’s possessions, it recommended this no-cash arrangement as a win-win for both buyer and seller.

After reaching the initial agreement, the next step is to iron out what portion of the transaction is subject to sales tax and who is on-the-hook for that piece of the equation.

The AI determined $1,200 of the buyer payment is being done in services, so that portion isn’t subject to sale tax. It also determined that $500 of the sales price was allocated to delivery and setup, also not subject to sales tax.

That meant the remaining $3,300 is subject to 10% sales tax, or $330. To handle this, the buyer agrees to pay $130 cash and do two Instagram posts, each valued at $100.

Both buyer and seller are happy, and the taxing authorities are left with a super complicated money trail that can only be audited with next generation AI auditing software.

2. Saving for Retirement Scenario

It’s entirely possible for a frugal saver to impose a savings-tax on themselves simply by asking the AI to add an additional 2%-3% on every purchase, and place it into a retirement account that grows with their spending.

The logic here is to make the pain threshold extremely low, so the amount squirreled away is nearly invisible to the user.

Savings today requires a conscious effort. As I mentioned earlier, any action requiring human involvement creates friction so it’s far less likely to happen. By automating the process and making it invisible and painless, we will likely see many more people start to amass significant savings over the course of their careers.

3. Pizza Drone Scenario

Imagine watching television in 2040 and an extreme pizza commercial comes on. The experience is so intense that within seconds your taste buds become engaged, your mouth starts watering, and you finally utter the word “yes!”

That’s all it takes, one simple word.

The voice commerce system for your home is instantly engaged, and since it already knows what kind of pizza you like, an order is placed.

Ten seconds later a delivery drone docks with your house, a steaming hot pizza is removed, and you’ve already consumed half of it before you realize what you paid for it.

Marketing people have long tried to combine the marketing moment with the buying moment. The easier it is to buy after seeing an ad, the higher the conversion rate.

But in this scenario, the marketing moment is combined with the buying moment, followed by an abnormally fast fulfillment moment.

The entire transaction happens in the blink of an eye. As we analyze all the advances in technology necessary to make this happen, we begin to see the incredible potential behind the idea of “building a better transaction.”

4. The 1,000 Revenue Stream Lifestyle

In the future people will have the job title of an “impressionist.”

In this scenario, anyone who works as an impressionist will start their day by dressing themselves in video clothing where every surface area has a direct feed that fills it with ads and commercials for many different companies, so it’s constantly changing.

The job of the impressionist is to get people to notice them, but people watching the ads is only part of the equation.

Video clothing also has to track the viewers so it is “looking out” as much as the viewing public is “looking in.”

Every time two eyeballs are focused on a logo or marketing slogan, it tallies an impression.

With each impression worth a few cents, the goal of the impressionist is to accumulate as many impressions as possible in a given day. Generally the larger the crowd the better, but the impressionist’s goal will be to stay visible at all times.

Inside this data driven video feed, there could be as many as 1,000 different companies running their messages, the wearer could be earning income from as many as 1,000 businesses per day.

5. Seasonal Cash Flow Loans and Mortgages

Virtually every business has its own seasonality. Some are busy around the holidays, others have a peak time during the summer, and still others formulate their business models around key events.

Until now, the banking world hasn’t cared about anyone’s seasonal cash flow issues. Every mortgage and loan payment follows the same relentless monthly pace, and it’s up to the borrower to figure out how to make the payments.

However, with a self-organizing AI smart transaction, mortgages and loans could be synced to a borrower’s specific situation, less some months and more at other times, with payments automatically adjusted to match the company’s cash flow.

Over time, borrowers would still pay the full amount, but it would be at a pace that meshes far better with a business’s ability to pay.

6. Fractal Transactions

A fractal transaction is simply an automated point of money distribution. Money flows into the transaction, from one or more sources, and instantly leaves the transaction, automatically distributing money to one or more recipients. While this doesn’t sound like anything earthshaking, it truly is. Fractal transactions are destined to crack open countless new veins for business strategists to mine.

To begin with, fractal transactions remove the bottlenecks. When a purchase is made, money flows into a transaction and is distributed instantly. There is no waiting for someone to write a check, authorize payments, or money to clear the bank. It removes the bottlenecks and has the potential to dramatically speed up the flow of money.

In its simplest form a fractal transaction involves a product or service. Let’s take for example a manufacturer who creates a widget. When an end customer sees the widget on a retail store shelf and purchases it, money flows into the transaction and is instantly split between the retail store and the manufacturer.

The amount paid to the manufacturer can either be a fixed amount or a percentage, or it can be a percentage with a fixed amount minimum.

The amount paid to the retail store can either be a single payment, or a piece of it can be peeled off as a commission for a sales clerk. In this example the options are still relatively simple, but there are far more complex decision points that can be engineered into the transaction.

Using an Amazon scenario, when a customer buys a product from Amazon.com. Money paid for the book is instantly divided four ways in a prearranged split between the author, publisher, Amazon, and the shipping company. Additional recipients may be a co-author, a referring website, or a warehouse worker filling the order.

7. Gamification-Style Work Projects

Gamification is driven by data, and gamification also uses data to motivate performance. In the past, most business was transacted through face-to-face meetings or via memos sent around the office. In the future, businesses will find new ways to leverage both data and people in a far more distributed manner.

In general, a person that comes into contact with 1,000 people on a daily basis is more valuable than someone who only comes into contact with 5.

A person speaking from a stage with a microphone is more valuable than someone talking one-on-one.

A writer that posts a column that is seen by 10,000 people is more valuable than a column read by 12 people.

Anyone with movie star good looks, stylish clothes, charming smile, affable mannerisms, and engaging banter is more valuable than someone who lacks these qualities.

Even a crazy person that can draw a crowd by juggling chainsaws on a street corner is more valuable than most of us from an attention-gathering perspective.

Every one of us has a mixture of qualities that can potentially be monetized. With cameras and microphones becoming increasingly pervasive, things that we did freely in the past may soon be gamified with incentives. Here are just a few things people may be willing to pay for:

1. Fly a drone over a crowd with a promotional message on it.
2. Recommend a company on NextDoor – law firm, accounting firm, insurance agent, or spa.
3. Take a survey or poll and make money from recruiting others to do so as well.
4. Begin a whisper campaign. (“I don’t know this for certain, but these are the rumors I’ve been hearing…”)
5. Create a video around a specific goal, topic, or opportunity and get money for every download and impression.
6. Get paid to mention products, political candidates, brand names, company names, and more on social media.
7. Take photos of problem areas in a city, in a business, on a highway, or even on a playground.
8. Wear clothes, shoes, and accessories with visible QR codes that are clickable, meaning someone can hold up a smartphone, get the information about the product, and purchase it online.

Naturally only those things that someone wishes to offer money for will result in an income stream, but over time, the list will grow exponentially.

With driverless technology, our expectations will dramatically change!

Final Thoughts

As our ability to monitor, collect, and parse data improves, so does the likelihood that we can assign value to every portion of the value chain and help a new breed of entrepreneurs reinvent business as we know it.

For instance, both companies and individuals are willing to pay for things like impressions, endorsements, approvals, referrals, opinions, recommendations, branding moments, and thousands of other forms of influence.

In the past, companies would hire people for full-time jobs or short-term projects, but in the future the tasks may be reduced to a single action taking no more than a second or two to complete.

Simple tiny actions like – drop this from a bridge, talk to this person, hand this to her, or throw that Frisbee – may have sufficient value to cause someone to be willing to pay for that action.

Is this the type of world we’re moving towards? It all becomes possible when someone starts to rethink that seemingly insignificant thing we call a transaction.

By Futurist Thomas Frey

Author of “Epiphany Z – 8 Radical Visions for Transforming Your Future”

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