Meet-Her She Knows Payments
A Collaboration between APAC’s most influential female payments leaders hosted by the Emerging Payments Association Asia.
Camilla Bullock is the Director-General (Community) and the co-founder of EPA Asia. She has a long career in the financial technology industry and often talks about coming home when she started her work in the payments industry.
Jennifer is an experienced banker and a life-long leaner who has a passion for finance and a talent for communications. Since 2016 she has been actively involved in the Australian fintech ecosystem and is proud to be a mentor at Stone & Chalk in Sydney.
Andrea is the Chairwoman of the Emerging Payments Association’s Advisory Board; Board member of the European Women in Payments Network. She also sits on several industry forums including the Payment Systems Regulator in the UK. She is a passionate speaker and supporter of diversity and inclusion, as well as financial inclusion, championing and challenging the industry to deliver better financial products for the benefit of all.
Yuchen is the project manager of EPA Asia and is coordinating both projects and events such as round table and inside tours. As a postgraudated student, she is heavily involved in EPA Asia’s research projects and the academic relationships. Yuchen joined the team as an intern during the associations’ foundation year and has since become an employee valued for her sound critical thinking and her ability to always come with bright ideas.
For this round table, we will explore specifically how payments can promote financial inclusion. Along the way, we will dip into open banking, regulation and, NFPs
Inclusion in the UK
- >97% have access to a bank account
- Even the basic bank account provides access to payments
- But key groups excluded
- Digitally excluded
- Rural
- Older people
- Access to cash is seen as a critical policy issue as branch networks retreat
- But many are under-served
- Financially squeezed struggle to access best products
- Lack of digital skills or access means reliant on cash
- Risk exploitation through scams and lack of profitability
- Regulatory response
- Access to cash review – potential legislation
- Role of the Post Office
- Financial Inclusion Commission
- Lending Standards Board
- Money and Pensions Service
- Open Banking
Blockchain and other DLTs have significant implications for the future of payments. These range from the opportunities of CBDCs and programmable money to the threats of cryptocurrencies and DeFi.
Blockchain can revolutionise payments by modernising traditional payment methods and legacy rails with something faster, more secure, and decentralised.
- Blockchain-based payments enable businesses to grow sales without the risk of costly fraud chargebacks, the expense of legacy pay methods, or the complexity of currency exchange.
- Crypto usage increased exponentially over the last few years by making it as easy to send money as it is to send an email.
- The ability to accept crypto expands a business’s sales opportunity into international markets where accepting credit cards is not practical, while reducing high fees and increasing payment transparency and efficiency.
- Corporations that conduct business internationally and send billions overseas incur high fees and delays of up to a week.
If blockchain is the future of the payments industry, then the merchant and consumer adoption of blockchain will continue to accelerate over the course of the decade.
New models and solutions inspired by the DeFi concept if combined with enterprise-grade technology that delivers the required level of trust, distribution, compliance – and convenience – are hugely exciting.
Convenience is the new currency
- Consumers know that their time is limited and valuable; so a brand that saves a customer’s time whilst significantly benefiting them in the process will win.
- If a brand can simplify a consumer’s experience, enrich their lives, and give them the ability to do more things at the same time, then this is powerful.
Personalisation is valuable and increasingly essential
- Consumers want to be shown that a brand truly knows who they are.
- Points-based loyalty programs are no longer enough; habits and preferences need to
be acknowledged to tailor-make a unique and personalised customer experience. - A brand needs to show customers why they deserve their time, money, and loyalty.
Data sharing and the role of trust
- Data & AI allow brands to provide customers with a broad digital experience.
- However, there are still risks around granting access to one’s personal data; customers are very aware of this but maybe prepared to trade for convenience.
- As long as the brand is using the data to enhance a customer’s experience, consumers are satisfied with that value exchange.
Technology is only innovative for a period of time and then it becomes commoditised. So there needs to be a purpose and a “good” problem for the technology to solve.
RTP is more than a payments infrastructure; it is an enabler for problem-solving, including:
- Financial inclusion
- Driving digitisation, and
- Fostering innovation.
Building a digital economy will require concurrent actions across several fronts from the development of infrastructure to building a strong governance framework.
Elements required to support the success of RTP
In addition to infrastructure development, there are additional elements that are required in order to support the success of RTP:
- Regulations and policy
- Regulations and policies that govern participation, consumer protection, privacy, etc.
- Nation-wide campaigns
- Marketing campaigns to drive consumer awareness and adoption
- Consumer education on how to detect fraudulent digital payment requests
- Ecosystem development
- Development of peripheral systems and capabilities for digital transformation e.g. digital ID, digital government services
- Upgrades to business operations, security, and fraud capabilities to deal with 24/7 instant payments
Common themes
The vulnerabilities of people, systems and technology are exposed and triggered by changes in both internal and external factors.
In short, change creates new opportunities for fraud.
Some examples:
- COVID-19
- Increase in people working from home
- Increase in people using digital banking
- Change in the demographic using digital banking
- Expediting contactless and digital payments
- Driving e-Commerce
- Technology advancements
- More people using mobile and smart devices
- Increase in connectivity and expanded use of 5G
- Consumer habits and expectations
- Regulation driven by consumer rights
- Demand for convenience, security, access and control of money in real-time
- Data breaches are in the news
Success factors for Open Banking
In different markets, regulators have taken slightly – or even vastly – different approaches in terms of being regulation led or industry led.
Many regulators are still trying to figure out how to stimulate the development of an OB enabled economy without mandating everything onto unachievable timetables.
Much of the early work has been around the technology standards with a focus on consents and data security. This has meant that not so much time has been spend on exploring the breadth and depth of use cases in order to show merchants and consumers the benefits that will lead to adoption. That said, OB usage has experienced a large uplift in the UK in the last 6 months as people have had both the a) time and b) motivation to explore digital tools that promote financial wellness.
“The revolution in deep learning has been very profound. It definitely surprised me, even though I was sitting right there.” Sergey Brin, Co-Founder, Google”
Analytics is a broad term
Analytics is a broad term that can be better understood in terms of degree of difficulty and degree of value:
- Inputs (low difficulty, low value)
- Descriptive analytics help us to understand what happened in hindsight
- Diagnostic analytics help us to understand why it happened to gain insight
- Outputs (high difficulty, high value)
- Predictive analytics help us to understand what may happen and to apply foresight
- Prescriptive analytics help us to shape the future to optimise the outcome
AI helps to deliver the higher value, higher difficulty analytics.
We will look back at this time as a watershed moment for cross-border payments.” The global pandemic has triggered a metamorphosis of demand. Patterns of consumption have changed. And consumers are happy about it!
We now have a watershed moment: an industry-defining opportunity. We can define the purpose of cross border payments to be more than the mere functional utility of getting money from point A to point B.
How can the industry come together to collaborate? To elevate its mission? To secure trust during times of rapid innovation and the arrival of many new entrants?
How do we get the data requirements to standardise? And to continue to migrate data to the cloud?
Payments are the most universal of all financial products. Digital currency puts the normally conservative, staid and traditional central banks at the front line of innovation.
Central banks have been considering digital currency as a theoretical concept for quite some time. There have been many papers published on the topic by authorities in the UK, Sweden, Canada and Singapore, for example, covering the topic of digital currency.
It was Facebook’s announcement in 2019 of Libra that catapulted the topic into the commercial mainstream and additionally prompted 26 central banks to request to meet with Facebook, a private non-bank organisation, possibly more out of fear than enthusiasm for innovation.
“Digital identity underpins everything we are working to advance.”
Payments are the front line of the digital economy and therefore digital identity
Payments are at the front line of digital identity due to the immediate valuable use cases in:
- verification (KYC)
- authentication (credentials), and
- authorisation
The topic is broader than personal identity, as large corporates and SMEs, trusts, NFPs/NGOs and governments also participate in the payments system.
Where available, most consumers prefer the convenience of card or mobile wallet payment. Prior to the pandemic, the consumer dislikes included some merchants not accepting digital methods for small value transactions and the requirement to remember and enter the PIN for high value transactions.
During the pandemic, there have been concerns around the physical touchpoints of can and pin pads.
It is increasingly a challenge to find an ATM to distribute bank notes. Additionally, it is increasingly a challenge to find a store that can make change to break a large bank note into small change.
Other considerations around a move to a totally cashless society include interchange fees, operational risk and backup plans for network outages, cost of cash handling, the shadow economy (tax evasion, organized crime) and the utility of cash as a store of value in a negative interest rate environment.
May 2020 is a major moment in time as the world navigates the short- and long-term impacts of the Covid-19 pandemic.
Major moments in time can change priorities and behaviours. For example, amid the current pandemic there are rapidly changing attitudes around payment methods such as cash, card, or digital wallet.
At such times as these, there can be major leaps forward and change can happen very quickly. For example, from late March onwards, both Visa and Mastercard have variously increased their transaction limits for contactless card payments. This change has been implemented swiftly and decisively without lengthy consultation or PR campaigns debating the risks versus the rewards. We are yet to see whether those transaction limits will be reduced post the pandemic.
PayPal Holdings, Inc. is an American company operating a worldwide online payments system that supports online money transfers and serves as an electronic alternative to traditional paper methods like checks and money orders.
Equinix, Inc. (Nasdaq: EQIX) connects the world’s leading businesses to their customers, employees and partners inside the most interconnected data centers. On this global platform for digital business, companies come together across more than 50 markets on five continents to reach everywhere, interconnect everyone and integrate everything they need to create their digital futures.
The EPA Asia’s vision is to facilitate for the region to become the centre of innovation for the emerging payment industry. Payment Solutions in Asia is already advanced, but lack of harmonization and standardisation has introduced technical and regulatory hurdles slowing down the projection to excellence. EPA Asia represents a unified voice for our members in the work towards a stronger and coordinated industry.