Payments

Payments Insight…Through the Lens of Industry Experts

Payments Helen Child

You probably receive an industry report, LinkedIn article or e-article daily.  Maybe you optimistically file the ones informative to the reading pile and delete the rest as Inbox clutter.

The Payments Innovation Jury Report is always at the top of my reading pile.  The Jury is composed of 40 uniquely qualified individuals from 23 countries across six continents. Unlike many payments commentators, every Juror has been there and done it before. They have been kept anonymous so they can be totally forthright in their opinions.

By way of background, FinTech and the payment sector in particular are going through a rich period of innovation. The Payments Innovation Jury Report provides expert insight into the state of the industry, dispels the hype and shows where the greatest opportunities lie.

High level overview of the world as the Jurors view it…

…to share a few key findings here:

On areas in need of innovation: Domestic P2P & international remittances are the areas of payments in most need of innovation. In the B2B space, international SME payments has the most potential for innovation

On exit options: Acquisition by a technology giant is now the most likely exit option for a successful payments start-up, showing how these firms recognise the commercial potential of the sector

On cryptocurrencies: Cryptocurrencies will not become viable alternatives to fiat currencies in the foreseeable future but the blockchain architecture has the potential to fundamentally change many areas

On mobile money: Availability of low-cost smartphones will be the single biggest enabler for driving universal adoption of mobile money. Very few mobile money schemes have yet turned profitable.

On the developing world: Of payments innovations from the developed world, virtual card payments are the most likely to find widespread success in emerging economies. It is about time that developed countries accept that they can learn from developing markets. Asia and Africa are in the lead in the payments innovation stakes and Europe is at the bottom of the heap.

I’d like to focus here what the industry thought leaders have to say on payments being a catalyst for social change.  Encompassing managing change and financial inclusion both topics close to my heart.

They comment that much of the focus is often on how to make payments lower cost and more profitable. However innovation in payments and FinTech can also be a catalyst for social and economic changes, beyond the mere transmission of the money. These changes can put the short-term financial position into a broader perspective.

Interesting they comment that mobile money systems such as bKash and M-Pesa have made major contributions to changing the economic circumstances of under-banked communities in Bangladesh and Kenya. Furthermore beyond the core service a whole eco-system and industry has built up. The M-Shwari deposit service which is built on top of M-Pesa has been a contributor to the development of a savings movement.

They go on to talk about other examples of how prepaid card products have facilitated the outsourcing of back office roles from developed economies to developing economies.

Fantastic! They believe prepaid is a platform for financial inclusion.  Prepaid products from companies such as Payoneer enable instantaneous cross border payments at low-cost to be made from businesses to workers in lower cost economies which has led to greater outsourcing of clerical and similar roles. Until the payment service was developed, such a business model was uneconomic and rarely existed. And stored value cards provide an essential enabling component of the TransMilenio public transport system in Bogota; being able to distribute funds electronically to multiple operators in a system where a journey to work can involve several independent vehicles has enabled the whole process to be dramatically simplified and speeded up.

To choose just one example from the many in my own experiences reinforces this statement.  It would be seeing the positive social change prepaid payroll cards made in the maritime market to the lives of seafarers.  Crew are traditionally paid in dollars.  Many of these Filipinos, Indians. Ukrainians and Chinese do not have bank accounts.  Giving rise to security issues when leaving the ship – many were mugged on their way home after spending months away at sea.  With ruthless gangs hovering around the ports – waiting for rich pickings.  The security implications are obvious.  A second card to the account allowed wives and partners to have controlled access to funds; improving life at home for loved ones. But what really made me smile was the seven-fold increase in mail-bags waiting or crew at ports.  Their prepaid card had given them access to the new world of on line shopping!  Social change indeed!

Valuable insight into the state of the sector. Comments from some of the most influential people in the industry…

“In Morocco the banked population rate has increased to 2/3 thanks to prepaid cards, online bill payment are implemented by the major public operators, including tax administration, and the government is launching a card program to distribute grants and subsidies. “Juror.

‚ÄúPeople talk about how e-commerce has revolutionized buying habits but the biggest impact has been on selling. Small traders in African countries can now sell their products to a much wider market, often abroad and know that they will receive payment…this is a major revolution. ‚ÄúJuror.

“The Indian initiative to give everyone a formal proof of identity and a bank account has yet
to fully play out but holds great promise for social and economic change in rural India. “Juror.

“Stored value cards have led to dramatic improvements in the operation of city-wide transport services in a number of developing markets by allowing for the sharing of fares between operators. “Juror

“M-Pesa in Kenya and similar systems in
other emerging markets for the first time bring an account/ banking/ payments infrastructure to large portions

of a unbanked population. “ Juror online apotheken cialis.

“PayPal facilitated online micro- merchants. Credit card facilitated travel. And new mobile based payment methods in Africa are enabling information and money to travel vast distances. “ Juror

“Prepaid telephony (the method of selling airtime on a prepaid basis, together with the distribution channel of selling top up credit through massive micropayment enabled networks) gives access to voice and data communications to large numbers of people that would otherwise not have had it. “ Juror.

“Payments innovation can be used to improve visibility and transparency government revenues. “Juror.

And finally, a number of Jurors praised innovations that helped to bury the payments experience altogether. As one put it, “no-one wakes up in the morning looking forward to their next payment experience!

Helen Child is a highly accomplished senior leader in the financial services industry. With over twenty years proven experience in the prepaid card and payments processing market, Helen’s reputation as an expert in this field is apt. Helen was voted globally as one of the top ten women in the prepaid industry and is currently a leading consultant with Striding Edge Ltd who provide Prepaid Payment Solutions & Prepaid Card Marketing.

To find out more about Helen, please visit http://www.striding-edge-ltd.com/helen-child

Helen has designed a comprehensive guide to Prepaid Currency Cards (FX Cards). View the guide here.