“Boring in payments isn’t a bug; it’s a feature.”
When I saw this quote on Twitter, I literally LOL-ed, mainly because it’s so true (thanks to James Wester & Sam Maule). Indeed the ’boring’ in payments exists for good reason; when it comes to peoples’ money, you can innovate, but you cannot forget the fundamentals. The basics may be boring, but the lesson there is that they are vital.
And this got me thinking. There are four key fundamentals in payments; Scalability, Availability and Reliability, and of course we want the payment to be Secure. You can think of them as the foundations of the Hierarchy of Payments Needs. These non-functional requirements drive payments; they might be boring, but the entire system is constructed on the back of these (boring) building blocks. As Maslow’s theory explains, if you are lacking in your baseline requirements, the ’nice to have’ elements are of no use – ’got to feed the children first.’
In payments, there are plenty of new FinTechs as well as established players that are building on the fundamentals that the ecosystem has established. The key is to remain constantly available, at scale, and secure, or massive customer frustration will follow.
As an industry, we need to be careful with the trust we have built in the Hierarchy of Payments Needs. Some of us are a bit ‘gung-ho,’ whilst some are perhaps overly cautious when it comes to innovation, which is causing tension within the ecosystem. So as we innovate we should also focus on protecting the baseline as an industry, because as we have seen in the past, the results of downtime, outages and hacks are hugely damaging for all payments players. We cannot take the fundamentals for granted. Whatever you do in payments, you have to make sure it has, what I would call, ‘SleepAtNightability’ – I love innovation, but I value the restful sleep that comes with knowing my money is secure and available when I need it.
That confidence comes also from the consumer retaining control over their payments. As the industry continues to innovate, we have to be careful not to remove that sense of control. Developing frictionless payments is great, but it cannot be so frictionless it feels like ‘pickpocketing.’ The decision on how to pay must lie with the consumer. This will be increasingly relevant in a post-PSD2 world of open banking and payments, and a future move to IoT (Internet of Things) payments.
PSD2 ‘done wrong’ could be catastrophic for the payments industry. The regulator’s aim is to increase access, choice and competition, and this means giving an unprecedented number of players access to payments systems and data. Controlling that access is going to be difficult. The controls have to be tight to make sure that open payments don’t have a detrimental effect on the availability, scalability and security of the ecosystem. Here the debate on screen scraping versus Open API technology is very interesting. It is going to be fascinating to see how this plays out.
The New Payments Ecosystem, like any ecosystem, exists in a careful balance; juggling fast, open, secure and transformational payments trends. This balancing act is what keeps our ecosystem from crumbling, by protecting the baseline requirements. And it is what keeps it exciting to be a part of the evolving story.
Wishing you #SleepAtNightability in payments.