SleepAtNightability – Why We Must Not Forget The Fundamentals of Payments
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.
Hierarchy of Payments Needs
Find out more about the Hierarchy of Payments Needs, and discover how to balance the four trends.UP Retail Payments
Related Blog Posts
What’s Next for Nordic Payments? P27 and the Rise of Real-Time and Cross-Border
The Nordic region has long been considered a pioneer of digital payments, with some of the lowest cash usage levels in Europe; however, the impact on cross-border payments has been limited when compared to progress on the domestic front. And this is a crucial area to address for a region with large volumes of trade and tourism between neighbors, as evidenced by the fact that 18,000 Swedish workers commute to Denmark on a daily basis. Not surprisingly, improving the cross-border payments experience and efficiency is a high priority.
Digital Overlay Services Unlock the Value of Real-Time Payments
The global payments industry continues to drive toward true real-time, with the potential opportunity for corporate banking often cited as the most lucrative.
Real-Time Payments Hits its Stride in the U.S.
The recent announcement of FedNow in the U.S., the launch of cross-border services like SWIFT gpi, and multiple real-time payment systems including The Clearing House’s (TCH) RTP system and Zelle underline the fact that real-time payments are here to stay. The need to deliver real-time payment services to customers has never been more pressing for banks, credit unions, processors, acquirers and fintechs. However, the U.S. payments ecosystem – and its infrastructure – must keep pace with global markets to remain competitive, and interoperability between real-time payment systems will be key.
How Do You Drive Full Value from SWIFT gpi?
As part of SWIFT and ACI Worldwide’s joint mission to accelerate adoption of SWIFT gpi, ACI’s SWIFT gpi global marketing lead Zhenya Winter spoke with Daniel Lynch, Data Analytics and Payments Innovation Lead at SWIFT, and ACI’s Global Head of Real-Time Payments, Craig Ramsey, about some of the key questions raised by attendees of our second Global Webinar: Drive Full Value from SWIFT gpi. The relevancy of these was reinforced at Sibos 2019, the SWIFT community’s annual conference, which recently took place in London.
India’s Unified Payments Interface: Breaking the Billion Barrier
September brought about quite a stir in the Indian payments ecosystem, with three years passing since the launch of UPI (Unified Payments Interface), and the realization that UPI is closing in on a significant milestone: one billion transactions per month. In September 2019, UPI clocked 955 million transactions, amounting to 1.61 trillion rupees (INR), demonstrating the extent to which Indian consumers have exuberantly welcomed real-time payments.
The Need for Financial Inclusion in Developing Countries
The payments ecosystem globally is changing – and the idea of financial inclusion is increasingly featuring as part of long-term strategy. At a glance, financial inclusion means that people and businesses have access to important financial products, services and data, such as transactions, credit cards, payments, savings and insurance, and that these are delivered in a sustainable way. The challenge for banks lies in being more inclusive and meeting social needs, while remaining profitable and increasing market share.
How to Maximize the Value of Partnerships Between Fintechs and FIs
The LATAM Open Banking & Fintech Partnership, organized by Connect Global Group, was held earlier this year in Mexico City, and ACI participated as one of the forum partners driving discussions on how to maximize value from collaborative partnerships between FIs and Fintechs. We explored the invaluable benefits of open API and strategies to differentiate the offerings of FIs and Fintechs, address consumer demands, and best practices for implementation aligned to regulatory requirements.
Universal Confirmations: Get Ready for 2020
With the arrival of universal confirmations, we sit down with some industry experts to find out more about what impact this will have on transforming cross-border payments. We’re welcomed by Fabien Depasse - Head of SWIFT gpi Customer Success at SWIFT and Craig Ramsey - Head of Real-Time Payments at ACI Worldwide.
How to be a Payments Trailblazer – The Seven Habits of Highly Innovative Organizations
The new Culture of Innovation Index from Ovum and ACI identified segments—from banks to intermediaries to merchants to corporates—at the cutting edge (of innovation) across the payments ecosystem. But what is most notable about those segments that have reached ‘trailblazing’ status is the apparent lack of commonality between them. No one segment, nor one region fosters better innovation. In fact, what’s driving these segments/organizations to be best of breed is their own culture of excellence. The only thing they have in common is their attitude.
How will SWIFT gpi Impact Latin America?
As the world continues to transition toward real-time, and technology continues to evolve, new challengers are disrupting the market with value propositions including real-time cross- border payments. The competition has inspired SWIFT to work with the industry and challengers to create the Global Payments Innovation (GPI) program, which radically changes the way banks interact with their correspondents and offers improved transparency and customer service to their customers.