Q&A : Payment platforms launch innovation
Paul Stoddart, chief executive of Vocalink, a Mastercard company, tells how payment platforms are benefiting customers worldwide.
Why should governments, businesses and consumers care about payment platforms?
Payments are a fundamental enabler for everything we do, from business to the way we conduct our personal lives, and have become a critical part of the financial ecosystem. Importantly, no two needs are the same and that’s why the design and delivery of a national payment platform is so important for governments, businesses and consumers alike.
It’s about ensuring that everyone’s needs, across all the various demographics, are met by the solutions we bring to market. The rapid adoption of technology has proven extremely powerful in making sure payment platforms are accessible to people across all areas of the globe. It’s also helped to meet growing consumer demand for certain processes to become digitised. Payment systems need to be fit for purpose and their design needs to reflect the changing times. For governments, payment platforms will enable them to achieve their macro goal of reducing cash in society.
Many central banks view the cash economy as expensive, inefficient and susceptible to financial crime. Our job is to ensure that payment platforms support both the customer pull and the regulatory push.
Who is leading the way in payments innovation?
There are various key players helping to drive forward innovation. Banks are great champions for innovation, as part of their goal is to increase engagement and interaction with their customers. Technology enables them to do this, as well as bringing new, targeted services to market. Overall, the financial services sector has been extremely supportive of innovation in payments, and is seizing the opportunity to create new revenue channels and streamline costs.
Payment system technology providers such as Vocalink are a crucial part of the equation. We are active in more than 200 markets and the power of that network is substantial. By bringing together our capability with Mastercard’s, we are able to drive innovation globally. The fintech community also has a leading role to play in enabling innovation to move from lab to mainstream. They make it accessible so people around the world can leverage developments in the most simple, efficient way
How can payment platforms benefit the developing world and poorer societies?
The two greatest benefits offered by payment platforms are access and inclusion. Despite advances around the world, it still remains difficult for many people to participate in the economy. Without a bank account or the facility to make payments, there’s a very real risk people will become excluded, and this is why developments in technology can have such huge social and economic benefits. We also need to consider the identity factor. Being able to participate in a payments system supports identity management and helps people create a profile, which is both useful for their own future needs and for governments. An example of this is Vocalink’s launch of PromptPay in Thailand, which has enabled the country to enter the world of real-time payments. Since it launched at the start of 2017, 21 banks have signed up and 631 million realtime payments have been processed, with the Thai government as a primary user. Even more impressive is that 44.5 million of the 68 million Thai population have registered for its services. Its success marks a huge milestone, not only for Thailand but globally.
What are the risks and barriers associated with new payment platforms?
As with the implementation of any new technology, the biggest risk remains cybersecurity. We invest in the most robust and advanced defences to protect our technology and services, but in a connected world security will always pose a risk. In terms of barriers, the greatest hurdle is ensuring host countries have the adequate infrastructure to support payment systems. That includes good power, communications and datacentre availability. Without this, it can become very difficult to implement a successful payment platform.
How do you imagine a future driven by new payment technology?
The connection between bank accounts and identity is only going to grow in significance going forward, and I believe that a critical element of payment technology will be the ability to identify people robustly. As a provider of payment services, we also need to be able to look towards a future where different forms of payments and means of exchange beyond fiat currency will become the norm. Cryptocurrencies will play a role to a certain extent, but we must be open minded to assets such as personal information and data being exchanged. In a world of global trade and cross-border payments, our job will be to build a system that can assess the value of something and enable a trade to take place in which a part or all of that payment will not be in today’s traditional form. There are exciting times ahead.
As originally seen in Future of Payments published by Raconteur Media on 25th September, 2018 in THE TIMES.