Partnerships, crypto bridges and fintech innovation change the payment landscape
Payments are changing rapidly, bringing new opportunities, new levels of inclusion and convenience to both consumers and businesses across all markets.
This is according to leaders in the payment space, speaking ahead of an exciting webinar on the payment revolution. A formidable group of Luno, Mastercard, Nedbank and Synthesis will be getting together to navigate this often-confusing space. Each company brings unique expertise to this not to be missed conversation.
Delivering the best consumer experience
As the events of the COVID-19 pandemic have already demonstrated, relying on the same payments infrastructure is untenable, and consumers have been set on a new path towards unprecedented digital adoption. According to Gabriel Swanepoel, VP of Business Integration at Mastercard Southern Africa, the next big thing shaping the industry is the convergence of payments across channels and rails (card, EFT or mobile mobile), driven by a consumer who is increasingly expecting more choice in how and who they want to pay.
“Over the past decade, consumer empowerment has led to significant reductions in friction across many arenas, from e-commerce to communications,” he says. “Payment providers have faced growing pressure to make their products and services more user-friendly. As a consequence, fintechs have stepped in not only to address consumer pain points but also to enable consumers to control their finances independent of the traditional bank or investment intermediary. In emerging markets like those in Africa, we have seen various success stories where payment providers have successfully introduced person-to-person payment services accessed by mobile phones. They did not stop there but continued to innovate by broadening the available types of services, such as incorporating overall asset management alongside credit offerings and providing holistic views of consumer’s financial health.”
Swanepoel says that to create a powerful ecosystem, partnerships between players are increasingly needed to meet the expectations of the fast-evolving consumer. This in turn will have the benefit of improving the customer experience, while increasing adoption and usage of digital payments and services - ultimately leading to a more connected, and inclusive digital economy that benefits everyone.
Of all the forces predicted to challenge and disrupt banking and financial services, open banking has proven to have a staying power that stretches beyond the initial hype, says Chipo Mushwana, Executive of Emerging Innovation at Nedbank. “The question that remains is whether this paradigm holds up when it comes to producing tangible results,” she says.
In its simplest form, open banking is about the exchange of data and services through standardised technical interfaces, so-called APIs. These three letters describe the way different IT systems interact based on standardised formats. Mushwana says: “This is an acronym that has long been reserved for the IT department, but the commercial use of APIs will create new opportunities for those who dare to explore and think outside existing organisational boundaries.
Even though the term open banking has been versed enough to become a household term in the financial industry, the true potential of open banking is significant and definitely still up for debate. This is so because in order to master open banking, it requires knowledge and expertise in a number of disciplines to fully understand the scope of opportunities as well as potential limitations. As a result, some of the initial promises made by open banking are yet to be realised, while future opportunities are definitely still open to those who dare to venture further along the open banking path.”
Bridges to crypto
Louis Van Staden, head of payments at Luno, believes developments in cryptocurrency are shaping the future of payments.
“There’s no denying that money and payments have shifted firmly into the technological space. However, one of the drawbacks of Bitcoin and other cryptocurrencies has been the lack of opportunity to use them. This has changed rapidly, with the introduction of stablecoins, which act as a bridge between the old financial system and the new,” he says.
“Stablecoins, and blockchain technology, in particular, allow payments to occur directly between buyers and sellers, thereby reducing the costs for both parties. Stablecoins are a contemporary class of cryptocurrency whereby the value is pegged to either one external, relatively “stable” asset such as the US dollar or gold. They combine the instant processing capabilities, functionality, adaptability, and security of cryptocurrencies with the stability and trust enjoyed by fiat currencies,” Van Staden says.
“A number of stablecoins have been created – including USDC and Tether (USDT). These have gained a great deal of traction and now have market caps in the billions. This, along with other key cryptocurrency-related advancements like crypto cards, will play a significant role in shaping the future of payments.”
Apple Pay in the mix
Pierre Aurel, head of payments at Synthesis Software Technologies, believes the biggest thing in payments is also the biggest brand in the world – Apple.
“Apple has managed to do what no other phone manufacturer has, shifting their business from being a hardware and software vendor, to a financial services business that takes part in payments made using their devices.
Apple Pay dominates contactless payments, with massive 92% market share in the US. Until now Apple has partnered with issuing banks to allow consumers to link their existing cards and make contactless payments – as we’ve seen with the launch of Apple Pay in South Africa this year,” Aurel says.
“But what next? What happens when Apple launches their own virtual cards to the world, backed by $195 Billion in cash reserves. What happens when they create services for businesses to accept payments directly on their iPhones? Apple could disintermediate banks and other payment services, creating a single platform to manage the world’s payments,” he says.
“Unlike Apple, Android provides an open ecosystem for device manufacturers and payment solution providers to collaborate and drive innovation and competition in payments. Synthesis have developed Halo – a Tap on Phone technology that allows anyone to accept contactless payments right on their mobile phone. This innovation removes the need for hardware POS devices – something all young businesses are going to be delighted by – everyone dislikes having extra hardware and wires. Tap on Phone is only available on Android currently because Apple have locked down the NFC chip on their iPhones.
Android provides a great solution for businesses, yet Apple’s brand appeal is difficult to counter, and we are regularly asked about making our solution compatible with Apple. The question is: can anti-trust laws prevent Apple from monopolising the world’s money?”
Webinar on 30 September, 14:00 (GMT +2)
The webinar will assess new payment trends and technologies, which are appropriate for emerging markets, and how to boost financial inclusion, remove the costs of cash, and increase security in the payment space.
For more information and to register for this event, go to https://www.itweb.co.za/webinar/synthesis-the-payment-revolution/