THEMES SHAPING THE FUTURE OF PAYMENTS IN 2020 Tony Craddock, Director General of the Emerging Payments Association, explores what’s really driving change at the start of the decade – from geopolitics to technology and regulation To do your job well, you need to know what’s going on. But with social media everywhere, newsletters and bulletins daily, and a flurry of conferences, presentations and podcasts, how do you draw all this into a cohesive set of conclusions about what is really going on in payments?
‘policing’ to ‘partnering’ in 2020, helped by the payments industry ■ The implementation of current regulations will take priority over the adoption of new ones
So, I went walkabout to talk to executives from our 150 member organisations. And the following themes are what I found. This is my personal distillation of the views of our members, and does not represent everyone or the EPA’s formal viewpoint, but I hope it’s thought-provoking and helps you better understand the direction of travel.
■ The payments industry will pay the price of frequent outages ■ Digital identity will take centre stage in the battle to combat fraud and money laundering ■ Trust in new payments technologies such as Apple Pay and Samsung Pay will increase steadily ■ QR codes are coming ■ There will be more friction and less fraud ■ Crypto and DLT will dominate – in niches
1
THE FLUCTUATION OF FINTECH FUNDING
■ New ‘fashionable fintech’ stocks will attract those who are obliged to invest ■ Investors already in fintechs will seek profits rather than just growth – unless fintechs find other sources of value ■ Investors who are willing to invest time and effort in understanding payments will be rewarded
2
THE BLENDING OF LENDING
■ Open banking-enabled companies will fill the gap created by the demise of payday loan companies ■ Payment account providers will promote lending to boost their profit margins
3
THE RESETTING OF THE REGULATOR RELATIONSHIP
■ The UK regulator will move from www.thepower50.com
4
5
TRIALS AND TRIBULATIONS OF TECHNOLOGY
THE SLOW BURN OF OPEN BANKING
■ The adoption of push payments via open banking is slow and will remain so for a while ■ Payment initiation service provider (PISP) payments will take off, albeit slowly ■ Smart use of data will enable lending that is better for both borrowers and lenders – unless you are financially vulnerable
6
THE SHIFTING PLATES OF POWER
■ UnionPay has grown its acceptance network in developed markets. It is now aggressively expanding its issuance, too ■ The European authorities will be unable to curb the power of American payments schemes, however much they may want to
■ The lack of payment account providers due to de-risking will stimulate new solutions ■ As more and more companies at the top end merge, anti-trust authorities will get nervous ■ Consumer banking will become an ‘AND choice’, not an ‘OR choice’ ■ Payments in Asia will become the Next Big Thing in payments
7
THE SOCIAL IMPACT OF PAYMENTS
■ Consumer trust in institutions based on what they are will fall but trust in organisations based on what they do will rise ■ The gap between those who have opportunity and choice, and those who are vulnerable or excluded, will start to close ■ Payments will become increasingly diverse ■ Uncertainty about the UK’s role in the EU will lead to greater focus on non-EU exports ■ SMEs will be offered more and better paytech ■ Sustainability will be discussed but little will be done ■ Institutions governing payments will come under greater scrutiny ■ Communities will become increasingly important agents for change Guided by our advisory board of leading CEOs, the EPA will continue to shape the future of payments, here and around the world. To read more, go to www.linkedin. com/ pulse/whats-really-goingpayments-tony-craddock/ THEFINTECHPOWER50
11