Money 20/20 day three: deregulation of US payments and going peer-to-peer

Deregulation of the US payments industry was a hot topic at Money 20/20 as open banking regulations are pushing for change.

“One of the reasons you haven’t seen that much payments innovation in the US is because it is a very tightly regulated industry. You can understand why – the risk of money laundering and fraud is very high,” argues Simran Singh, director of business development and strategy for Hyperwallet.

“As an industry, we have erred on the side of ensuring that doesn’t happen rather than the consumer experience in the past. Today we are trying to tie the great consumer experience with the security,” he said.

Some could argue that the continued use of cheques by many Americans is far less secure than digital currencies. However, Singh disagreed.

“Digital currencies are not completely secure, that is just the media story around it. No matter which payment type you come up with, there will always be fraudsters and hackers will come up with a way to attack it,” said Singh.

“Regulation encourages innovation as well because you know if something is approved through the stringent regulatory structure you know that it will be secure,” he added.

Peer-to-peer payments

Peer-to-peer payments have been discussed frequently in the payments industry, but is messaging the next big app concept for money transfers? Panellists of the discussion on social payments and shared finances which included Kahina Van Dyke from Facebook, Michael Vaughan from Venmo, David Barrett from Expensify and Eagle Yi from WeChatPay certainly thought so.

Eagle Yi spoke about the growth of mobile payments in China, and how peer-to-peer apps such as WeChat Pay have been a revelation, attracting hundreds of millions of users.

Adoption in the US may be slower for mobile payments integration, but the concept of connecting people with the social context of a transaction is quickly increasing. Social payment apps are being used by roommates splitting the rent and utilities, sharing a dinner bill or friends sending monetary gifts for a birthday.

Michael Vaughan, who was the 4th employee at Venmo says: “It’s not about optimising the transaction – it’s about the experience around it and the payments story.”

Kahina Van Dyke adds: “A couple of years ago, no-one understood the social aspect of payments. But actually, every payment has a story and a concept, whether you’re donating to a charity or sending money to friends.

“Payments is a conversation,” she continues. “We believe that [Facebook] messenger is great, and there’s so much social context. Consumers are already interacting with businesses through messenger apps today.”

Eagle Yi added that people aren’t downloading as many apps, but instead, spending more time in messenger apps such as WeChat and WhatsApp. A total of 600 million users WeChat to connect with friends, send money and utilise the social context of payments.

Diversifying the fintech industry – maybe change?

First to take the stage for the keynote discussion on day three was Julie Sweet, CEO of Accenture North America. Julie understands that in an industry that is largely dominated by males, diversity can be a differentiator.

Sweet discussed how she is taking charge in helping companies implement and deliver disruptive innovations at scale. Accenture believes that a key to driving innovation in a highly competitive market is through diversity—from tailoring experiences to underserved populations, to having an inclusive workforce that can inform those strategies.

Sweet began her presentation by speaking about the undervalued role of women in the payments industry, stating that there’s never a better time to incorporate women to better serve the industry.

“The personal wealth market in the US is expected to increase by $7 trillion,” she adds. “80% of women make decisions for the household.”

Sweet discussed the latest research on women in finance, stating that women are more risk averse and carry 30% less credit card debt than men – they are also more susceptive to planning services and managing budgets.

“70% of women say they want more financial products and services designed for them.”

Julie Sweet continues that as an industry, we need to invent greater incentives for diversity to level the playing field.

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