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ThinkAThon 2015: Keeping It Real (-Time Payments)

The 2015 ThinkAThon, held on March 19 as part of the PYMNTS.com Innovation Project, cast players from the payments and commerce industry on two opposing teams in a series of lively debates on hot-button topics before a captive audience at the Sanders Theater.

The moderator for this organized chaos was Global Economics Group Chairman David Evans, who also served as a judge. Joining Evans in his judging duties – as well as in the “Crossfire”-style conversations that were ignited during each debate – were Tom Brown (Partner, Paul Hastings), Hans Morris (Managing Partner Nyca Partners and Former President Visa, MD at GA, Citi), Dick Schmalensee (Economist and Former Dean of MIT Sloan School of Management), and Halsey Minor (CEO & Founder of Bitreserve).

Each debate team – whose members could not exceed five – was led by a captain who organized the team’s response and presented its opening and closing statements. Both sides were given one minute each to present their position statements, followed by 13 minutes per proposition during which the judges joined in on the debate.

 

In keeping with the idea that time is of the essence, the ThinkAThon debate on Real Time Payments was the only issue that was not divided between two separate propositions. For this topic, everybody was all in.

 

THE PROPOSITION

The Federal Reserve Board should require that U.S. banks develop and implement within five years a real-time payments system that would enable the real-time clearing of small value (less than $100,000) debits and credits against demand depository accounts. It should also require that real-time payments clear at par. This system would encourage innovation and competition in payments. In debating the question, the team is permitted to advocate modifications to this proposal.

[Because the debate teams of ThinkAThon featured real people advocating for beliefs that they didn’t necessarily really believe in, their names as they relate to specific quotes have been changed or omitted entirely, as have their company names in that regard.]

The “For” side was led by a Senior Vice President. Joining “Captain For” were a President, a Founder, and a President.

The “Against” side likewise had a Senior Vice President as its captain, and was rounded out by a CEO/Co-owner, a Strategist, a Product Development Manager, and a Cofounder.

“Team For” opened the debate by explaining that they altered the proposed definition of “small value” to a tier system, categorizing consumer payments within a range of $10,000 to $50,000 (while keeping businesses at $100,000). The team gave the reasoning that consumers and businesses alike “want choice, they want freedom, they want transparency, and the option for speed in making payments.”

Continuing (and speaking quickly, as they only had one minute to start), Team For referenced the ongoing debate among The Clearing House, NACHA, card networks and the Fed as to how to fulfill the aforementioned needs. “The biggest question,” said Team For, “is how does the FRB and the central bank regulate or dictate payments?”

The answer, according to Team For, is that the economics should drive themselves, with the FRB and the players in the industry coming together to create a beginning baseline and an ending baseline. “The middle,” said Team For, “is where the differentiation happens, the innovation happens, and [so does] the potential to add revenue and create economic value.”

Team For began to talk about how “consumers’ and businesses’ choices will revolve around the premise of shipping,” but the buzzer sounded and they were cut off (them’s the rules).

Not missing a beat, Team Against started right in with their opening statement, delivered using prepared notes:

“The Fed’s recommendation to develop and implement a real-time payments system in five years is not in the best interest of the payments ecosystem stakeholders. While today’s payments system no doubt requires a facelift, the solution should be innovative disruption, not mandatory destruction.”

Sick burn, Team Against.

The team went on to assert that improving payments’ speed “in a vacuum” does not solve the broader ecosystem’s need for better security nor does it positively affect the ability to innovate within it.

Pointing to the element of the proposal wherein banks would replace the infrastructure but not benefit, Team Against opined that such a mandate would put undo stress on margins and deflect investment “from where it should be placed to where it is mandated to be placed.”

“Private industry,” said Team Against, “is more than adept at identifying true industry challenges and finding technology and business-model solutions.”

And the team literally got this statement in at the buzzer: “Where government agencies such as the Fed can provide the most benefit is not in mandating infrastructure changes but by promoting standards, appropriate rules and the use of security protocols.”

The rapid-fire questions from the judges’ panel commenced.

Team Against effectively handled a challenge to provide examples of where private industry had been successful in finding solutions. Turning to Team For, Dick Schmalensee asked how an agreement on one particular system across financial institutions could be compelled within five years.

Team For was ready with a response: “By bringing the larger stakeholder group together beyond the F.I. space and keeping it loosely defined…you create more inclusion…a simple baseline for what the beginning and end points need to be, and [allow for] the little point to be where the innovation and the change happens.”

The judges immediately volleyed back: “Who’s paying for it?”

Team For did not provide quite as clear of an answer to that follow-up. This opened the floodgates to a great amount of crosstalk between both teams as well as the panel of judges, culminating in some rather amusing confusion as to which side was trying to make which point to begin with and good-natured accusations from Team Against that Team For was beginning to argue the opposition’s case for them.

David Evans calmed things down somewhat by bringing both teams to focus on the question as to whether or not the banks possess the will to implement an agreed-upon real-time payments system.

Spinning off from that sub-debate, Tom Brown put it to Team Against to explain how their point of view – doing away with any sort of mandate for real-time payments – would allow for account portability for banking customers. Team Against started to draw a comparison with the telecom industry, then Team For piped up again, reigniting another round of chatter, and things quickly devolved (or perhaps evolved, as everyone – both on stage and in the audience – seemed to enjoy the turn).

As Evans pleasantly observed at that moment, “we’ve fallen into incoherence.”

Things did not reach that level of chaos again, as, during the remainder of the 13 minutes, each side enjoyed a reasonable allotment of uninterrupted time to reinforce its central argument.

With the clock winding down, Halsey Minor raised the question of the difficulties that varying state regulations could create for a proposed real-time payments system. This initiated a back-and-forth between the teams and the judges that threatened to spin into another flurry of crosstalk…but the final buzzer sounded, bringing an end to the debate.

 

Later in the evening, at the closing event of Innovation Project – the PYMNTS Innovator Awards Gala Dinner – three “medals” (gold, silver and bronze) were bestowed upon what the ThinkAThon judges had deemed the most effective cases presented during the panel. As a testament to both sides of the Real-Time Payments debate – as well as, perhaps, the significance of the issue itself – Team Against and Team For both took home medals.

The Bronze medal-winning team was led by Casey Wilcox, Senior Vice President at Capital One, and comprised of Hume Miller (President of Data Business Systems), Mark Egerman (Founder of Cover), and Maria Sparagis (President of DirectPayNet).

The Silver medal winners were captained by Nicola Morris, SVP of Corporate Development at WEX, and rounded out by Deborah Merkin (CEO & Co-owner of GiftCardPartners), Christienne Genaro (CM Genaro, Strategy, Business Development & Implementation), Erin Andréa (Product Development Manager at PULSE), and Todd Rooke (Cofounder of Jingit).

In a sense, everyone who took the stage during ThinkAThon 2015 to debate Real-Time Payments was a winner. (Of course, the “Against” team could argue that they won slightly more…but that’s perhaps a debate for another day.)

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Latest Insights: 

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The May 2019 PSD2 Tracker Report, is a go-to, monthly resource for updates on trends and changes regarding PSD2 and other privacy and data protection regulations.

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