21st century payments and their evolution in the industry are challenging for all payments
participants; confusing, yet promising. There is nothing scary about payments, but some change will be necessary with payments processes identified in this somewhat well rounded article. Some comments are provided.

Regarding CurrentC/MCX and the competitive stance with Apple Pay is quite a “kerfuffle” as noted. The architecture of CurrentC/MCX is an interesting challenge; that being exclusive bank
participation of “future” low priced network, security, and exclusive merchant and consumer bank DDA membership participation with potential limited successful gain in market share short term, as opposed to Apple Pay leveraging the existing credit and debit card rails, benefits of proven tightened security and authentication, both dependent upon consumer adoption of the Samsung and iPhone devices, respectively. Consumer interaction with purchase flow, Merchant Teller device, NFC, are all factors affecting rapid adoption and determination of the success of Smarthphone payments overall, none of which may effectively provide for the domination of a large portion of the market by any of the participants such as Apple Pay,
CurrentC/MCX, other Smarthphone payments vendors, or any other payments
industry participants. It appears there will continue to be non-collaborative Smartphone
payments solutions and due to these market penetration strategies, participation
by consumers and merchants will be fragmented. This needn’t happen. Collaborative
solutions are necessary for mobile payments to succeed.

Regarding the section of the article on Cybercrime, noted and understood. Cybercrime should always be analyzed, architected, designed, developed, tested, implemented and monitored in
all payments networks and products utilized by payments operators, software companies, networks, financial institutions and central banks; the issue is how this should be managed in the US, for those institutions critical to ensure US payments systems integrity and payment systems globally. The payments industry needs to do more than “hope” as stated in this article; we must implement methods to ensure payments products and organizations supporting those payments products preventing cybercrime are standardized and implemented with all payments segments across the payments industry landscape for all payments products and are priced fairly to consumers and businesses. We “professionals” in the US payments industry lack an agreed upon authority or authorities to manage and monitor security across the payments industry landscape or know how best to achieve it. The
question is what authority or authorities are required to provide this role? Maybe they exist. If so, where are they?

Regarding Real Time Payments, they’re needed. The lack of attention paid to the legacy core
DDA processing systems in the US where accounts are unable to be processed in real-time, when accessed at any merchant or ATM location, by any consumer, branch or business device touch-point is difficult to understand. Certainly the cost is and economic model will require a significant change with payments industry participants and networks restructured or removed, funds possibly raised through grants or bonds, but the seriousness of such an effort can’t be overlooked. The tendency towards judging the Federal Reserve Bank’s Real Time
Payments as a solution in this article is somewhat harsh and requires a closer look at their approach. The Fed has approached their bank member base and their internal support group and payment industry participants to evaluate current payments products to determine their level of efficiency. Outside of this article, the Fed states “They desire to engage with the industry to bring forward improvements in U.S. payments that accelerate the speed, increase the efficiency, and enhance the convenience, accessibility, safety and security of payments” and within this article, the Fed’s statement, the “Fed advocating for the spending of multi billions of dollars” supports my belief the monies suggested to be spent haven’t been confirmed. The Fed’s other statement, the “business case through 2025 for implementing a faster payments solution for the primary use cases is profit contribution net neutral to
negative” supports my belief the time for implementation is beyond what is necessary and needs revisiting. I believe after attending many of the Fed Symposiums, town hall meetings, meeting with knowledgeable payments industry professional attendees and reviewing a large
number of the publicly available Real Time Payments System Improvement Papers
responded to by leading payment industry organizations on the Fed’s website, there
exists much support for real time payments, albeit support specific to each
organizations revenue generating products or services due to self interest. Mentioned is the Fed’s estimate of 12 percent of payments currently processed by the Fed through their networks which may be true based on their current payments process count, but may not be true for the process count using Real Time Payments System business model payments processing changes. Increases in number of payments may occur when a new system is
developed. Payments traditionally processed through other systems may route
through a new Real Time Payments System and additional payments from cash and from
other systems may increase with a new Real Time Payments System. Once the business
model changes, new payment types may contribute. Mentioned in this article is a
PYMNTS B2B conference held where a question was asked of the audience of a
requirement for a Real Time Payments System, with no response, assuming a Real
Time Payments System wasn’t needed. The audience appeared to be a limited one
in terms of number of attendees and possibly due to a lack of need for a Real
Time Payments System. Not being aware of the products presented at the
conference, a Real Time Payments System could add significant value to B2B
products with innovative solutions.

The recent announcement of The Clearing Housing and NACHA partnering with the FED to implement a Real Time Payments Systems in phases is required to substantiate the expectation with respect to time and structure expected for delivery and relative cost and expected features. This articles assumption made of the Fed “prevailing” with the implementation of a Real Time Payments System assumes the Fed is the dominant player where frankly their role may be one of playing a lead in collaborating with primary participants in the payment industry focus on major payments segments to implement a Real Time Payments System. The business model for Real Time Payments System may require major changes in the manner in which the lead players participate in architecture design, with banks and their core processing systems possibly requiring significant changes, payment message standards implemented, banks and their software vendors updated with changes implemented, and with many other conversion initiatives affecting a significant number of banks, and possibly core processing software applications modified, consolidated, or created new.
Regarding the revenue of the payments transactions received by the participants,
once a Real Time Payments System is active, fees allocated to payments participants need not be free, but could be defined per transaction, or per a new business model with revenue and cost spread across payment participants based on usage percentage, including Smartphone providers of the service offered ubiquitously for all consumers and businesses posited per the Smartphone providers brand (as a sample business model). Much needs to be determined upon delivery of The Clearing House, The Fed’s and NACHA’s proposed strategy for a Real Time Payments System with the deliverables deferred to them based on their proposed objectives.

So, what more have me missed, let’s see….

There appears to be some discomfort in this article against governments and regulators indicated by the creative sections referencing the UK mandates and regulations, and criticisms in the US of healthcare.gov, the Post Office and the CDC. The UK is marching to their own drum and seems to be “owning” their payment industry issues and frankly have the right to do so, so let that be, with regard to the US, healthcare.gov, we can debate these independent of
payments since they’re unrelated and are government managed entities which US payments aren’t, the Post Office isn’t interacting with payments processing, although is being considered for some peripheral payments products unrelated to payments product processing, and the CDC is completely unrelated. The point of this article appears to state the lack of confidence in
the US government’s ability to operate a payments network or service which most payments industry participants in the payments industry will agree, but hopefully the reference isn’t . The Federal Reserve Bank’s operating group has proven highly capable of operating the existing Fedwire and FedACH networks and Checks and would prove highly capable of operating a new Real Time Payments System or one delegated by the Federal Reserve Bank for implementation and operation of a Real Time Payments System to a private entity.

Getting back to what’s sparked the discussion….

True to the article and inviting discussion from its openness, is the never ending whirlwind of innovations; the “disruptions”, “battles” and “wars”, we often hear of in the payments industry, with “Apple Pay” and “CurrentC/MCX” and the plethora of payments companies attempting to grab revenue operating inconsistently among the aged payments rails with swanky innovative end user payments products and tools such as Smartphones and supporting security solutions and inventive virtual currencies painting a cornucopia of payments throwing businesses and consumers into a state of euphoria and sometimes confusion. And we in the payments industry bask in the glory of inventiveness at the profits made from merchants and consumers
paying for payments received from payments made by consumers and businesses for goods and services, depending on the business model and form of payment. What is concerning is with Smartphone payments is that of exclusivity, when a consumer could once pay with one funding mechanism, that being cash at any location, to now be influenced or required to own a unique method or device, such as a card or an iPhone, using unique software, such as Apple Pay and its peripheral components, and usable only on unique POS devices, at only select
merchant locations. Although Apple Pay is a powerful brand and the iPhone a wonderful product with many features unrelated to payments, like playing games and videos of a “curveball” from Madison Bumgarner’s glove at a Giants game at ATT park in downtown San Francisco, or a pic of a glass of Cabernet Sauvignon standing atop a teak table on a redwood deck overlooking the crashing waves on the Mendocino coast. Can Smarthphone payments work in the 21st century with Apple Pay being a manner of payments concurrent at merchant locations with CurrentC/MCX? Let’s hope they both can work with other forms of mobile payments providers and be satisfied without needing to be dominant, and maintain existing funding sources such as cards and cash and accounts where necessary, and possibly digital currency where applicable and participate without negating each method, a demanding yet collaborative requirement of the payment industry.

By the way, I own a Samsung S5. I like it. My young adult son and daughter both own iPhones. They’ll need to upgrade their iPhones. I suppose they’ll soon be trying Apple Pay since they both enjoy iPhone features and the Apple brand. I wish them well. I’ll continue to pay the old fashion way, either swiping my Golden Gate bridge image VISA card, or my wind farm, rolling hills image MasterCard, or with cash from my Levi blue jeans pocket. We’ll see if the payments industry can get its act together and allow consumers and businesses the use of Smartphones and cards at any location, with any device, regardless of brand, but I’m not sure if I’ll resort
to tap and pay with an iPhone, or if I’ll stick with with my Samsung, or if Smartphones will continue to support payments. Or maybe we’ll eventually be using biometrics to pay…with our thumbs…or with our eyes...or…who knows what the world of payments will bring? To close
this somewhat long winded discourse, with a point to be made on payments; I recall as a six year old boy in 1965 walking with my mom to Parkside Market, a family owned store on Davi Avenue in my Delta river town of downtown Pittsburg, California to buy some groceries. We walked the isles putting cans and boxes in a cart and ordered a pound of the “DiMaggio” family Italian sausages from the butcher counter at the back of the store. We approached the counter at the front of the store and my mom paid Bob DiMaggio, the son of the owner with a check from Crocker Bank which he gladly accepted with a smile. A few days ago, forty nine years later, I drove to the store and purchased three pounds of the DiMaggio sausages to prep for a barbecue celebration. Under new ownership the store still exists, as do the sausages, although the sausages are not from forty nine years ago, they’re fresh, sort of. Bob and my mom have passed; rest their souls, as has Crocker Bank and mom’s checking account. The bank I once worked for acquired Crocker Bank, which I dutifully managed as a systems guy, as well as many other banks I managed as a systems guy, and helped acquire with millions of other accounts. Parkside Market no longer accepts checks after the decline of check usage due to advances in debit card usage but that’s another story. I paid for the sausages at Parkside Market with my swanky Golden Gate bridge image VISA card using their VeriFone POS device. They still accept cash as do some retail locations nationwide. Next time I buy DiMaggio sausages I’ll ask the owner if they’ll reconfigure their POS device to support Smartphone purchases. Not that I’ll use the Smartphone, just wondering if a small corner store in small
town America would be willing to change the manner in which payments process, because in the end it’ll require more than the big box retail chains and multi-store chains supporting Apple Pay and other Smartphone payment companies being targeted to make this work. Apple Pay has pushed to the forefront issues necessary to determine the viability of mobile payments and by doing so, has forced the evaluation of the existing payments infrastructure, technical, economical, and security related. And as this article states, “… it’s safe to say that we all feel that we are well on our way to a digital payments future.” It is safe to say, yet the road will be a bit bumpy…..