It’s been said that change is the only constant in, well, you name it. The aphorism holds especially true for payments, an industry in which technology shapes the way payments happen — and vice versa.
In an interview with PYMNTS, Jerry Norton, vice president of financial services industry at IT services and consulting company CGI, said that in a global sense, the broad movement toward real-time payments is currently shaping the payments industry.
“Wherever you go in the world, whether it’s consumers or corporates, real-time payments mark the trend,” Norton said.
That extends to the infrastructure level, which recently saw a shift toward faster payments in the U.K. and Sweden — a shift that is spilling over to Canada and the U.S., and going live in Australia this year. The faster payments trend has grown through osmosis, in a sense, “but ultimately, it works its way to the end consumer or business side as well,” Norton said. Until now, and particularly on the retail side, payments have been shepherded through batch processing, making the shift a fundamental one.
Why now? As is often the case with such sweeping changes, Norton said, “it is the convergence or confluence of lots of different things.” One enabler has been the ubiquity of internet connections and networks. Consumers have gotten used to doing other things — aside from payments — in real time, and so have demanded the same speed when they transact.
“We could have talked about real-time payments 25 years ago,” said Norton, “but then it would have been prohibitively expensive and difficult to do from the technology perspective. All of these things are now aligned and pointing in the same direction.”
Looking back over a five-year time frame, with an eye on innovation that has enabled all of the above top-down momentum in payments, the executive said the most important events have included a real “difference between infrastructure changes and what the customer might see.”
From customers’ point of view, the biggest innovation has been mobile devices and the attendant ability to pay by phone via card transactions or mobile wallets. That comes in tandem with network buildouts and WiFi connectivity, which enable that activity in the first place.
Norton pointed to CGI’s own activities, which he said are oriented toward its customer’s view of payments, with an avoidance of “speculative, ‘build it and they will come’ types of innovation. A lot of companies do that, but we don’t.” By way of contrast, Norton said, his company conducts an insight program, interviewing its top clients globally, across business and IT departments, to learn their outlooks on innovation. This also helps to formalize CGI’s views of what is shaping the payments landscape.
“They might say that mobile is really important,” posited Norton, “and they might say that real-time payments are important … and that allows us to get a sense of where the market is going.” All while allowing the company to tailor what it is taking to market.
Given that ongoing dialogue, Norton said some observers may be overlooking or overestimating certain events in payments. Asked about overestimation, Norton pointed to “everything that is around digital currencies. I’m not talking, here, about a digital dollar or a digital sterling…. I’m talking about the whole sort of Bitcoin world. I think that has been overestimated. I am sure those currencies are important for certain sub-segments in the market.”
Bitcoin, Norton noted, is important if people want to do anonymous transactions in a market, adding it’s generally clear that central banks and governments want to maintain their own control over currencies — and will want to continue to do so.
Underhyped? Norton remarked that banks and other firms get fixated on connectivity, which he termed the “pipes” part of the payments equation. But payments professionals must look well beyond infrastructure.
“What you really want is … the value-added services on top, the things that can make you money as a bank,” Norton said, adding that those services would be of use to individual consumers or corporate customers alike. He pointed to bill payments, for example, as things overlaid on top of real-time payments functionality — and which enable customers to take advantage of speed and convenience.
According to Norton, Uber is a company that executes well along these lines when looking at what he called “the bundling of transactions.” As part of the customer experience, a user signs up with Uber, uploads some sort of payment instrument — PayPal or credit cards — onto the Uber platform and payments transact automatically. The driver is credited at the same time and takes his or her cut of the transaction. This is also a form of invisible payment, Norton noted, and most firms have not done a stellar job of making payments truly seamless.
As he told PYMNTs, “That’s my complaint, really, that not enough is being done to take advantage of this.”
To look for and apply innovation, Norton said, payments professionals should examine other industries and mull how successful developments can be applied to their own various niches. Some ideas and technologies evolve markedly, according to Norton. He pointed to near-field communication (NFC) as an example, with its roots in card payments. NFC has now become part of the mobile payments arena across various “pays,” such as Apple and Samsung.
As for current worrisome issues in payments, Norton cited two. One, he said, revolves around security, and the other is operational. After all, if the consumer is always on, 24/7, and a payments ecosystem goes down or gets compromised in some way, then consumer trust suffers, he said.
“The thing that keeps me awake is not 24/7 [transactions],” Norton noted, “but crashes at midnight, or if somebody hacks and gets into [a system].”