Universality is, well, universally, desired in business — particularly when it comes to technology and especially when it comes to person-to-person (P2P) payments.
At a high level, allowing disparate and far-flung customers to interact with ease and pay one another across different types of devices, wallets and currencies means that commerce gets a bit more fluid.
The rise of contactless and digital transactions, banking apps and various payments service providers has also shaped a payments landscape that can best be described as fragmented. You may have experienced that fragmentation a bit yourself — using Zelle, of course, means that you are not going to be able to send funds to your pal who’s got Venmo on their phone.
Might the bid for universality get a boost from PayID — and a consortium led by Ripple that is coalescing around crypto?
As reported this week, Ripple announced the effort, said it has 40 partners and estimated that its service can, potentially, reach 100 million users. The operative model here is the platform, where a universal payment ID would ostensibly make sending money as easy as sending emails.
The Open Payments Coalition has said the IDs would be operational across networks and would eschew common staples of payments such as credit cards and bank routing numbers. Members of the coalition, as noted in this space, include Ripple, crypto payments gateway Bitpay and others.
And there’s at least some precedent that simplifying the end-to-end identification of parties in a transaction will get closer examination. Though PayID in Australia is not part of this most recent announcement by Ripple et al, at least some of the tenets are the same. In that country, PayIDs debuted two years ago as part of Australia’s New Payments Platform tied to mobile banking and apps.
Alongside the announcement of the PayID launch, “memorizing crypto wallet addresses is the most significant pain point for our users, which is inconvenient, but poses considerable security risks.” The coalition has said, too, that it is compliant with Financial Action Task Force mandates known as the “travel rule.” The rule governs how beneficiary and originator information is to be shared.
We note, though, that this time around no banks have been announced as being coalition members — and what is able to be sent is not in fact currency … but (initially) Ripple’s XRP.
And herein lies a bit of head-scratching. If the idea is to gain critical mass, to get people on board with P2P, doing it without banks and the typical accounts that people hold — savings accounts, checking accounts and of course debit cards — can prove a stumbling block to that desired universality. The goal seems to advance crypto as a payment choice.
As noted in the press release tied to the PayID launch, Reza Bashash, CTO of CoinField, a bitcoin and crypto exchange and member of the coalition, said, “We are excited to be a part of this initiative and are hoping for other crypto exchanges to join and utilize PayID for an easier, safer, and compliant future of cryptocurrency.” There’s at least some acknowledgement of the clumsiness inherent in sending crypto payments — not the least of which is the fact that, once sent and received, the question may be just what to do with the crypto (if it isn’t converted into fiat, which itself can add a layer of complexity). As of June 17, according to coinmap.org, slightly more than 19,400 venues — merchants and ATMs — accept crypto as payment (or, in the case of ATMs, dispense it). Hardly critical mass — and as a replacement for P2P, demonstrating utility is vitally important.
For the newest coalition-backed effort that bowed this week, simply adding alternatives — with a crypto underpinning (cryptos are volatile, of course) — may just fragment the landscape even more.