PYMNTS.com spoke to Bruce Parker, Founder & CEO of Modo, for the 2017 PYMNTS year-end eBook on the defining moments of the past year. The most defining moment to him? No disruption. Check out why below.
We’ve been hearing (for a few years now) that this will be the year FinTechs will replace banks, disrupt the traditional payments and financial services and that their software will eat all the current systems’ infrastructure. Oh yeah, and blockchain will take over everything from anonymous purchase transactions to reserve currencies to asset tracking to corporate contracts and virtual kittens. This year did see some pretty big bets placed on what the future of our global payments ecosystem will look like, in two categories: payments fantasies and real payments that will last beyond the hype.
First, the fantasies. This author’s favorite delusion of grandeur is that bitcoin (and really all cryptocurrencies, go ahead and sum them altogether, I dare you) can reach beyond niche applications for value exchange and value storage. Meaningful numbers in the currency arena have T’s in them. As in Trillions. Not only do cryptocurrencies fail this test on the value front, they have positively tepid circulation or turnover ratios because they aren’t used for anything (not anything good anyways). Finally, wars have been fought over currencies and their geopolitical import, and may be again in our lifetimes. Nobody is going to battle for bitcoin.
That crypto-absurdity is followed closely by blockchain (and blockchains) for everything that ails you. Some $1.3 billion in funding went to support the otherwise open-source form of a glorified distributed database and associated ledger. Easily the coolest part of the continuum from a tech perspective, it nonetheless precisely solves the wrong problem. Financial institutions and payments companies are decidedly not in strategic alignment with “trustless” systems. They sell trust for a living, for goodness’ (and stableness and reliability and…) sake.
Let’s get our final yuks by bidding adieu to a few dreamers that probably had good intentions but didn’t quite have the momentum to escape the gravity well of irrelevance. MCX had a ton of ink spilt — in print, in contracts, in funding — but in the end, not a ton of value nor working product. Plenti seems to have lost early adopter AT&T who did stop believing, to the chagrin of Journey fans everywhere. Speaking of music, it may not have stopped, but it got a lot more foreboding for the Pays of every kind except the merchant variety. It turns out that unless you can change the in-store shopping experience and/or add real money value to the transaction, nobody cares. Or at least not very much.
But, let’s focus on the brighter side of 2017. There was so much being done to create new relationships that have the potential to make a meaningful impact in payments today and solve the real payments problems our industry is facing. The funding for FinTech startups are reaching record levels, and there were major acquisitions, such as Vocalink by Mastercard and Vantiv being bought by Worldpay. Explosive growth continues for Adyen, Stripe and others who have solved the real checkout problems of too many methods of payment. Speaking of which, torrid growth continues for Alliance Data, Klarna, Alipay, PayPal and others who have made real contributions to the checkout experience online and in-store. Oh, and IoT has shown up in the checkout lane, with great new ideas percolating from our friends at Mastercard.
New approaches to loyalty may be struggling, but we’re quickly reaching saturation and maturity of points systems with every household now adopting and tracking them. In the friends are friends to the end department, loyalty is becoming just another currency that can be used alongside every other form of payment. We’re working with FIS and Verifone to power their Pay with Points solution that allows consumers to pay with their loyalty points in-store at the point of sale.
Oh, and those old banks that were going to be run off by FinTechs and have sand kicked in their faces by the kids? Yeah, we’re proudly working with them. They’re kicking major payments tail with their digital payout solutions. Bank of America Merrill Lynch is enabling the financial supply chain for the gig economy by leveraging global digital networks like PayPal and Alipay.
At Modo, we’re excited to conduct the exchange of payment data and solve for interoperability using our cloud-based service. We understand that the rails that payments are run on aren’t going away. Not this year, not next year, not even 10 years down the road. Implementing solutions that work with the existing rails are the way to change payments and create the most value today for customers.
As a #paymentsgeek, I’m excited to continue working to make payments suck a little bit less year over year. Especially with some of the awesome clients we’re working with. Bring it on, 2018.