You won’t win because you can make cheap spot payments
This past week I attended the Money 20/20 payments conference in Las Vegas – below are my takeaways from the event as some insights from one-on-one discussions I had.
Everything other than spot payments
The ability to make an international payment is a commodity. The companies that are going to win in this space will do so by addressing a more significant pain point for customers and spot payments will just be part of the package.
World First’s big bet is their World Account (multi-currency account) solving for the pain of needing bank accounts around the world and the slowness of the current system. Jonathan Quin, CEO of World First highlighted the US market as major issue.
“If you’re sending money from the UK to the US, you can use a faster payment to send the money to our app and have it sent to the US in the minutes. If you’re sending money from the US back to the UK, it can take 5 days.”
Monese is one of the new UK banks. As Norris Koppel, their CEO told me, Monese is solving the pain felt by people moving to a new country who can’t open a bank account simply because they don’t have the traditional KYC of a utility bill in their new country. Does this make someone any less bankable – they don’t think so. Their model is based on better understanding the risk of their customers than traditional banking has allowed. They offer international payments but this is not why they are winning customers. Our full interview with Monese’s CEO is here.
Takeaways From the Cross-Border Payments Panel
WorldRemit on the pains of the receiver of the remittance
The cost of receiving the money is the biggest issue, not the cost of sending. In a rural part of Africa, it may cost someone $20 to travel into a town to cash pickup location. These receiving costs are not being factored into the remittance cost saving claims at the moment.
Paypal and Earthport on partnering as the future
A shift in sentiment is taking place from everything having to be disrupted and done by one company alone, to big and small companies partnering together to solve different parts of the value chain. There is a realization that the payments ecosystem is complex and any one company believing it can solve all the pain points just isn’t realistic.
Technology and cryto-currencies are simply a means to an ends
Crypto is neither cheaper, faster and definitely doesn’t solve the risk management problem (a starting point of all users being anonymous). It’s naive to think any technology by itself will lower costs. All the counterparties in the chain have costs and have to cover those costs.