The payments landscape

The payments landscape has undergone a significant transformation in recent years. Advances in technology have led to drastic changes in innovation, with increasingly rapid payments, both locally and globally, easier and more convenient.

Actors do not Entering the marketplace, from big tech companies to automakers, are bringing new applications and innovation to the payments ecosystem with payments integrated into the real-world economy like never before. This has not gone unnoticed by regulators who they are now investigating how regulation must adapt to meet these changes. As the needs of customers and businesses evolve, it is clear that the global payments ecosystem must be agile and open to innovation without sacrificing financial stability over the that underpins the infrastructure and the future of the payments industry .

Today's inconsistent application of digital identity means that in some countries, people can freely and easily transact, while in others, where it is more difficult to verify identities and assets, there is much greater friction in the payment system. These barriers will decrease as nation-states and payment providers work together to establish internationally agreed digital identity standards, increasingly leveraging biometrics, including facial recognition, fingerprints, and implants, which will also enable The payments industry will continue to lead the fight against financial exclusion, with developed economies learning from the successes already achieved through mobile channels in many emerging markets. For those individuals and small businesses - currently struggling to access payments and financial services more broadly, a digital identity will represent a golden key, unlocking benefit payment services to banks and allowing them to establish credit histories and financial footprints. Social media represents another area where Western markets will learn from their emerging economy counterparts; the convergence of social media and payment services, already firmly established in China, will spread internationally. This will create new opportunities for payment providers and their customers, for example, for merchants to interact with individual consumers on a large scale through such networks. Distributed ledger technologies have the potential to be the primary means through which we deliver the payment system of the future.

Cloud computing and API tools will link blockchains to create high-speed cross-border networks - an "Internet of Value" through which payments flow unhindered, just as information currently flows across the global web. . An increasing number of payments will be made through these blockchains, which will largely be operated by private sector organizations from the banking or quasi-banking sector, such a network has the potential to provide more than just services. transactional. For example, linking payments to the supply chain through distributed ledger technologies will transform supply chain management and monitoring into a standard product. As blockchains dissolve the borders between national settlement systems, payments will be instantaneous, even when cross-border. This will begin to have fundamental impacts: for example, making large-volume micropayment transfers and an atomization of the payment system economically viable; But it also means that banks will need to be able to manage their liquidity in real time, which remains a key challenge today.

John Hallsworth Partner, Open Banking Lead KPMG UK