2017: The Year in Payments
2017 has been a busy year in payments and for us here at WePay as we were acquired by JPMorgan Chase. We acknowledge that it’s the year of bitcoin and cryptocurrency, but the payments industry as a whole also had a lot of developments. It’s not always easy to tell what changes are going to end up being significant in the long run, but we are going to take a stab at what the meaningful developments were this year for payments. So we asked some of our industry experts for their opinions on what was significant.
Cryptocurrency and blockchain
Bitcoin in particular had a headline-generating year with growth in value of 2000% over the year. Other cryptocurrencies fared even better with some managing over 10,000% growth over the year. But the more significant long-term developments may well be in the underlying blockchain technology and its other applications throughout the payment and banking industries.
Vinodh Poyyapakkam, Senior Director, Risk Management at WePay said, “a big development is the rise and rise of cryptocurrencies before the impending regulatory squeeze. It's going to happen when something unfortunate is connected to something like perpetrators financed through BTC (bitcoin).”
Matt Marino, Head of Sales at WePay, pointed to the rapid rise of BTC and, in particular, banks participating in blockchain research. And Catherine Jing, Payments Manager, Global Core Payments at WePay, added, “blockchain developments are the biggest thing to happen this year and how they are cropping up everywhere in all kinds of use cases.”
Partnerships, acquisitions and consolidation
Another clear theme, accelerated by the many changes happening throughout fintech and global commerce, was consolidation via partnerships and acquisition. Karen Redwood, VP Global Core Payments at WePay said, “Chase acquiring WePay is one part of a story of consolidation and acquisition in the payments industry. There have been a variety of big deals, for example Vantiv acquiring Worldpay.”
Sireesh Potireddy, Director of Product Management at WePay said, “In 2017 there have been a lot of partnership announcements, specifically from PayPal, for example PayPal with Citi, Chase, Discover, Android Pay and Apple, but also Stripe with AliPay and Amazon Pay with First Data or Clover.”
Bill Clerico, our CEO, added “in particular there was lots of consolidation in the integrated payments space – for example First Data bought BluePay.”
Faster Access to Funds
The third big theme was the beginning of the first steps in offering real-time payments. Bill Clerico said “same day ACH is really starting to take hold and become a reality.” And Tina Hsiao added “One of the themes of 2017 is faster settlement – there is a lot of talk around the promise of faster settlement and Zelle is being pushed as well.”
But it is still early days for real-time payments and Zen Banerjee highlighted that when he said, “One significant development was the first transaction on the Real Time Payments network. This is a big deal as people have been talking about a faster payment infrastructure in the US for a long time. Worth noting that Chase is one of the original participants.”
Rich Aberman, WePay Chief Strategy Officer, summed the competing efforts up. “One of the biggest developments is real time payments – the evolution of rails to drive payments faster. Major banks are investing in new mechanisms to move money faster as the modern successor to ACH. For example TCH, same day ACH, Zelle, etc.”
Pretty much everyone agreed on these first three themes but we also had a few others worth noting.
Several years of larger and more significant data breaches came home to roost in 2017 with the revelation of the Equifax data breach. Matt Marino described it as, “the worst year on record for data security breaches (Equifax, OneLogin, Verizon, Yahoo, etc.)” But Vinodh Poyyapakkam felt that as the culmination of several years of breaches, “Data breach fatigue is setting in with most of us reading it as another news article and moving on (how many still remember Equifax breach from a few months ago?)”
Global payments and commerce
Rich Aberman said “One thing of importance in 2017 was global commerce – Adyen, Stripe, Alipay, Klarna – everyone is racing to cover the globe and to be the first with global acceptance and international coverage. It’s going to lead to a lot of unusual competition.” Zen Banerjee pointed out that “the Indian economy survived its demonetization initiative and as an upside leapfrogged into digital payments.” While Matt Marino added “China is overtaking the US as the largest ecommerce market.”
Evolution and Change
One thing is certain – the payments market will continue to evolve and change. Rich Aberman pointed out a couple of ways that is happening. “On the consumer side and purchasing we now have ambient commerce – Google Home, Alexa, IoT, AI-enabled commerce driving more convenient purchasing from all kinds of locations.”
He also pointed to a slow evolution in some markets to subscription-based purchasing with the rise of food subscriptions like EatClub and Blue Apron and many others, as well as clothing subscriptions from companies like Stitch Fix, and the rapid return of content subscriptions across the board.
Other developments mentioned that highlight ongoing change included more and more businesses, especially marketplaces, seeking to become merchants of record for their customers; the move by card networks to no signature needed; and ongoing regulatory changes around the globe in how payments can operate.