After hosting seven virtual fireside chats since May, the inaugural season of Zepto Connect events has wound up. In this article we review the final session in the series, and our most ambitious one yet.
CLICK HERE for access to the session replay and full panel details.
As 2023 winds down, it would be remiss of us not to reflect on what we’ve created with the Zepto Connect series before recapping the final session of the year.
We launched Zepto Connect in May. Since then, we've hosted seven live webinars as part of the series. If you’re curious about those, you can find replays of previous sessions over on the Zepto Payments YouTube channel.
Zepto Connect is a space we’ve created to curate engaging conversations with clever people about our favourite things: Technology, innovation, brilliant businesses, trends, predictions, payments and a future shaped by all of those. A range of experts joined us to discuss what’s next for Aussie tech, the Consumer Data Right, even digging deep into PayTo — the technical side [twice], and our partnership with Wpay.
The sessions have been insightful and engaging. We’re grateful to everyone who generously gave us access to their busy calendars to attend and participate, and we hope to take Zepto Connect to new heights in 2024.
But first, let’s recap the robust and insightful conversation from our most recent webinar. On 05 December, we successfully aligned calendars across time-zones, a dateline and seasons to deliver the final instalment for 2023 — ‘UNPACKED: Payments Insights from Around the Globe’.
Zepto's CEO Chris Jewell was joined by Aussie-in-the-Big-Apple — Paypa Plane CEO and Founder, Simone Joyce, and Reed Luhtanen — Executive Director and CEO of the US Faster Payments Council [FPC]. Zepto is a proud member of the FPC.
Our panelists shared their window-seat views of global payment trends, insights and developments. Through 45-minutes attendees were treated to views, facts, figures and insights like these.
The US RTP network is showing steady growth, has processed more than US$500 million is payments, and has broken through the one million payments a day barrier. Expectations are that it will continue to accelerate. Notably too, the new FedNow instant payments system launched over the US summer with some 200 financial institutions [FI] now on that network. It is also showing good growth in terms of FIs adopting it.
“Generally speaking, FIs here have had lots of options in terms of different payment rails that they’ve had access to in different ways to move money around for their customers. At the same time, their customers have been served by alternative financial service providers like digital wallets that give the feel of instantaneous payment. Even though those of us who are nerds about it know that that’s not really what’s going on,” said Reed.
Inevitably, with an American in the room, the subject of cheques came up.
Chris noted that there’s some 9 trillion dollars worth of cheques in circulation in the US.
Reed’s response was a bit of a showstopper.
“When I was at Walmart five years ago, we took a hundred million cheques at the point of sale each year. People stood there and wrote those cheques right there in the store. There's still a huge amount of cheques being pushed around. That's not only slow and cumbersome, but it's also a huge fraud problem. We're seeing huge growth in cheque fraud here in the US — think about it, you're handing around paper with your account number on it. That's a recipe for disaster."
REED LUHTANEN
This led to an intriguing conversation about what’s required to shift US consumers’ fondness for this antiquated way to pay. Reed pointed out that relying on shifting consumer interest and demand never brings about the extinction of anything. It will require more than this.
Emerging RTP uses and changing behaviours in the US
The panel agreed that early use cases in the US are taking shape in the disbursements space.
Reed pointed out that, "The big ones you keep hearing about in the US are what I would classify as a disbursements type transaction. So a lot of payroll or gig economy worker pay — Uber, Grubhub — things like that, even hourly shift workers being paid instantly at the end of their shift.
“Funding and defunding mobile wallets is big, too. We're also seeing loan-funding as a big one. Being able to pay instantly is creating a competitive advantage. And the really big one that's coming is the US Treasury which will use FedNow to disburse all kinds of payments like welfare programs, retirement payments, tax refunds, even their own payroll,” he added.
Having recently moved to the US from Australia, Simone has a unique perspective. Comparing Australia — where we have one or two flavours of account-to-account payment options — in the US, "It's like being in a gelato shop," she says.
"But there are so many payment optionalities in the States that there's almost a friction," she adds. Simone also noted that some digital wallets and other services are being used by businesses in ways they were never intended to.
"I pay my daughter's nursery school fees every month on Zelle, and I hate it."
SIMONE JOYCE
She posited that shifting understanding in the US where there's a huge population who don't think anything is broken yet, is going to be a massive challenge.
Simone got straight into a detailed description of opportunities she’s seeing in the US.
“There's a host of companies in the US that are looking to provide the connecting bits. If you're an organisation, how do you get access to real-time payments? There's much more appetite in the US for financial institutions to provide services to payments companies looking to connect into the rails. We've seen a real drought of that kind of activity in Australia.
“But in the US, banks are motivated to do it because there's a commercial reason to do so. There's a lot of middleware companies popping up like the payroll ones Reed mentioned earlier, earned-wage access — micropayments as you're working your shift. There's also a dynamic in the automotive space where new car owners drive off the lot, and the dealer just hopes that your cheque doesn't bounce. So, how do I get that verified money in to confidently allow the car to leave the yard? That plays out across a lot of high-value industries with commission-driven sales. That's a frontier that I think we'll see next,” said Simone.
Regarding the impact real-time payments might have on business transformation and innovation, Reed noted that the next 12-18 months will be critical.
“I think there will be new business models that are made possible by the existence of these [real-time payment] rails in the same way that new business models were made possible by the invention and proliferation of the world wide web 25 to 30 years ago.”
REED LUHTANEN
Discussion around transitioning from legacy to the new real-time paradigm
While there’s incredible excitement about the future of digital payments, Chris had praise for the workhorses that have brought us to where we are today.
"ACH in the US, and BECS in Australia are hall-of-fame payment infrastructure systems. They’ve been reliable, scalable and have had great cost benefits. But at this point now we have a crossover. Where we're at is a really important point to recognise. I do think the challenge will be as much about the transition from the old world to the new world, as it is about understanding the new world,” said Chris.
“In Australia, I think we're three-to-five years ahead of the world in many respects. Because, as a significant merchant or enterprise, you can use the real-time payment infrastructure to send money in real time, to receive money via an alias with confirmation of payee in real time. And now — with PayTo — you have the ability in effect to collect with the consent of a customer. The world is watching this,” he added.
The panel also discussed fraud and scams as they relate to real-time account-to-account payment ecosystems.
"I don't subscribe to the slow-payments-down school of thought,” said Chris.
“I think fraud and scams will persist if there's a two-hour delay, a two-day delay or a two-second delay. This is really an ecosystem issue, and we all need to lean into more governance and regulation to support innovation and drive better outcomes."
CHRIS JEWELL
The entire panel had a lot to say on this.
"This is not an inherently more fraud-prone payment type than others. We spoke about cheques earlier. What's more fraud-prone than literally handing a piece of paper around that has the account number and routing information on it? There's fraud on cards, there's fraud on ACH, and there's fraud through wires. There's fraud on every payment system that's ever existed. And there's no reason to think that this is more fraud-prone. It's just newer, it's going to take some time for folks to figure out what it is that we need to do to be smart about preventing fraud” said Reed.
The final question required a quick glance into the crystal ball: What will we all be talking about in 12-months from now?
“We’ve spoken a bit about fraud and scams. I think we'll be having a more in-depth discussion around what has gone wrong with claims management or disputes management, and what we've learned from that in the 12-months. I think that will naturally happen with volume increase — it's something we need to prepare for. And from the Australian perspective, we'll be talking a lot more about long-lived case studies that have implications for markets like the US,” said Simone.
Chris had a similar view to Simone’s point about Australia.
“I think we'll be talking about some very big, well-known brands in-market [with real-time payments] at this time next year. Awareness now of what's possible in terms of capability and access to real-time payments is still anchored somewhat to what has been possible. In 12-months from now I think we'll be focused much more on what is possible. I also think we'll see government departments and agencies engage more around this which is exciting because it will drive awareness of the benefits."
CHRIS JEWELL
Reed thinks we’ll be even more future focused.
“This may be a bit flippant, but I think we'll be talking about what we're going to be doing next year. That's how we are, right? We'll spend a few days talking about the things we've accomplished, but the rest of it will be about where we’re going to go next,” he said.
Where will that be?
We encourage you to buckle up and take the ride with us.