Google, SumUp, Monta and JPMorgan Payments looked at the gap between modern payment experiences and legacy infrastructure.
Electric vehicles are perhaps not the first topic you would expect to hear discussed at a payments conference, but the infrastructure behind them provides a useful comparison.
That tension between the frictionless experiences users now expect and the legacy infrastructure still powering them was the discussion point for “When New Payments Meet Old Rails” at Money20/20 Europe in Amsterdam.
Panellists from Google, SumUp, Monta and JP Morgan Payments explored where progress is being made in payments and where existing rails continue to limit what is possible.
Asya Karakus, Head of Payment Partnerships at SumUp, explained that a growing part of a fintech’s role in the SMB space is hiding complexity from merchants.
Businesses expect consumer-grade experiences, whether that is instant onboarding, near-instant settlement or one-click payments. However, much of the infrastructure supporting those experiences hasn’t changed.
“What is not changing is the old legacy systems, the rails, the regulations, the scheme rules,” Karakus said. “What we are trying to do is abstract that complexity from the merchants and find solutions around the payments, so that anything else flows through the old rails.”
While fintechs can improve areas such as payment routing, acceptance rates and onboarding processes, Karakus acknowledged there are limits to what can be changed when the underlying infrastructure is, well, legacy.
“We will not be able to accelerate a dispute process,” she said. “The scheme rules and the rails will be there, and we just need to have merchants realise that these will remain more or less the same.”
Karakus suggested that, for SMBs, the infrastructure is usually less important than the result because merchants are more focused on operational efficiency, reliability and customer support than understanding how payments are processed behind the scenes.
Greenfield by accident
Monta brought a different perspective to the discussion on stage. As an EV charging software platform, it did not inherit legacy payment infrastructure because there was no existing ecosystem to build on.
Mikkel Landt, who leads financial services at Monta, argued that if the fuel industry were being built today, it would not start with cash or payment terminals.
“You have new options to pick from when you have an emerging industry and a digital age that is accelerating,” Landt said.
However, even newer industries are not completely insulated from traditional payment requirements.
Recent regulation in the EV charging sector now requires public charge points to accept card payments, bringing with it terminals, acquirer relationships and the onboarding processes that come with them.
Landt was critical of merchant onboarding, describing experiences with eight to 10 different acquirers where obtaining a merchant ID could take between two and three weeks.
“Shout out to the industry,” he said. “You can do better on this one.”
Google explains why authentication matters
Deniz Oran, Head of Payment Partnerships at Google across India and Europe, said Google’s current focus is on simplification and choice.
A key part of that effort is authentication, particularly extending the experience users have on mobile devices to desktop and cross-device payment journeys.
Oran argued that authentication is especially important because strong customer authentication is one of the few regulatory requirements that applies across multiple payment rails.
“By investing here and trying to bring these simple customer experiences, we are helping users and merchants at the same time with conversion,” she said.
She also highlighted digital identity as one of the most significant developments in the wallet space.
Following the UK’s decision to allow users to digitise identity documents through Google Wallet’s ID pass feature, which enables selected credential information to be shared with third parties, Oran suggested that the relationship between payments and identity is closer than ever.
“I think payments innovation is going to be so tightly wound to identity in the longer term,” said moderator James Allington of JPMorgan Payments, a view Oran agreed with.
