Tuesday, May 5, 2015
Payment professionals from around the world gathered at New York's Columbia Business School on May 1, 2015, to explore the evolving payments landscape. The fourth annual Digital Financial Services & Emerging Payments Summit was organized by the Columbia Institute for Tele-Information, a university-based research center focused on strategy, management, and policy issues in telecommunications, computing and electronic mass media.
The conference, co-sponsored by the International Telecommunications Society, and Telecom Italia, featured 35 speakers from six countries with diverse views on how digital payment technologies impact developed, developing and emerging economies.
The occasion coincided with Columbia University's 100th anniversary, where preparations were underway for graduation ceremonies. An amphitheatre-style lecture hall set the stage for the daylong agenda, which included discussions on such far-ranging topics as the global state of mobile payments, strategies for financial inclusion, tokenization, digital currencies, disruptive trends in digital finance, cybersecurity, privacy and consumer protection.
In opening remarks, Columbia Professor of Economics and Finance Eli Noam suggested that payments, like books and movies, have certain predictable plot lines. Popular themes include financially enabling the unbanked; competing among device manufacturers, networks and banks to own transactions; regulating consumers in ways that restrict and enable them; and debating cybersecurity and privacy issues.
Noam entreated participants to think beyond short-term outcomes to the broader historical impact of these stories on international financial flows, as well as the velocity, supply and distribution of digital currencies. He described money's transformation from a dumb, one-size-fits-all commodity into an interactive medium of exchange that can be customized for institutions and individuals.
"I think the most interesting is the impact of [new monies on] people beyond convenience; interpersonal transactions that are not financially based will become part of market mechanisms," he said, using examples of paying people to walk a dog or take one's place in line.
Noam predicted that law enforcement will use sensing technologies to detect speeding or jaywalking. "In the future you might drive fast past a certain bridge and $25 will be deducted from your account," he said. Another example he provided is that someone could be automatically fined for walking a dog without a leash, incurring a $25 fine without any particular human intervention. Noam stressed the future is fast approaching and urged academics and professionals to think ahead.
Conference organizer Dr. Leon Perlman, a world authority on mobile financial transactions, has been affiliated with CITI at Columbia Business School since 2006 and specializes in digital financial services payment technology. Perlman called the mobile phone "a vector for financial inclusion," a theme shared throughout the day in presentations and panel discussions.
Howard Hall, Managing Director at Consult Hyperion cited a 35 percent year-over-year growth rate in mobile payments, with approximately 245 million users and $163 billion in mobile spend in 2013. Money transfers accounted for 71 percent of overall spend, followed by 21 percent merchandise sales, 5 percent bill pay, and 2 percent near field communication (NFC) payments.
Hall referenced drivers of success in mobile payments as low costs, standardized platforms, simple user interfaces and consumer incentives. His list of obstacles included poor understanding, lack of benefits, low NFC acceptance, regulatory hurdles and unclear transaction ownership.
Thierry Millet, Senior Vice President Mobile Services and NFC at Orange Money, shared recent data on market developments, projecting $1 billion Euros in mobile spend by 2018, largely driven by new services. He called mobile money a major driver of financial services to unbanked and under-banked consumers, including mobile banking, money transfer, contactless services and peer-to-peer payments.
Sacha Polverini, Senior Program Officer of Financial Services for the Poor at the Bill & Melinda Gates Foundation, described financial services as the "connecting tissue of all programs" that can generate efficiencies by connecting poor people to government, business donors and "other counterparts."
Polverini noted that people can be poor and financially healthy, or middleclass and financially challenged. He encouraged payments industry stakeholders to work together to build infrastructures that support remote payments and a fuller range of digital financial services.
The theme of collaboration was further explored in a panel discussion moderated by Jason Oxman, Chief Executive Officer of the Electronic Transactions Association with executives from MasterCard Worldwide, Visa Inc., American Express Co., and Merchant Customer Exchange.
The panelists, all fierce competitors, amicably explored the role of tokenization in the commerce ecosystem in addition to methodologies for scaling electronic payments by adding value and services to create a truly mobile-centric experience. About the panel, Oxman said, "Rarely do you see this kind of group before you without an array of antitrust attorneys."
A live stream of the conference can be viewed on bit.ly/dfsciti15 and on Twitter using hashtag #DFSCITI15.
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