Page 20 - GS190102

Views

Seeking real-time payments much of which sits idle for some period. There are 1.3
million pieces of heavy construction equipment in the
Ashwin Raj, a vice president at Lyft, talked about his field, as well as ISO standards that provide data for fuel,
company's challenges in optimizing payment processing idle time and utilization time. The construction industry is
in the overall consumer service proposition. Apparently, cash poor. Richardi's solution is to put the right equipment
Lyft handles 1 million rides a day. In addition to requesting in the right place at the right time and monetize excess
and paying for rides via smartphone, Lyft riders can capacity to leverage the IoT.
change reservations and even change destinations after
they get in the cars. They can rate rides and tip drivers Another discussion was on preventing fraud by providing
immediately or after their rides. Raj was clear that the better identity management. The Better Identity Coalition
payment rails Lyft uses, the ACH network and Visa is working to address this huge need. The idea is to start
Direct, are inadequate for the gig economy. He wants to with something you know, something you have, something
pay his drivers instantly, but has found the ACH takes you are, and a code generated elsewhere. For instance,
three to five days. In processing credit card transactions, Google authentication has a random six-digit code.
Lyft is treated as a card-not-present merchant, so the
authorization process looks for a shipping address. Lyft Eric Solis discussed his product, MovoCash, which uses
loses chargebacks because of this. He wants to truly pay blockchain technology to convert cryptocurrencies to
his drivers in real time. cash in real time. He said protocols, not apps, matter to
blockchain. He sees a new paradigm where everything is
Both the Federal Reserve and The Clearing House (a up for grabs, promoting innovation without undermining
consortium of the largest U.S. banks) are working on the regulatory framework. His presentation asked six
a real time payments (RTP) solution, and NACHA has questions, which look helpful for anyone considering a
promulgated a three-step plan for same-day ACH. distributed ledger solution:
With ACH payments, the originating bank can choose 1. Is the process repeatable and does it lend itself to
whether to route the transaction via the Federal Reserve automation?
or via TCH, each of which has pros and cons. TCH said 2. Is there an ongoing or long-running process, rather
its RTP solution can reach about half of all demand than just one time?
deposit accounts in the country. The Fed is developing 3. Are there multiple stakeholders within the process
an RTP solution, but that raises issues of interoperability. or value chain?
Furthermore, community banks are skeptical that TCH 4. Is there a need to reconcile disparate data from a
will keep small bank customer data private. We will not limited number of parties?
be able to reach all 11,000 U.S. financial institutions in the 5. Does a value transfer exist?
immediate future, however, and Lyft remains stymied on 6. Is there value in an immutable record?
how to make immediate payment to its drivers.
Assessing innovators' competence
Creating new solutions
Presenter Olga Mack raised an idea worth repeating. She
Nick Brown spoke about his company, Clear Purchase. showed a chart depicting the Dunning-Kruger effect.
His goal is to provide mobile money accounts to the 3 It illustrated that in many cases, when the "best and
billion poorest people in the world – a basic bank account brightest" get together to change the world, there is often
for people making $2 a day. All of these people have a lot of self-delusion and overestimation of competence.
cellphones. Disparate systems serve them. His goal is to Mack suggested that when you talk to such people, ask
provide interoperability, a switch that connects everybody. what they have done, what they have built, and what
In these poor communities, the only trustworthy outsiders experience they have with project management. First,
are the cellphone reps and the microloan reps. There are you need a successful pilot before you scale and expand.
100 million borrowers now borrowing $200 billion a year, Ask what blockchain can do that a distributed database
but the expense of managing a $200 loan causes an APR cannot and what application you cannot live without. This
of between 30 and 60 percent. Another 700 million people brought the audience back to reality.
would borrow if they could. Brown believes that if we give
another billion families purchasing power, this will create Innovation is a tricky business, akin to catching lightning
a 30-year economic boom. in a bottle. But there are numerous dedicated, energetic
people working to do that. Some will be successful.
There was also a discussion of bitcoin, but the bloom is
off the rose for bitcoin now. For one thing, the speed of Brandes Elitch, director of partner acquisition for CrossCheck Inc., has
processing is inadequate. It also has unknown value, and been a cash management practitioner for several Fortune 500 compa-
there is no purchase guarantee, which will be difficult to nies, sold cash management services for major banks and served as a
figure out. consultant to bankcard acquirers. A certified cash manager and accred-
ited ACH professional, Brandes has a Master's in Business Administration
Nick Richardi gave a presentation about how to share value from New York University and a Juris Doctor from Santa Clara University.
among the players using heavy construction equipment, He can be reached at brandese@cross-check.com.

20