The Electronic Funds Transfer Association hosted a day-long Electronic Payments & Innovation Council meeting on Sept. 23, 2015, in Napa, Calif. The nonprofit trade organization launched EPIC as an open forum for exchange between traditional and upstart companies that are involved in advancing electronic commerce and payment technology.
Jim Stahley, Senior Vice President, Enterprise Strategy Group at Wells Fargo & Co., opened the discussion with fresh perspectives on emerging payments, noting that the partnership model has become more prominent in banking, especially as new players enter the ecosystem.
Stahley said catalysts for mobile commerce will be consumer- and merchant-driven with entities like Facebook expected to engage person-to-person payments. He believes the U.S. migration to EMV (Europay, MasterCard and Visa) chip card payments could accelerate contactless payments, and gave as an example what happened in Australia after it adopted EMV. Australia is now one of the top-ranked countries in terms of contactless payment awareness and usage rates.
Kurt Helwig, President and Chief Executive Officer of the EFTA, a member of the Federal Reserve System's Faster Payments Task Force, noted that while there has been discussion about improving speed of payments, the 15,000 U.S. financial institutions (FIs) operating today have a considerable investment in existing assets. It could take 20 to 30 years to recoup the additional capital expenditures required to build a new, faster payment system, he noted.
Lois Hansen, Vice President, Product Development at CO-OP Financial Services, echoed Stahley on third-party involvement with FIs. She said FIs must focus on building trust, especially among younger age groups, to create new commerce opportunities. She noted that CO-OP has a brandable marketing portal to help clients educate customers and an API suite that covers a full spectrum of services.
Peter Tapling, President and CEO at Authentify Inc., a provider of phone-based, two-factor authentication, described electronic commerce as having multiple touch points and a security pipeline where identity management and authentication serve as the valves to close transaction risk.
Tapling noted that FI app and software development kit projects can take 24 months from inception to launch, but the pressure to innovate is more persistent and granular than in the past. He said the true payoff for brands that rise to the occasion is a better image.
Ted Rogers, President of Xapo, a bitcoin wallet and secure vault storage provider, said that 12 million people are now using bitcoin. He predicted that in five years bitcoin will "top PayPal as the native currency of the Internet" and that it will disrupt the financial industry much like the Internet has with communications and commerce.
Rogers expects bitcoin to gain traction fastest in developing countries, where local currencies are more volatile, and that it will reach new niches where fractions of pennies are spent online, for example. He expressed concern that New York-based tech startup R3CEV, a closed-loop, bank-controlled blockchain project backed by nine of the world's largest banks, could stymie innovation in the otherwise open protocol upon which bitcoin is based.
The conference concluded with a panel and lively discussion about fintech investment. The three-member panel shared perspectives on what types of companies they're looking to invest in.
Jeffrey Katz co-founded Mercury Payment Systems in 2001 and sold it to Vantiv Inc. in 2014 for $1.65 billion. He said he focuses on early-stage startups that add value to omnichannel commerce. His investments include Cardfree, an integrated mobile commerce platform; Loyl.Me, an automated customer relationship platform for small businesses; and Stellar Restaurant Solutions, an outsourced phone ordering service for restaurants.
Chris Winship, a partner with San Francisco-based FTV Capital, which was one of the first companies to invest in fintech in 1998, said he focuses on businesses entering the growth stage. FTV counts as clients CashStar Inc., a prepaid commerce solutions provider to more than 300 leading brands; and Credorax, whose Smart Acquiring solutions and digital Merchant Acquiring Bank serve cross-border transactions in over 30 jurisdictions, he noted.
Ramneek Gupta, Managing Director, Co-Head of Venture Investing at Citi Ventures said he focuses on businesses in all stages of development. He named Square Inc. and DocuSign as companies his firm has invested in.
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