How Payments Got Their Groove Back (Hint: It’s Seamless)

The payments industry has undergone a dramatic transformation and is now a hotbed of innovation; attracting talent, investment, and lots of attention. Just ten years ago payments were still dominated by big banks - look around you today and fintechs, payment service providers, governments and RTPs have changed the dynamic. It’s now exciting. Zach Anderson Pettet says, ‘Payments used to be where fun went to die. But now it seems that payments are bringing the sexy back to fintech.’

Visa’s CEO, Ryan McInerney, observed recently that payments have changed more in the past five years than in the last fifty and Tim Moncrieff adds that this shift is not just about technology; it’s about having a consumer-focused mindset. Real-time payments (RTP), fintech disruptors, and evolving consumer expectations have turned payments into a dynamic, customer-first ecosystem.

Seamless payments are the new normal

Swapnil Mhasde observes that there is of course huge curiosity around stablecoins and cryptocurrency, but what really is generating the most excitement in payments is the technology that helps make it seamless and frictionless. Payments are playing a huge role in the digitization of everything from tax payments, ecommerce, and gaming – embedded within the experience, not separate to it. Swapnil says, “re-seeing a shift from payments being a standalone action to becoming part of the experience. That’s where the magic is. We haven’t even reached the peak with payments – we’re still on the journey, and it’s continuously improving.”

Consumer and business expectations are changing, fast!

The industry in cross-border payments is growing exponentially. This growth underscores the huge demand (and need) for better experiences, and not just from consumers. It’s led to a consumerization of institutional payments – where businesses and governments are expecting the same level of experience at work that they get in their personal life: they want it to be fast, fuss-free, and easily accessible end-to-end. Speed, transparency, and low-cost transactions are key.

Its advances in technology on the backend which has had a huge role to play to make these seamless cross-border experiences happen.

It’s not just remittance anymore

Most people who got into fintech 10 to 15 years ago, did it to make a difference in the world, using faster cross-border payments to pay people more efficiently. But the world is run by businesses, with B2B payments making up over 97% of cross-border payments.¹

A quick overview of payment trends in APAC highlights this. The region has billions of dollars in remittance value flowing out of it, whereas the corporate flow is in trillions – significantly higher. This is why it’s imperative for the next stage of growth for fintechs to be to move from remittance (P2P) to the business space and offer payment solutions and services attractive to businesses. For example, this approach has been part of several major fintechs’ growth strategies. They are usually founded on a remittance model but then evolve to offer everyday solutions for consumers and businesses, as well as investments, crypto trading and other lifestyle benefits. Neobanks have also evolved to specifically serve SMEs to solve their payment and overseas collection needs. Being a one-stop-shop is increasingly important.

This move from remittance is reflected in the type of payments which have grown in APAC in the past 10 years: digital wallets. These have evolved into superapps like Tencent where consumers can buy insurance, crypto, and shares.

The future’s already here

Even though distributed ledger technologies and stablecoins can make a huge difference in the future, there are payment challenges that are being solved right now with current technology. The Visa network has innovated to double-up the interoperability of the card network and the wallet infrastructure to simplify access; providing live programs that mean gig workers, like rideshare drivers, can get access to their earnings at the click of a button, and influencers can get fast access to funds, even cross-border. It’s a payments game changer.

Swapnil unpacks this innovation further. ‘Over the past five years Visa has accelerated technology to enable cards to offer real-time² access to money in seconds across the network. For example, South Africa doesn’t have an RTP system but instead, using one of Singapore’s banks, people can remit back the savings to South Africa. This RTP innovation opens access to countries who don’t have an RTP infrastructure – and it’s much cheaper than SWIFT. You can move high or low value funds, and the same card works wherever in the world you want to send money to.’

Tim notes that Visa Direct was instrumental in developing this, working to provide an alternative method of payment by reversing the existing consumer purchase rail (where consumers draw money away from their card to pay a merchant). He adds, “This was not a simple enterprise! We have had lots of regulatory considerations to overcome to enable this. The ecosystem that underpins this must be secure, and this is where alias credential directories come in. The journey Visa has been on is to extend that capability to address ways people want to pay and be paid. We can now push money to an account or wallet anywhere in the world to any account that’s on Visa’s network."

Unregulated industry, paying it forward

The crypto boom really demonstrated how tech could be applied to enable true, instant P2P payments. The Regulated Liability Network in the UK and its U.S. equivalent, and more recently, Project Agora, led by The Bank of International Settlements (BIS) have been exploring how the technology that was applied to help P2P can be used in the regulated payments industry, principally in fiat currencies. The technologies that have been proven in the decentralized crypto industry are now taking on more mainstream and regulated adoption through stablecoins. They have a hugely compelling path that involves being applied to the regulated industry with a specific focus on a wholesale institutional settlement layer, which can start to unblock some of the existing underlying constraints.

Continuous payment innovation

Visa Direct drives seamless payments, enabling fintechs and banks to offer fast, transparent, and secure domestic cross-border payments,³ all through a single integration.

Visa Direct. Move money your way.

To learn more about money movement, visit: visa.com/visadirect