Technology and commerce are now in the driving seat of payments innovation

In my foreword, I observed how this illustrates, once more, that the fundamental drivers for the evolution of the payment ecosystem entered a new phase around 10-15 years ago, and we now see more and more obviously the deep transformations this has triggered.

Indeed, for centuries, currency and payments were the same unique reality. Through coins and bank-notes, national currencies were also the day-to-day payment instruments: centrally regulated, produced and distributed by states in a government-led ecosystem.

Then, with the advent of commercial banks, commercial money was born, and this has had a massive impact on the payment ecosystem. As individuals and businesses started to hold their money with banks, day-to-day payment instruments became more and more bank-led. Numerous innovations were created by the banks, which for decades, if not centuries, became the central driving force of the payment ecosystem. They regularly launched new products and new solutions and promoted more modern and convenient alternatives to cash for individuals and businesses: from cheques, debit cards and credit transfers, through to direct debits and international credit cards. Banks were both the main technical operators and commercial distributors of these payment products. Very often, they also worked together, both through national and international banking communities, to promote interoperability and security standards, to create payment schemes and, for decades, they had also a decisive role in educating the market for the shift towards electronic payments.

Nonetheless, as the world becomes more global and digital, payments have been entering a new strategic phase, becoming somehow more and more commerce- and technology-led. The driving force of change in payments has become the new business needs of merchants, as their own businesses must become omnichannel, data-rich and cross-border, while constantly trying to improve the customer experience thanks to the power of digital technologies. Correspondingly, electronic payments have to follow, and even lead the way, to support new use cases and new challenges to go beyond simply matching securely a debit and a credit, to become a growth enabler for 21st century businesses. It is no wonder then that the world of commerce is now pushing hard on the payment ecosystem, becoming the driving force demanding more innovation and globalisation in payments. And it is not an affront to banks, who are still a key stakeholder in the ecosystem, to acknowledge that retail banking remains far less consolidated and global than the largest retailing brands and the platforms born from the digital economy. Correspondingly, this has forced our digital payment ecosystem to adapt its strategy and its industrial structure over the last 10 years to better serve these new commerce needs. Many less traditional players like Worldline have emerged, precisely to bring global reach, enhanced capabilities and increased technological fire-power to offer the next generation of answers and solutions in response to these new needs of the merchant ecosystem

Innovating at the speed of commerce is also leading to an ever-wider diversity of actors in the payment ecosystem, which is naturally leading to a payments world that is, and will become, even more decentralised than today. This also paves the way for many new strategic partnerships for a company like Worldline, for example with leading local banks where we combine forces through joint-ventures to better serve the fast-changing needs of their markets, or with business software vendors to allow a more seamless payment integration into their solutions.

There is also a paradox at play. Yes, almost everything is changing. But, at the same time, many of the fundamental success-factors for any payment solution have stayed the same: extreme convenience, extreme affordability, extreme resilience, and absolute trust, all on top of deep market reach and distribution power. Yet even then, how these are achieved is transforming.

For example, trust in payments traditionally relied first on the trust people had in the governments and, later, in the banks providing the payment services. Now, with a more diverse ecosystem of actors, how can the needed trust be maintained? Or take resilience as another example, with digital payments now a critical piece of national infrastructure which often has to manage high peaks in demand, what new approaches are needed to achieve the necessary hyper-resilience?

Digital payment is still growing much faster than the general economy, a trend that will continue as more and more cash usage is displaced. This continued growth brings with it important responsibilities for our industry. Firstly, despite the increasing complexity of our ecosystem, resilience, security and safety will have to stay at the leading-edge as less and less disruption will be acceptable. Secondly, even though our industry is growing, digital payments must find ways to make a strong positive contribution to fighting global warming by reducing massively CO2 emissions, particular in comparison to cash. Thirdly, digital payments, while becoming more and more sophisticated and diverse, must stay accessible and inclusive for as many different segments of society as possible. No one should be left behind as this becomes the new normal for our advanced societies. 

And this leads me on to my final point. As I’ve said already, our industry is changing faster than ever. It is growing. It is critical for the functioning of society. And it has to work for everybody: whether rich or poor, old or young, tech-savvy or technophobe. It is also decentralised: there will forevermore be no single controlling power, not even a small number of institutions, that can shape the future by themselves alone. It is my belief that this context makes it essential for our companies to think, work and act as members of a vibrant ecosystem, to contribute to the fundamental and applied research in our field of play, to work with an open-innovation strategy and also to contribute actively to the business and regulatory initiatives that will shape our future in payments. And always, to look beyond payments and understand the big picture, sensing the direction of travel of the customers we serve, and navigating together the complex but fascinating and rewarding terrain ahead.

To learn more about the trends that will shape the future of retail, banking and payments, download our Navigating Digital Payments report.