Companies have presided over big shifts in money flows in recent years as technology has transformed transactions.
Yet speakers at a conference Monday said financial institutions and other businesses will need to overcome more hurdles if they want to realize all of the benefits of instant payments and stablecoins for payment senders and receivers.
“At the end of the day our customers and their customers are counting on us, they don’t care about the rails, they don’t care about the modality,” Amy Burr, chief product and relationship officer with Federal Reserve Financial Services, said during a panel at the Money20/20 conference in Las Vegas. “They want to know that money is going to move reliably, quickly and independently; the end. That’s the challenge and we need to rise up and meet it.”
To be sure, businesses are making inroads into new systems. Consumer card-swiping, digital wallets and an ever widening range of corporate payment methods have been part of the transformation of economic exchanges that has driven annual global payments revenue from $1.7 trillion in 2020 to $2.6 trillion last year, according to the consulting firm McKinsey.
Still, skepticism and old technology are holding some companies and banks back from full adoption of the wider range of alternative forms of the payments — ranging from stablecoins to the Federal Reserve’s instant payment system, FedNow — as well as the benefits that modern payments technology can offer.
“I spend a fair amount of time talking to financial institutions that just don’t want another thing,” Burr said during the panel discussion at the conference, noting that some companies are reluctant to add more layers to their technology stack. “The fatigue is real.”
The ideal of a fully activated modernized payments ecosystem and how companies can take steps to surmount the hurdles that are still preventing it from being realized, was the focus of a panel discussion at the annual finance and technology conference.
Burr expressed some skepticism about the uptake of the new technologies because of the relatively lukewarm reception that banks gave to a new international standard known as ISO 20022. The Fedwire Funds Service, which moves trillions of dollars daily, shifted to the standard last year, but banks are just beginning to embrace it and make use of its attributes.
While there’s been effort to push adoption of the full benefit of ISO 20022, “we’re not really seeing banks and corporates using all the fields so I’m maybe a little pessimistic about programmable money,” Burr said.
Sam Aarons, CTO of payments software provider Modern Treasury, said he is frustrated personally by capabilities for payments, some of which would make them more user-friendly, but which aren’t being widely adopted. For example, he said he can log into his credit card account and see purchases, but receipts are not included — even though technology can provide that capability and allow card users to have more information about their purchases.
“It irks me to no end that I can’t log into my American Express portal and see the receipt attached to my payment,” Aarons said, noting that he believes the problem is likely tied to decades old software that hasn’t caught up with technology. “We have all this innovation for stapling context data to payments, and still no one does it.”
As companies explore their payment system options, Aarons advised that they think about payments rails as a kind of menu, with paths that might or might not fit their needs at a given time. That includes keeping some existing rails operating, such as ACH payments, that some companies like for their low cost, and even paper checks.
“You still see paper checks; they’re very popular in the United States,” Aarons said. “The volume will get reduced over the years but not to zero.”
Currently, he said big companies are not viewing stablecoins versus fiat currency as an either or question but are rather using all of them in varied degrees depending on their needs.
Irfan Ganchi, senior vice president of product management at stablecoin giant Circle Internet Group, agreed. The choice of how the money gets to a place is something that depends on the location of the receivers and senders, as well as the capabilities of the rails, he said. For example, Ganchi said large multinational companies may use stablecoin to move a payment to some of their international entities overnight, but locally they’re going to pay local suppliers and vendors using instant payments.
“But also there’s an aspect of receiver preference,” he said. “It’s quite possible that a ride sharing driver in Indonesia wants [Circle’s stablecoin] USDC because they want to hold it in dollars. But a ride sharing driver in the U.S. wants dollars or fiat and you have to be able to support both.”
The Money20/20 conference is owned by Payment Dive’s parent company Informa.