Pay By Bank – Where does it work and why?

Pay by Bank (aka Push Payments) are tremendous efforts driven by local market bank groups. Their core success is in cash replacement (ex P2P) and where there is high consumer-merchant trust (ie bill pay/recurring payments). Data clearly show that Push Payments are NOT a threat to V/MA but part of a rising electronic payment “tide” that lifts all boats. 

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Friday I was a tad “let down” in the Sionic/TCH/MX release of Pay-by-Bank. Per my blog on Google/TCH launch and Google P2P I was anticipating something much bigger. To be clear I firmly believe that TCH is working on an “ApplePay Competitor”, which will entail TCH tokens inside of Google’s phone, but this will be 3-6 months out.  Per the blogs above, I see neither pay-by-bank nor TCH Tokens in Google Pay as a threat to V/MA. 

Today I thought I would drill down into “pay by bank”, the dynamics of why it works in some markets, and why I see little threat to V/MA in replacing core cards in eCom or at POS.

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Durbin 2 – Impact on “Wrapping” Rules?

A highly technical “what if” scenario involving a long-sought after change by top US card issuers. What if Durbin credit routing bill were designed to eliminate network wrapping rules?

© Starpoint LLP, 2022. No part of this site, blog.starpointllp.com, may be reproduced in whole or in part in any manner without the permission of the copyright owner.

A highly technical “what if” scenario involving a long-sought after change by top US card issuers. I’m fortunate to have the exec teams of just about every payment network, processor and FinTech read this blog. I have 3 main drivers for writing today:

  1. Start a community discussion
  2. Assess the potential for a much more strategic driver behind the proposed Durbin bill
  3. Most “change” in US payments is driven by 7-10 players: networks, top issuers, Google, Apple, … etc. These changes have an enormous impact on the FinTechs building around them. I’m hoping to help these small companies plan around these changes as the only advantage of a start is speed.

Note I DO NOT think this scenario is likely, but rather possible (30% probability). Historical context is key and the only reason I’m spending time on this today is that 27 bank CEOs have been discussing this for over 10 yrs.

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FedNow

Very short Blog – Recapping a few tweet streams.

I think FedNow is a great effort to provide an open alternative to TCH’s RTP. I’ve spoken with, and consulted for, the KC fed on a number of occasions and provided my input to the FedNow service back in 2013. Per my blog last week the survey result from the Fed’s efforts found “emergency bill payment” as the top consumer use. Paying someone faster brings on risk. The Fed depends on banks to manage risk and price that risk. As a former banker running payments at 2 of the largest banks I have a view here.

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A2A, Fed Now and Real Time – Threat to V/MA? Nope.

Sorry for typos

My good friend Dave Birch wrote a piece in Forbes today on Account to Account transfer threat to V/MA. I wanted to provide an alternate view. This will likely be a multi part blog.. today I’m starting with the consumer and the merchant (from a US perspective). 

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Square in Crypto/DeFi

#1 Today DeFi and Crypto in Commerce (POS and eCom) are in need of a “core” that can manage either compliance and connections to existing financial services, or operate in critical mass with minimal interaction to banks (ex – custody, exchange, platform, consortium-diem).

From Bloomberg yesterday 16 July

https://www.bloomberg.com/news/articles/2021-07-15/square-building-new-bitcoin-inspired-financial-services-business

Why is this a great thing for Square and DeFi?

#1 Today DeFi and Crypto in Commerce (POS and eCom) are in need of a “core” that can manage either compliance and connections to existing financial services, or operate in critical mass with minimal interaction to banks (ex – custody, exchange, platform, consortium-diem).

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