Discover more from Payments Innovation
Deconstructing Payments for 2021 [Dec '20 edition]
Acquisitions & IPOs
As I write this essay on the last day of 2020, I’m hellishly intrigued to realize it’s already the end of the most historic year of this decade. Crash and Burn and then Resurrection - companies that were best suited for the market and nimble enough to pivot and run with the times came out stronger, whereas entities on the wrong side of the pandemic underwent layoffs, struggles and financial troubles.
As travel bans and new strains of the virus continue to erode sentiments of wellbeing and revival, many of us are looking tentatively to the new year - will it be a harbinger of successes or herald much greater atrocities? Will we completely change the narratives in our personal and professional lives or continue to play passive and lull in the comfort of our relative existence?
Coming back to the month of December, a number of consolidations interested me, along with a few big bang IPOs -
Salesforce acquired Slack
The slick startup from Vancouver, Canada finally got nabbed by Salesforce for a cool $35B. Wonder what internal struggles they went through to take this M&A decision.
Montreal's Element AI to be bought by U.S. company ServiceNow
Another Canadian startup Element AI that provides AI solutions to enterprises is going south (just figuratively) to a Californian company.
Another BNPL consolidation; once again a Canadian company is being swept off its feet by an American enterprise.
Intuit + Credit Karma
A personal finance company has been acquired by the financial platform, Intuit.
The companies will provide consumers with access to a personal financial assistant, which will find financial products to help consumers increase savings, pay debts, and access funds quickly.
The new integrated platform will offer high-yield savings and checking accounts to consumers.
It will help maximise their tax refund, provide access to financial advice, actionable insights, tools, and live experts, to ultimately build their wealth.
Visa & Crypto
Visa has been on a spree to get ahead in the crypto game -
Visa will connect its global payments network with USDC (US dollar stablecoin) developed by Circle Internet Financial on the ethereum blockchain.
Circle working with Visa to help select Visa credit card issuers start integrating the USDC software into their platforms and send and receive USDC payments.
Visa will issue a credit card that lets businesses send and receive USDC payments directly from any business using the card.
Rewards in Crypto
Cryptocurrency startup BlockFi has announced the launch of its bitcoin rewards credit card in the first quarter of 2021. Through the card, users will receive a 1.5% cashback for every transaction made through the card, which will then be converted to bitcoin and placed into a BlockFi account in a regular monthly cycle.
Health passports were already in the works, but a version of the same may soon become a reality with World Health Organization (WHO) looking at prospects of deploying e-vaccination certificates like those it is developing with Estonia.
Blackberry + AWS on Intelligent Vehicle Data Platform
BlackBerry is all set to launch its intelligent vehicle data platform, IVY, to help automakers understand and utilize vehicle sensor data.
BlackBerry will use some of AWS' cloud computing services, including Internet of Things and machine-learning systems, for some of the platform's features.
Digital Taxes for Canadians
Canadian federal government’s decision to impose taxes on digital giants like Netflix and Amazon will lead to price increases for the end consumers.
Bull run for Crypto & CBDCs
Deputy governor of the Bank of Canada is claiming a soon-ish launch of Canada’s CBDC.
Cryptocurrency indexes coming to S&P Dow Jones in 2021
PayPal CEO has a bullish outlook on cryptocurrencies
Standard Chartered CEO bullish on digital currencies - “inevitable”
Ethereum fund to debut on the TSX
Holding and using digital yuan is as simple as tapping your phone
letting individuals send money to each other by just touching their smartphones together
which can be used even without an internet connection
make sending electronic money feel like having physical cash change hands.
Russian digital ruble on the way to becoming a reality
warned that digital ruble would destroy banks' business models.
digital ruble will transfer a significant part of the traditional banking business to the central bank.
digital ruble should be issued and stored exclusively by the central bank. It is the only way to guarantee its security regardless of what happens to the banking system.
digital ruble will make settlements and payments more reliable and faster. The regulator considers creating special wallets to pay with digital rubles offline. Thus, companies and people working in remote places without access to the Internet will be able to pay with the new coin.
Can banking be interoperable?
It seems ICICI is trying to do just that with its iMobile Pay app :
the app enables customers to pay to any Unified Payments Interface (UPI) ID or merchants, make bill payments and do online recharges.
The app is available to customers of all banks.
It enables QR scanning of any payments app, allows money transfers to any UPI ID, bank account, and self, for free.
SGFinDex will enable Singaporeans to consolidate their financial data held with banks and government agencies to enable better financial planning.
The new centrally managed online consent system is built on Singapore’s National Digital Identity, SingPass.
Going forward, it will allow the people to access information on their insurance policies and stock holdings.
entered the public market and plans to use its IPO proceeds to up its game in smaller local markets such as suburbs, where it's largely outperformed competition from rivals such as UberEats, Postmates and Grubhub.
Square has brought DoorDash onto its on-demand delivery platform for Square online sellers, who can harness a network of Dashers as a fulfillment choice.
Amid a lacklustre travel year, declining demand and revenues, Airbnb went public this year just hours after Doordash almost doubling its listing price in its debut trading session.
Wartimes vs. PeaceTimes
Ben Horowitz in his book, the Hard Thing about Hard Things, writes about the mentalities of CEOs during wartimes vs. peacetimes.
In peacetimes, a leader would care about the culture, job satisfaction and general happiness of her employees. Decisions might be consensus driven or at the most adhere to a sound disagree and commit protocol.
However in wartimes, when the company is weathering stiff competition or swaying under unrelenting market forces, customer churn and steep revenue dips, a leader is in the throes of flight or fight response. Mostly the only option available for her is disaster recovery, salvaging the business and dictating ruthless hard decisions, without mulling over employee satisfaction or cultural integrity.
This year has been wartime for an overwhelming majority of company leaders. I’m sure there’d be deeply entrenched lessons from various industry stalwarts - whether it’s Airbnb’s emphatic downsizing or Airlines and Flight aggregators pivoting to food delivery & unified lifestyle products or even Uber abandoning its self-driving efforts.
The world looks one way in peacetime but very different when you must fight for your life every day. In times of peace, one has time to care about things like appropriateness, long term cultural consequences, and people’s feelings. In times of war, killing the enemy and getting the troops safely home is all that counts. I was at war and I needed a wartime general. I needed Mark Cranney.
- The Hard Thing about Hard Things
So who was your Mark Cranney? Which person, product or pivot dictated the survival of your business?
I'll end with a few trends I envision getting consolidated into firm offerings in the new year.
Future of Payments -
B2B Payments - automating RFPs (Request for Proposals), bulk discounts, contracts, recurring payments, transaction fees, LOC (line of credit) with 30 to 60 day terms, international payments and more; B2B payments are complex, but what innovation doesn’t anticipate a host of challenges? On top of this, real time payments would be a game changer for enterprises, either through a decentralized architecture or through the use of crypto lightning networks.
Digital currency for the citizens, unbanked and underbanked - with each country issuing its own stable-coin, and technology platforms on the verge of launching their own crypto, we’d be living in a world where international transactions & remittances shall get easier in terms of cost and efficiency. It’s be “frictionless” and “contactless”, and digital currencies shall provide an inclusive and accessible mode of payment for the unbanked/underbanked population. It’d facilitate increased oversight by regulatory authorities when combined with an all-encompassing digital identity infrastructure for citizens. And it’d hold a light to the futuristic IOT and M2M (machine to machine) payments to enable truly secure synergistic experiences for the end user.
Embedded finance & Open Banking - each technology company would want to own or lease some portion of the finance stack. BAAS (banking as a service) will enable this by providing neat modular components as a plug and play service. Compliance as a service, Credit adjudication as a service, KYC as a service and more - maybe we’d even see larger incumbent banks provide branch as a service? Open Banking with its inter-operable APIs would provide a data dimension into the mix to create holistic customer profiles and bring out last-mile financial innovation for citizens.
So that’s it folks. Happy Holidays & lets be open for anything outlandish coming our way in 2021, control the narrative & proactively create a plot twist!