The great digital shift may be upon us, but the money is struggling to move.
Drew Edwards, CEO of Ingo Money, says solving the problem of “money mobility” will be key for providers in 2022 and beyond.
Right now we are in the technological equivalent of the banking days of yesteryear, where individuals held accounts at various institutions and transferred money by getting money from, say, their BofA ATMs and by bringing it to the Citi counter to deposit funds there.
“Now we have a phone full of accounts,” Edwards told Karen Webster of PYMNTS. There are accounts for sports betting, PayPal, banking, and even crypto. Oh, and there are the paper checks that always arrive in mailboxes, of course.
And, as Edwards noted, it “doesn’t make sense” to have five different accounts hosted in five different locations, unless you can freely transfer your money there and instantly get out of it.
“It almost becomes comical,” he said.
The rise of peer-to-peer (P2P) payments and instant payments as well – among the “biggest hits” of the past year – will undoubtedly become table stakes for these applications.
Transferring money between accounts, he said, will be the next big thing in 2022.
The ideal framework for P2P is to have choices and to separate how we send money from how it is received. Consumers should get funds instantly, but should be able to choose whether the transaction goes to a bank account, PayPal, or Square Cash.
Regarding the aforementioned mobile wallets: we need to change the way these wallets are used in trading a bit. Put simply, using them on the physical terminal, leveraged for non-fungible tokens (NFTs), has not taken off as some would have assumed.
But we’re heading, Edwards said, to an experience where the mobile wallet becomes a de facto consumer-driven point of sale (POS).
It’s true that consumers want a contactless experience, Edwards said, but they use their cards, hosted in mobile wallets, and not necessarily the (hardware) phone itself to complete transactions.
As Edwards explained out of personal preference, “I use my Apple Wallet wherever I can – and this money comes from my Apple Card… because I’m an Apple guy fully engrossed in the Apple ecosystem. ” The overriding considerations for its transactions, and for consumers in general, are ease of use, acceptance, and incentives (Apple’s cashback offers are competitive, he said).
The time is approaching, he said, for a reinvention of the checkout experience, where merchants, mobile wallets and issuers work in tandem to prevent consumers from lining up or heading to terminals for wave their phone.
“They are going to have to remove the point of sale connection process [for me to use a wallet at checkout]”he said, removing the frustrations of double-clicking and touching phones.” If they added biometrics [so I could pay with PayPal easily at the POS], I could get on that wagon, ”he said, as the additional friction associated with authentication would also be removed.
Also read: Same Day ACH Too Slow For Consumers Because Instant Payments Rewrite The Rules
This lack of friction to leverage the wallet itself as a personal point of sale will disrupt the payment experience, Edwards said. Simply put, consumers want to be able to shop at different locations in the store and to have whatever has accumulated in the cart counted, counted, and ready to buy. He pointed out that Amazon and Apple’s forays into cashier-less shopping have helped provide a roadmap for this disruption. And Uber, he said, helped make payments invisible.
“If we can find a way to make it all go away… well, then everyone’s going,” he said.
Ecosystems can also be designed by including the “big thing” of 2021.
Buy Now, Pay Later (BNPL), where, as PYMNTS noted, 29 million consumers have used a BNPL option in the past 12 months at least once.
Edwards said the BNPL space, at least for now, is largely a “rapidly evolving FinTech space,” where pure-plays dominate and banks have yet to gain traction – and could. do not get there.
The biggest banks, he said, have focused their efforts, in large part, on traditional card-based products (including credit cards), but are likely to “end up buying their niche” to do so. breakthroughs in BNPL.
BNPL, he said, “has certainly been creative,” but takes inspiration from retail and tech giants like Apple, where one could (and still can) buy a iPhone to $ 999 and divide that transaction into 24 months of equal payments.
As Edwards noted, the conventional wisdom (and his own initial thoughts) might be that BNPL could lead to overspending – the same hypothetical buy, say $ 400 that is unaffordable all at once … may not be. more digestible in a few months (and then the consumer also buys something else, which starts to lead to a tightening of liquidity).
However, BNPL has proven, he said, that there is a middle ground between using credit and spending only available, immediately available money – where $ 400 may seem expensive, but $ 20 per month seems manageable. .
“BNPL has obviously struck a positive nerve with certain consumer groups,” he said, “and I would have misjudged it.” BNPL’s value is underlined by the options and flexibility it offers to consumers.
Along the way, the green space facing BNPL offers new players the possibility of opening new accounts, linking new ways of paying to mobile wallets to transform credit vehicles into full-fledged ecosystems, linked to applications that can be integrated with any merchant. environment.
Of course, merchants and FinTechs can use underwriting and spending data to help craft other offerings, further drawing consumers into ecosystems.
High time for real time
More consumers and businesses are aware of faster payments, especially instant payments, than ever before, Edwards said. And they’re willing to pay for speed: A joint study by Ingo and PYMNTS found that a third of consumers would pay fees to get instant cash payments. And small businesses would prefer to be paid instantly for their interactions with vendors, especially for ad hoc transactions.
Read also: 33% of consumers willing to pay for instant payments
From a consumer perspective, he said, the attitude is: give me my money now. And the enthusiasm transcends any use case – it’s not just about raising funds for an emergency.
We are in the third round of adopting instant payments, he said, driven by the tailwind of P2P, which in turn will help foster the smooth flow of money between accounts. There is so much money changing hands in the economy, between businesses and consumers, between businesses and consumers (ie.
Read more: New study: instant disbursements, an instant winner with consumers
“There are still 20 billion checks in circulation,” Edwards said, “and once consumers have had a taste of instant payments, that’s when they will hit the tipping point.” The big companies driving the reduction in those checks will need to retool their systems and processes to make real-time payments (as he pointed out to Webster, there’s real time, then there’s time. perceived real, and many companies just aren’t there yet).
Getting ready for the Super App
“It all comes down to the super app,” said Edwards, where it’s all in one place again, and we’re moving away from adding a new payment app through what appears to be every two months.
Over the next few years, he said, the unbundling and decentralization of everything we do financially must come back together.
“It’s a painful process trying to keep track of usernames and passwords,” he said. PYMNTS research found that two-thirds of consumers want to benefit from the simplification of a single ecosystem.
“We’re going to see a whole new paradigm, or layer, of application rules and application authentication,” he said. “And faster payments and the mobility of money will be in the middle of it all.”