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Payment system revolution continues with free cross-border payments + plain normal

The payments revolution/evolution continues with new solutions and services ranging from the surprising to the very normal. The one consistent feature, in all these developments, is they raise important questions about the future of the payments industry including: which players will win? who loses? what does the payment transaction cover? 

Circle offers free cross-border payments

Payments services provider Circle is offering its customers in the US, UK and Europe the ability to send and receive money across borders with no fees and no mark-up on foreign exchange (FX) rates. The firm also said it is now offering "instant" transactions for users that send funds between those countries.

"Consumers will not have to pay fees or foreign exchange mark-ups on payments sent to or from the US, UK and more than a dozen European countries," Circle explained in a statement. "Payments can now be sent between US dollars, British pound sterling or Euros instantly and there are no fees at all and zero FX markup on exchange rates if sent using Circle."

Banking Technology report that:

  • “The firm (sort of) explains how it can make this free. It points to Spark, its open source project built on Ethereum for digital wallets. It can run on private and public Ethereum blockchains, while being designed for compatibility with other distributed ledger technologies and runtimes. It hasn’t released the open source code for Spark yet, but it is working with unnamed “consumer internet and consumer fintech companies” on implementing Spark at an unspecified date.
  • In a duet, Jeremy Allaire and Sean Neville, co-founders of Circle, say: “We don’t believe there is a revenue model for domestic or cross border consumer payments, and we are not trying to generate any revenue from those payments. Just as the internet entirely commoditised information sharing, data sharing and communications, we are on the cusp of that commoditisation happening in consumer payments.”

The upgrade comes months after Circle pivoted away from its bitcoin buying and selling services, though at the time the startup said it still planned to use blockchain behind the scenes.

Integrated payments

For decades many have argued that the payment is just one part of a business transaction. The transaction covers whole process. In an interview with PaymentEye, Carla Erlick, SVP Business Development at Paysafe, talked about integrated payments and the crucial role they play in supporting business growth

Carla Erlick explained that, “Integrated payments are the invisible force that underpin the one-to-many payments ecosystem; they allow Value Added Resellers (VARs), Independent Service Vendors (ISVs) and Software as a Service (SaaS) e-commerce platforms to provide a ‘one-stop-shop’ solution to their merchant clients. They do this by combining payment processing with other vital business tools – such as points of sale, Customer Relationship Management (CRM), accounting, scheduling, and marketing – within the confines of a single platform or application.” 

She believes that, “Integrated payments are going to be a hugely significant component for many payment processors – but probably not all. Some, like us, will choose to operate in this area and others will shy away due to the complex nature of the industry.”

The way payment service providers are covering the whole business transaction will have significant impact on payment systems development.

Amazon disrupting again

As well as moving into bricks and morter shops, Amazon have launched a new perk for Prime members that will give them cash back on purchases – even if they’re not paying for items using an Amazon cashback credit card. Through a new rewards program called Amazon Prime Reload, Prime members can receive 2 percent back on purchases when they first load funds into their Amazon Balance using a debit card attached to their bank’s checking account.

Sarah Perez at TechCrunch reports that, “Amazon Prime Reload is meant to encourage more people to sign up for Prime, the $99 per year membership program that includes free, 2-day shipping on millions of products, plus same-day shipping in select markets, along with a host of other features like access to Amazon’s Netflix-like service Prime Video, music streaming via Prime Music, free e-books and magazines through Prime Reading, Audible Channels, unlimited photo backup and storage via Prime Photos, Twitch Prime, early access to deals and much more.

Not only this, “Amazon Prime Reload has another advantage for the retailer, as well – it may encourage people to load large lump sums into their Amazon Balance, in order to ensure they never accidentally pay for an item through their debit or credit card directly, therefore missing out on the cash back option.”

How to use plain normal business cards

Commerical cards have been one of the mysteries of the payment systems industry: why haven’t they been more successful? The latest report on this topic by Celent’s Patricia Hines The Value in Payments: Forces Driving Commercial Card Adoption looks at how “Commercial card solutions help businesses to increase control over business expenditures and to manage cash flow more efficiently.” She examines three key questions:

Source & Copyright©2017 - Celent

As a critical tool in the payments mix, incorporating cards into an overall working capital and payments strategy ensures an integrated approach across payment types and digital channels. Further integration arises from detailed transaction reporting and analytics flowing into treasury, procurement, and other financial management systems. To optimise card programmes, companies need to involve stakeholders, actively manage and monitor expenditures, engage suppliers, and collaborate with banking partners.

Hines believes that:

  • “Cards-based payments can help corporate treasurers reduce procure-to-pay friction and maximize processing improvements,” and
  • “Banking partners can deliver a full suite of payment options across a firm’s geographic footprint, incorporating commercial cards into an overall working capital and payables strategy”.

CTMfile take: Payments are just one part of a business transaction. Why not make them free, even cross-border payments, if the fully integrated business transaction is profitable? We are now in the business transaction business, not the payment business. There is a role for business cards, even Amazon, the disrupter, still accept business cards, but for how long? Is there a long term future for business cards?

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