Yves Mersch, a member of the Executive Board of the European Central Bank, spoke recently at the joint European Central Bank/Suomen Pankki Conference in Helsinki. His speech included some very compelling points about innovation, trust and regulation in retail payments. One of the central themes of his speech was how online content digitalization has not only disrupted creative media industries like music and publishing, but such digitalization is now banging on the door of the payments industry as well.
He emphasized how user expectations are bringing sweeping and fundamental changes to how transactions are conducted in real life and online. He noted that:
What I think is safe to say is that user expectations have undoubtedly changed due to the digitalization of our lives at home and at work. At the ECB, we receive many inquiries and comments from individuals and companies across Europe about retail payments. We are frequently asked why, in this age of real-time communication, e-payments take longer than e-mails. Users expect retail payments to be like other digital content: easy, secure, not obstructed by national borders – and instantaneous.
Mr. Mersch also pointed out that while so many online users have come to expect speedy or even real-time payments, many others still rely on traditional payment methods. Therefore, older methods, including cash, shouldn’t be discarded so quickly. He stated that he thinks “it is illusory to expect that cash or “traditional” cashless payment instruments will totally disappear within the next five to ten years because of digitalization. The cashless society, as appealing as it may sound, is probably just as elusive as the much vaunted paperless office.”
The key is to recognize that the times are indeed changing and to find a way to harness these changes to benefit the entire payments industry. The idea of “instant payments” at the speed of instant messaging is no longer hypothetical—the question remains how to implement them with proper regulations and standards across Europe and the world. The major stakeholders in the industry—including merchants, PSPs, acquirers and regulators—must decide together out how to effectively meet changing consumer expectations.
It all comes down to providing as much payment choice as possible to both consumers and merchants. Providing that choice on a unified online platform is an essential goal for Credorax and one that we will be discussing more in the coming weeks. Stay tuned!
We encourage our readers to keep an eye on the hashtag #credoraxunify next week for more discussion on this topic.