By The Board, Interviews, Misc, Payments, Tech

Payments; Small World, Big Possibilities

How payments are driving never-before-seen levels of global innovation and connectivity

In the most recent feature from Fintech Finance News, the team speak to Phil McGriskin and our Corporate Director, Mauro Di Buono, about what have been the drivers for digitisation of the payments industry, including increasingly, insurance…..and what the future holds.

Read the full article here.

“From a B2B perspective, I think the fact that organisations want to do more business globally, and are embracing what we have seen with remote working and a now global workforce, has driven organisations to want to access different markets and jurisdictions.

At the same time, organisations want a seamless payment experience regardless of the country they are operating in or where their employees are based.

From a consumer perspective, we saw a rapid acceleration of digital trends in the last 12-to-24 months. Consumers had little choice but to embrace e-commerce as social distancing measures and lockdowns were limiting access to physical stores, so that has inevitably affected spending.

And regulation has also played a role, when you think of open banking and the adoption of the revised payments services directive (PSD2), which is making big waves in the UK and Europe, and, to some extent, in Latin America.

That has pushed the fintech and banking industry to try to deliver better and faster ways to make payments and create more financial inclusion.

The demand for instantaneous results goes beyond expectations of products or services, it also applies to how customers expect their payments to be handled. Everyone wants to make a payment and the money arrive at its destination right now, and everybody wants to receive a payment as soon as possible.

So today’s customers have expectations for, let’s say, a smooth payment process, and trying to create a more frictionless payment environment for your customer has become the key to making them happy.

They don’t want things to be complicated, they don’t want to jump through hoops in order to make a payment or access different systems; they want to do that as seamlessly as possible.

On the other side, it’s also important – and Vitesse is doing this – to adopt what I call a geolocal strategy, where you’re able to offer payment solutions in different markets or countries, based on what the requirements are in specific places. I think that is what business customers are demanding from a payment perspective.

Businesses are still recovering from the pandemic to a certain extent and there are other topics, such as Environmental, Social and Governance, and sustainability. But one theme coming through increasingly, recently, is access to the right talent and people within businesses.

Organisations need to start to look outside their borders to access the best resources to grow. Most of the time, those individuals sit outside of the country where they operate, and they need to ensure that they can smoothly hire and pay them.

So having, for example, access to a network of local domestic payment rails, such as the one Vitesse has, for paying them, is a huge advantage to enable them to grow their business globally, and also at the same time, ensure they pay them and any vendors in compliance within the local regulation and currency requirements.

We are also seeing companies are trying to innovate in the payroll space. By innovate, I mean that employees are demanding alternative ways of getting paid, which can be real-time payments, or pay-to-card, or on-demand wage, and treasurers need to find the right tools to deliver on these expectations and meet those needs, to be competitive in the market and, above all, retain those employees.

For those employees, it means they are sure to receive their salary on time and the full amount, or they can access their salary whenever they want, which has become a more and more sought-after way of receiving pay. In that way, they can better plan their finances.

They know they have flexibility around the way they get paid, and they can make more informed decisions. It’s all about making the employee experience the best possible, so that firms can retain their best talent.

Finally looking at embedded finance – it has the flexibility to be applied to any company or industry which has a transactional element to it. What’s brilliant about it is that financial and non-financial organisations can work together and offer consumers a bundled service, as a one-stop-shop for their spending.”

“Digitisation is what’s pulling the changes through, but the big underlying ground shift to make these changes possible was when technology providers were allowed to start playing in financial services, around PSD2.

The payment services directive and the e-money regulations, I think, were the biggest enabler of all the innovation that’s come through, because they’ve enabled businesses that are not banks, and do not have to offer lending and foreign exchange, to just focus on technology-as-a-service, which means that they can approach the problem in an entirely different, free-thinking way.

Those are the ones that have driven the change, and it was the change in regulation that allowed them to be able to operate in the money space, that made this happen.

We’re a Financial Conduct Authority (FCA)-regulated business so we’ve been through the wringer in terms of making sure our processes, people, approaches, etc, are all gold standard.

By using the banks and our FCA regulation, plus our global banking network, we’re able to provide our customers with a very flexible solution, which still gives them the strength of the banks but with a much more configurable treasury platform, to enable them to make payments globally, in the most efficient way possible, and not just limited to what the banks are doing but also involving things like Visa, Mastercard and other e-wallets, to give our customers and their customers absolute choice around how the money moves.

It’s about using a layer of technology and regulation, and treasury capability, on top of the big banks’ balance sheets, to make a much more effective payment service for our customers.

As we see more embedded finance technologies come through, Vitesse is using its payment platform, and its regulation, to help develop those solutions, giving some of the more legacy verticals payments and treasury access to these new-style channels.

We’re seeing some incredible technologies coming out; Anansi is a business that’s working on a parametric cover – cover that pays out automatically, based on a predefined event.

Their use case is around the fact that lots of people are sending parcels all around the world, using Shopify, Parcelforce, etc, so, to make this easier, they can just click a box when they buy their postage and the price of the insurance is related to the value of the parcel, and where they are sending it to in the world.

Then the whole thing, after that, is automated. They know exactly where the parcel is, because it’s with a courier service. If the parcel is delayed, or if it gets too hot or too cold, or is broken in transit, the courier reports that as part of its standard logistics processes. And that reporting is what businesses like Anansi take back, so that they know when a claim has happened, and they can make the payment back to the customer in a seamless fashion.

It’s a great experience for a customer to be able to pay, say £1, and know their parcel’s going to get there and, if it isn’t, somebody will automatically send the £15 or £20 they’ve lost back to them. We’ll see a lot more of that coming through on all sorts of different finance-related products.

Part of Vitesse’s aim is to provide our customers with as much payment choice and capability as possible.

Mastercard is a truly global brand, and it’s got many billions of cards that are able to receive funds across the Mastercard network, through the Mastercard Send service, so it’s logical that our global insurance customers offer Mastercard Send to their customers as a way of being paid instantly when an insurance claim occurs.

This is one of the multiple payment choices we’ve put out to our customers, but we are working very closely with Mastercard on making sure its Mastercard Send service is optimised for the insurance industry.

And by that I mean it isn’t just a case of making a payment from a pot of funds that somebody has lying around somewhere; in insurance the funds need to be in a secure environment, they need to be held in a CASS (Client Assets and Money)-type structure, in accordance with requirements of the industry from the Financial Conduct Authority and other regulatory bodies.

Vitesse, being a FCA-regulated business, is able to hold those funds on behalf of, and with the agents of, the insurers, to make these payments out within the right regulatory framework and keep everybody in line with global rules and regulations.

Mastercard already had a Send product, and what we’ve been doing with them is really helping them to optimise it, and then get it into a platform state that’s deliverable to the insurance industry in the most efficient way possible.”

Want to find out how the payments market is innovating insurance? Read more insights from Phil McGriskin in this recent article ‘How is the payments market innovating insurance?’

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