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This Week In Payments: Tracking The Contactless Shift, Going Global In The Cloud And Casing Crypto’s Mainstream Future

The momentum spurred by the pandemic has accelerated the connected economy. Volante CEO and Founder Vijay Oddiraju told Karen Webster during the latest This Week In Payments conversation that while the pandemic has been bad news, it has also opened up the door to innovation.

The world of payments is changing at light speed, as the pandemic has pushed consumers and corporations into new levels of digitization about ten years ahead of schedule. Digital innovations of every shape and size now all need to have been put into place yesterday.

The changes are also accelerating the connected economy. Volante CEO and Founder Vijay Oddiraju told Karen Webster during the latest This Week In Payments conversation that while the pandemic has been bad news, it has also opened up the door to building better digital ecosystems. In these new ecosystems cloud connections are making things possible for consumers and businesses to enter the digital-first economy. This genie, now out of the bottle, he noted, isn’t going back anytime soon. In fact, as this week’s latest cryptocurrency headlines make evident — it’s only getting faster.

“COVID is something that has unfortunately happened to humanity, but it has accelerated this whole digital transformation. And when it comes to businesses or corporates and today, no matter how much we want it or don’t want it — we are increasingly seeing how much we are all globally connected,” Oddiraju said — meaning that the advances we see in one place will rarely stay regional and will move more quickly to a global stage than ever.

The Inclusive Power Of Contactless Payments

In the U.S. talk about the spike in contactless payments preference and usage observable in the last half year has centered on what is immediately traceable back to COVID-19 and consumer safety concerns. People don’t want to touch public touchpads to key in a PIN or swipe a card so much these days — and contactless seems the cleaner safer way to pay at the point of sale (POS).

But step out of the developed world bubble of the U.S. and into an economy like India and things are different. On the subcontinent there are currently 190 million unbanked adults and the situation in regard to mobile contactless payments is a bit different. Mobile wallet and payment schemes, Oddiraju noted, aren’t merely offering a safe way to pay — they are offering up a way to pay at all in a digital environment.

“Anybody who carries a mobile can make a payment now and so much easier,” Oddiraju said. “The whole idea of demonetization is creating this fully digital transformation into payments and from that angle, I think, it has really helped in India.”

And it has created a variety of consumer choices, he noted, as the competition among firms to sing on merchants and consumers into this digitization rush has been growing. But bigger than just those payments, he said, is the way the cloud and broader connectivity has enabled this, with a host of financial services accessibility upgrades such as nearly 200 million consumers becoming less on the outside looking in due to the accessibility of banking services.

Once the cloud is in place, he noted, the shackles of physical infrastructural requirements begin to fall away. Firms aren’t trying to place, secure and manage data centers or find themselves worry about their ability to scale in a timely fashion.

“The cloud means firms can provide services from one location to any remote part of the world, very easily at a minimal cost and in a way that can be scaled,” he said.

That level of opportunity that unlocks, he said, is becoming incredibly apparent in the world of mobile payments because of how fast it is growing. As the volume of digital transactions is forecast to grow three-fold in the next five years, it’s a huge opportunity and an interesting space to be playing in, he said.

But it’s far from the only one.

Cross-Border Payments’ Instant Future

When we see it, we want it, Oddiraju said of the path of worldwide instant payments. In the U.S. and around the world in scores of peer-to-peer (P2P) payment applications — customers pressed a button on one end, while on the other funds are immediately available for use by the recipient. This means corporations want them, too, and want to be able to access them even when funds are moving cross-border. And banks, he noted, are starting to realize that they have to “quote modernize things” and are starting to figure out how to make that work. Because when demand becomes a unified call worldwide, there isn’t a lot of choice but to meet that demand.

“There is a lot of demand for real time receivables,” he said. “If it takes a week, no one is interested. These days physical checks, physical drafts and letters of credit — those are things, I think, that are gone or very soon to be. Those banks that are not investing in inclusion who are not doing the digital transformation to increase the speed of payments. I don’t think they will be able to catch up because it’s not just consumers, the demand is increasing quite a bit from corporate as well.”

Moreover, because of the advance in cloud infrastructure, he said, firms have a greater ability than ever to “experiment” with expansion via small project and product launches without having to commit to large-scale, high-cost build projects. If demand increases, they can scale up computing power as needed.

“So all this innovation along in a way when combined with the needs of cross-border, I think it’s a fabulous thing that happening in the world right now,” he said.

Crypto’s Big Future

Oddiraju also addressed PayPal. This week it captured a lot of headlines with the announcement that it is moving forward with plans to allow PayPal wallet holders to use them to buy, sell, trade, hold and spend bitcoin with the 26 million PayPal merchants worldwide.

Eye-catching, but on some level basically unsurprising, he noted, as crypto is growing up. Right now cryptocurrency’s greatest strength is also its greatest weakness — it’s not really backed by anyone or anything but the blockchain rails it rides on. What will make it interesting to watch over the next few years is how it evolves away from that — as central banks are exploring digital fiat currency as an option and considering rolling it out.

“This won’t have a place in the market where it is going to replace everything else,” Oddiraju said. “But at least in the next five years, it will find its own place. And there’ll be lots of uses for it.”

Particularly, he noted, in developing countries where it will help take a lot of cost-adding middle men out of the market. He believes the future of financial services is in accessibility and making it possible for anyone, anywhere to access their funds — and use them how they wish, exactly when they wish.

Crypto has many miles to go, but as the pace of payments innovation keep picking up, he noted, the road to that eventual destination is getting shorter by the day.

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