For decades, payments systems in the US barely changed. Suddenly, innovations such as FedNow, real-time payments and blockchain are shaking up the legacy infrastructure. Scott Ernenwein, Currencycloud’s Strategic Partnerships Manager, North America spoke to Astra co-founder and CEO Gil Akos about what these developments mean for payments providers, and why the need for Fintechs to have a robust payments platform is greater than ever.
People have been saying for years that soon every company is going to be a Fintech company. Yet Fintechs are still spending over a year building their core infrastructure. We live in an age where Google finishes our sentences - it really shouldn't be so arduous for a company to find the tech solutions it needs to achieve its goals.
Today there are huge opportunities for tech to make payments more efficient. We are seeing infrastructure providers starting to digitize payment functions, making it easier for Fintechs to move money from A to B. They provide a scalable solution using APIs to make payments instant and seamless. This means Fintechs don’t have to invest both time and money in hiring engineers. Instead, they can focus on creating a great product and doing what they do best.
People expect payments to be as instant as everything else in their lives. However, the underlying infrastructure of the US and international banking system is complex. Technology is helping to simplify this complexity for businesses. For example, software as a service (SaaS) is enabling companies to take advantage of budgeting and sales forecasting capabilities. Tech is making payments less complicated for businesses, who now don’t have to rely on banks for all their processing - providing value and reassurance to both payer and payee.
“The underlying infrastructure of the US and international banking system is anything but easy to use and instant. It’s cool to see people that are conquering the issue of making the payments experience instant, even if the underlying legacy infrastructure is complicated.” Scott Ernenwein, Strategic Partnerships Manager, Currencycloud, North America
Even though the US’ Automated Clearing House (ACH) is innovating with FedNow to enable real time 24/7 payments, innovations in tech are still needed to make these payments functional. Increasingly there’s not just one product and one solution that uses one payment type. The best technologies now route your funds, sometimes across multiple payment rails, giving companies choice and convenience over how they pay.
Even as a new payment rail like ACH’s FedNow or blockchain becomes more widely adopted for new use cases, or to support faster settlement for existing use cases, the laws aren’t going to change that fast. The laws and compliance requirements are still there and have to be in place regardless of the payment route. The ideal technology that enables all these fantastic payment systems still has to have compliance, regulatory and operational features and aspects to it. The best way to solve for this is to be vertically integrated, where technology provides the automated tools for developers to handle these complexities.
“If you are building good technology it is the thing that is doing the work while you sleep. If APIs are built with strong infrastructure behind the scenes, it means that any developer can do that same thing, and your tech can run 24/7, 365 and you are set up for the long term.” Gil Akos co-founer and CEO, Astra
Whether it’s government-led initiatives like the real time payments system Unified Payments Interface (UPI) happening globally, or international-focused opportunities with stable coins, it’s good for a Fintech to ask what is the outcome that is trying to be achieved, and then break down the payment route from whom to whom, and where to where.
“It’s exciting to think about a digital currency future, whether that’s with RTP or blockchain-enabled. But the ultimate incarnation of Astra is an internal layer for your money that is a tech-agnostic layer, and is inclusive of every payment type regardless of what the rails are.”
To hear the full conversation about how technology is transforming the US payments landscape - please click here to listen.