Wrestling with Priorities

Episode Summary

In this episode of Wrestling Payments, host Joe Casali engages with the intricate world of payment systems. He dives into the evolving landscape, highlighting the shift towards faster and more secure transactions. Joe sheds light on the technological advancements driving change, from blockchain to AI, emphasizing their impact on both consumers and financial institutions.

Primarily, this episode reports on the responses to our listeners responses of the areas of interest they would like to hear more about in 2024. It also includes a thank you for named respondents.
 

1. Faster Payments – Operational Considerations
2. Faster Payments – Strategic Considerations
3. AI and Fraud
4. Payments Modernization – Payment Choices

Joe concludes with insights into the future of payments, including the potential of FedNow and other real-time payment solutions. Casali's expert commentary provides listeners with a comprehensive understanding of the payment industry's current state and dynamic future, making this episode a must-listen for anyone interested in financial technology and innovation.

Key Insights

The Rise of Faster Payments and Operational Considerations

 The episode dives into the rapidly evolving landscape of faster payments, highlighting operational considerations that businesses face. With faster payments, questions around functionality, error handling, and unexplored details come to the forefront. The push for speed in transactions offers benefits but also introduces complexities in implementation and management. This insight underscores the need for financial institutions to adapt to new technologies while ensuring reliability and security in their operations.

Strategic Implications of AI and Fraud in Payment Systems

 AI's integration into payment systems marks a significant shift towards combating fraud more effectively. Joe explores how AI tools enhance fraud protection by analyzing patterns and identifying anomalies in transaction data. This technological advancement is not just about preventing unauthorized transactions; it's also about streamlining processes and improving operational efficiency. The episode emphasizes AI's role in shaping future payment security strategies, illustrating its potential to mitigate risks in an increasingly digital financial landscape.

Payment Evolution: From Barter to FedNow

 Tracing the history of payment systems from barter to the introduction of FedNow, the episode provides a comprehensive overview of how payment methods have evolved. It highlights the persistence of older payment systems alongside the adoption of new technologies. The focus on FedNow's launch and its adoption by financial institutions showcases the industry's movement towards instant payment solutions. This insight reflects on the diverse payment mix available today and the strategic decisions businesses must make to accommodate consumer preferences and technological advancements.

Transcript

NEACH - Wrestling Payments - Wrestling with Priorities - episode 2.2

[00:00:00] it's not a matter of being incremental by one payment choice. I think it's a whole new world of how do you determine what you're going to offer to your consers, what you're going to offer to your members, how they're going to process payments. ​

Hello and welcome to Wrestling Payments. I'm your host Joe Casali and today we're going to go over wrestling with priorities. And what that means is we're going to revisit a survey we put out at the end of last year [00:01:00] to look at what is hot, and what you want to hear more about in 2024. We had a great bunch of people respond.

And before we go any further, I do want to thank them for their contributions. I said, I would read your name on the air. And for most, I did get a name to read. I'm not going to read your company., please identify yourself in the, in the comments, if you'd like to people to know more about you or put in a LinkedIn tab, but I want to thank,Maria DiPietro.

Melissa Bryan, Lee Hemmings, Tiffany Costa, Rock Ballestad, Sandy McDonald, Stephen Dillon, Robert Vogts, Linda Carmichael, Roberto Campbell, Heather von Kriegenberg, Mark Dixon, and last but not least, Lynn Hurd. Thank you very much for [00:02:00] participating. Thank the other folks who, who, , submitted anonymously as well.

You helped informing the plans for next year. And as we go there, I just want to revisit with folks. We had a few general areas that we looked at for what do you want to hear about? And those areas consisted of faster payments, AI and fraud, some payment modernization topics. And finally, a look at regulation.

And what did we hear back? We heard back first, the nber one issue. That listeners wanted to hear about is faster payments in operational considerations. How does it work? What happens when something goes wrong? What are some of the details that, that maybe haven't been explained well enough that will be covered in 2024 AI and fraud.

AI has burst onto the network and it's, it's [00:03:00] a panacea of topics around AI, AI and fraud protection, AI and fraud, , AI in, in looking at your processes and procedures and how it can help mitigate, , different situations. We're going to be looking at AI and fraud. The third response that came back was again, faster payments, but this time it's a strategy.

So in addition to just operational everyday considerations for faster payments, we're going to be looking at strategic considerations. So what does that mean? Are you on a network? Are you on two networks? Did that require a payment hub? Have you never heard of a payment hub? All of these things are topics we're going to talk about as faster payments and specifically, , RTP.

And FedNow ramp up. I'm not sure if you've heard the news, but FedNow launched in July of last year [00:04:00] has gotten over 480 financial institutions to onboard. Not sure at what level each of them have onboarded on. , definitely, probably, definitely, probably. Probably not the right way to say that, but most likely all of them are going to be receiving FedNow credits.

But how many are going to be sending FedNow credits? And that's, that's one of the strategic considerations we'll be, , talking about. And finally, the, the topic that made our top four is payment monetization. Payment choices. Now, if you recall from our, we need your help episode, payment choices are, you know, back in the day there was barter, right?

We started barter. We started carrying around a big stone that was worth. You know, five sheep or whatever. And there was a barter, barter system set up and something about [00:05:00] payment systems is sometimes they don't go away. So, , barter still exists in, in the US I know, , it's not an official payment exchange, but it, it exists.

, then we turned a barter into cash where cash was a stored value of currency and certainly cash has not gone away. We've introduced checks, right? So checks were a big deal. checks are still, they are declining. There's a lot of decline on checks, , check usage, but they are, they did not go away. , the ACH was created 50 years ago to replace checks and, , that just continues to grow.

, the latest statistics that I think I might have an episode on later this year is that not only is it growing, And growing at the billions of transactions and trillions of dollar mark, but it's same day, ACH took a dramatic leap this year, and I think with the changing of that limit to a million dollars, it's [00:06:00] become a more popular method of sending out payments, same day, ACH, and then now that's when it gets sent out.

That's when it gets squirrelly, right? I'm not a, I'm not a card guy, right? But card entered the picture probably around 50 years ago as well. And card were, , department store cards that allowed you to, to buy things on credit. They've evolved. They've evolved to debit cards, ATM cards, , some faster payment systems use card as their rails.

So those have grown as well. And then we introduce. , what I'll call the apps. So we have Google Pay, Samsung Pay, , Venmo, PayPal, , Zelle. All of these apps provide lots of options. And, and finally we have the advent of the instant payment FedNow and RTP. RTP was established over five years ago. FedNow came out last July and, and is very [00:07:00] popular by financial institutions right now.

So the question is, What's your payment mix? How, how do you allow or not allow or limit or, or incent your conser base, your member base to use which type of payment? Some of the payments are processed by financial institutions. , this podcast is sponsored by NEACH, the Payment Association. Our, most of our members are financial institutions, but the Venmos of the world live off, Off a payment system.

Venmo has Venmo is a product of PayPal. Venmo allows folks to store payments off. I don't know. I don't know what chain, what word to use off chain. , if we were talking about, , Digital currency, which I, I didn't mention, but it is, , being used for exchange of value. Venmo lives off, off the payment network.

[00:08:00] It's, it's not necessarily, your Venmo account isn't held in your financial institution necessarily. Your Venmo account gives you access to a debit product, a card product that allows Venmo transactions to take place, , at different companies and stores and, and, , Dunkin Donuts allows you to buy Dunkin Donuts on Venmo, a Venmo card.

So I find it, it's not, it's not a matter of, , being incremental by one payment choice. I think it's a whole new world of how do you determine what you're going to offer to your consers, what you're going to offer to your members, how they're going to process. Payments. How can you help them? Is there any risks in these Venmos and Zells?

Is there not any risk? Are they the same as cash? So all of those questions we're going to address at varying degrees. But that is the [00:09:00] episode for today. I thank you for your comments. It's not, definitely not too late. To respond, if you want it to respond, you could respond by, , commenting on this, , episode or sending, , an email to our podcast, casting website.

I will tell you, we, you may see that the studio is different. And I say the studio is different is because we are between homes. We've moved out of our existing lease. At the end of January, and they're still building our new podcast studio, along with the rest of our office. So we are in a, in a, , conference room in the building where our new office is.

They were kind enough to give us access to this conference room. I don't think the background is too bad, bad for those folks looking. On, , YouTube, but, , we are out of, out of home for a little while. If you want to record an episode at your location, give me a call. We can, we can, we're, we're portable now.

I can move the [00:10:00] studio to your location and we can have an episode on a topic of your choosing. , thank you very much for participating today. , it is a short episode and thank you.