The PAYTECH Book

Table of contents

1. Cover
2. Preface
3. About the Editors
4. Acknowledgements
5. 1 Payments Explained
   1. Payments are Getting Political Again
      1. Why Payments are Political
      2. Payments in the World’s Largest Economy
      3. Payments Across a World in Turmoil
      4. Payments and their Relevance in Society
      5. What this Means for the Future of Payments
      6. Payments Shaped for People, by People
      7. The Old Questions in Our New Digital World
      8. Acknowledgements
   2. Money: A History of Gods and Codes
      1. What is Money?
      2. From Barter to “Sacred” Money
      3. “Banker Gods” and Temples
      4. The Emergence of the Metallic Coin
      5. Sovereign Money
      6. Monetary Alchemy
      7. The Divinization of Code
   3. Payments Explained
      1. Introduction
      2. How do Payments Work?
      3. Where are Payments Going?
      4. Platforms for Payments
      5. Here Today, Gone Tomorrow
      6. What Could Go Wrong?
   4. From Barter to App – How Payments Have Changed
      1. The Early Days of Payment: From Cowry Shells to Coin Counterfeiters
      2. Payments Today: Electronic and Varied
      3. China: Showing the World How it’s Done
      4. The Future of Payment: Seamless – and Invisible
      5. What Does All this Mean for the Retail World?
   5. Do We Still Need to Pay?
      1. Payment Works
      2. Technology Today Enables Greater Purchases
      3. Responsibility Lies with the Industry
      4. Powerful Technology Empowers
      5. Technology, Payments and Trust
      6. Conclusion
   6. How ACH and Real-Time Payments Clearing and Settlement Works
      1. Introduction
      2. ACH Payments
      3. Settlement Risk
      4. Real-Time Payments
      5. Closing Issues/Recommendations
   7. Payments as a Service
      1. Conclusion
   8. The New Emerging Banks and Their Role in Payments
      1. Traditional Retail Banks
      2. So What is a Neo Bank?
      3. Post Neo Banks
      4. Neo Banks, Where to From Here?
      5. Where in the World?
      6. A Positive but Uncertain Future
   9. The Payments Race
      1. Highlight #5
      2. Highlight #4
      3. Highlight #3
      4. Highlight #2
      5. Highlight #1
   10. PayTech Regulation Trends
       1. 1. Nationalism
       2. 2. Compliant Innovation
       3. 3. Interoperability
       4. 4. Competition
       5. 5. Cybersecurity
       6. The Right Framework to Enable Innovation
   11. An Innovative Local Payments Method in an Ancient Land
       1. What Drives the Rise of Local Payment Methods?
       2. TROY: A Unique Local Payment Solution
       3. Understanding the Success of TROY
       4. Conclusion
6. 2 Payment System Infrastructures and Money Transfer Technologies
   1. The Convergence of Card Payments and Bank Payments
      1. Current Position
      2. Types of Payment Systems
      3. Market Drivers of Change
      4. Timescales
      5. Early Adopters
      6. Winners and Losers
      7. Role of Standards
      8. Conclusion
   2. Instant Payments: A New Deal for the Payments Market?
      1. Background
      2. An Institutional and Geopolitical Initiative
      3. A Strategic Issue for European Banks
      4. A Step Towards Modern Payments in a Global Market
   3. PIN on Mobile – A Pivotal Moment for Payments
      1. The Transforming Payments Landscape
      2. The Impact on Merchants
      3. New Technology for Tomorrow’s Consumers
      4. Isolation Can Save the Day
      5. Laying the Foundations for a Payments Revolution
      6. A Brighter Payments Future
   4. PayTech in the Cloud
      1. Cloud Security Best Practices
   5. The Rise of a Super-Correspondent Banking Network
      1. Tough Terrain for SME Lending
      2. The End of Banks?
      3. Beyond Lending
      4. Future Banking
      5. Conclusion
   6. Why Distinctions Within Mobile Wallets and Tokenization Matter
      1. Tokenization – The First Steps
      2. Mobile NFC Wallets
      3. Secure Element (SE) Tokenization
      4. Host-Card Emulation (HCE)
      5. What are the Differences?
      6. Conclusion
   7. The Future is Already Here; It is Just Not Evenly Distributed
      1. Introduction
      2. The Process of Exchanging Value
      3. Payment System Over DLT Transaction Flow
      4. Reasons DLT Technology Will Change Real-Time Payments
      5. Conclusion
   8. PSD2 Open Banking: The Challenges of Third-Party Provider Identity and Regulatory Checking
      1. Conclusion
   9. Taking PayTech to the Villages of India
      1. What Can be Done?
7. 3 Payments Regulation and Compliance
   1. How Payments Regulation and Compliance Can Create a Better Future
   2. Refining the Collective Responsibility for Compliance
      1. The Rise of the FinTech Revolution
      2. Compliance Challenges
      3. The Various Ways of Preventing Money Laundering
      4. Inexperience Exacerbates the Problem
      5. How to Handle AML and the Digital Revolution
      6. Setting the Standard
   3. Can Operational Agility Grow Payments in the New Online Platform Marketplaces?
      1. Issue 1 – Goods Rental on a Platform
      2. Issue 2 – Rationalizing Due Diligence for Cryptocurrency Exchanges
      3. Issue 3 – “Trust Us” Guarantees in a Marketplace
      4. Conclusion
   4. The Hidden Value of Greater Standardization for the EU-Wide FinTech Market
      1. The Journey from API to Open API and Open Banking
      2. The Characteristics of APIs
      3. Banking Industry Should Put a Premium on Openness
      4. Conclusion
   5. Is Europe a Good Example of Open Banking?
      1. Asia-Pacific Region
      2. Australia
      3. Hong Kong
      4. Conclusion: What Can Europe Learn?
      5. Europe Can Learn From Others
   6. Taking Back the Power: Regulations in the EU are Changing the Face of Banking
      1. What Do the Regulations Mean for Consumers?
      2. How Does This Change Banking?
      3. What About Security?
      4. Changing Consumer Expectations
      5. The Opportunity for Banks
   7. Achieving Control Effectiveness and Sustainable Compliance Using Nine Factors
      1. Factor 1: Control Environment
      2. Factor 2: Control Design
      3. Factor 3: Control Risk
      4. Factor 4: Control Robustness
      5. Factor 5: Control Resilience
      6. Factor 6: Control Lifecycle Management
      7. Factor 7: Performance Management
      8. Factor 8: Maturity Measurement
      9. Factor 9: Self-Assessment
   8. Money Laundering Laws, Technology and Keeping Up With Criminals
      1. Is Legislation Keeping Up With the New Age of Cybercrime?
      2. Into the Hands of the Criminals
      3. What Should Happen Now?
      4. Mindset Change
      5. Rethinking Compliance
      6. Conclusion
   9. Dynamic Regulation Readiness – Implementing the 5th Anti-Money Laundering Directive
      1. The 5th Anti-Money Laundering Directive
      2. Leveraging the Ultimate Beneficial Owner Register
      3. Tooling Up for Future Regulation
      4. Cognitive Technologies in Action
      5. The Application of Data Science
      6. Incumbents and Startups Face Different Challenges
      7. The Principle of Proportionality
   10. eKYC: The Next Mountain for e-Businesses to Climb
       1. The Difficult Nature of KYC
       2. The Rise in Fraudulent Activities
       3. The Crossroads Where eKYC and UX Meet
       4. Automation: The Way Forward
       5. Traditional Approaches are Not Enough
   11. AML Systems After Madoff: Ponzi-Identification Using “Complexity”
       1. What is a Ponzi Scheme?
       2. About Madoff
       3. The Sins of the Deposit
       4. Starting Assumptions for an AML System
       5. Failings of JPM’s AML
       6. The Aftermath
       7. Where PayTech Can Help: Anomaly Anti-Money Laundering Software (AAMLS)
       8. Applying Complexity Rather than Modelling or Machine Learning
       9. Conclusion
8. 4 Blockchain Regulation Around the World
   1. Understanding Cryptocurrencies, Blockchain Technology and Regulations
      1. On Blockchain Technology
      2. A Primer on Cryptocurrency
   2. Blockchain, Cryptocurrencies and How They Fit Within Current Payments Regulation
      1. What is a Payment Service?
      2. The Three Key Blockchain Payment Models Explained
      3. Navigating the Current Regulatory Framework
      4. Setting Up for the Future
   3. Blockchain and Beyond
      1. Getting Onboard the Regulation Bandwagon
      2. Addressing Our Fears
      3. Conclusion
   4. Will Central Banks Adopt the New World Economy of Cryptocurrencies?
      1. A Vision of Money
      2. Creating Options
      3. A New Money
      4. From Stranger to Friend
   5. The Case for a National Cryptocurrency
      1. Upward Direction of Travel
      2. Taxing Your Share
      3. Act Now
   6. Regulation and the Future of Blockchain: Which Approach Will Succeed?
      1. The USA’s Distrustful Approach
      2. Watchful and Slowly Moving Towards Regulation
      3. Welcoming Regulation
      4. Absent Regulation or Prohibition
      5. Conclusion
   7. Web 3.0 – The Internet of Value
      1. Getting Smart
      2. Developing the Next Generation
      3. Robotics on Blockchains
      4. Adopting Stability
   8. Blockchain – An Elixir for Anti-Money Laundering?
      1. Introduction
      2. Cryptocurrencies
      3. Blockchain
      4. Regulations
      5. Anti-Money Laundering
      6. Identity Management
   9. Facilitating Online Crypto-Payments Now and in the Future
      1. The Emergence of Cryptocurrency Payment Platforms
      2. Growth in Demand for Online Payments
      3. Current Trends and Payment Regulation
   10. A New Law for Derivatives Markets and the Use of Smart Contracts
       1. Regulation of the Financial Derivatives Market in the European Union
       2. Regulation of the Financial Derivatives Market in the USA
       3. Risks Created by Central Counterparties in the Financial Derivatives Market
       4. Smart Contracts
       5. Limitations of Smart Contracts
       6. Implementation of Financial Derivatives Smart Contracts Using Blockchain
   11. PayTech and Blockchain: Adjusting for Security and Risk
       1. Risk Estimates Rise Out of Proportion
       2. The Decentralized Nature of Blockchain is Also its “Achilles Heel”
       3. Cyber-Insurance Against Cyber-Attack
       4. Blockchain and the IoT
       5. The “Cognitive Blockchain” Perspective
       6. Letting Go – a Single Blockchain Economy
   12. Cryptocommodities: An Essential Element of Decentralized Payments
       1. Deployment
       2. Asset Initialization
       3. Asset Conversion
       4. Asset Redemption
       5. Conversion Steps
       6. Points of Exchange
       7. Points of Redemption
       8. Redemption Providers
       9. Redemption Administration
       10. Hypercollateralization
       11. Summary
9. 5 Payments in Practice
   1. The Perspective of a Passionate Payments CEO
      1. Change Seen from Inside a Payments Company
      2. Growth and Failure
      3. The Open Banking Secret Driving Change
      4. Changes to the Value Chain
      5. Payment Initiation Makes Consumers Into Winners
      6. Raising the Retail Game
      7. Online Innovators Setting the Offline Pace
      8. The Future is Invisible
      9. Sorting the Settlement Problem
      10. Looking East for the Network Effect
      11. Cranking up Crypto
      12. PayTech is the Future
   2. Plugging the Data Black Hole: How Mobile Self-Checkout Can Help Revive the High Street
      1. Challenging Questions for Retailers
      2. Stores are Not Delivering
      3. Using Data to Enhance Experiences
      4. Transforming the In-Store Experience
      5. Benefits Beyond Data
      6. Instant Gratification
      7. Saving the High Street
   3. How UnionPay Quick Pass is Beating Alipay and WeChat Pay in China
      1. From 10m to 120m Users
      2. Full Integration
      3. Fighting Strong Competition
      4. A Fully Integrated and Balanced Strategy
   4. How Payment Agility and Cash-for-Carbon Can Solve a Global Problem for Mankind
      1. PayTech Solutions for Carbon Markets
      2. The Missing Link in Carbon Markets: Payment Agility
      3. Multi-Year Horizons Require a New Solution
      4. The Benefits of a Payments Model for Carbon Pricing
      5. Cash for Carbon – A Look Into the (Near) Future
   5. Revolutionizing the Retail Industry Through Integrated Payments Systems
      1. FinTech and PayTech
      2. PayPal Paves the Way
      3. Widespread Adoption
      4. Keep Raising the Bar Across Retail
      5. From PayPal to Alipay
      6. The Revolution Ahead
   6. Asset Management and Payments in India – So Near and Yet So Far
      1. The Business Pitch to a Billion People
      2. The PayTech that Powers a Billion Dreams
      3. Innovations Riding on the NACH Stack
      4. Further Innovations Enabled by FinTechs
      5. Instant Investments and Redemptions
      6. The Pain of Paper, and of Regulatory Flip Flop
      7. It’s Not All Plain Sailing
   7. Exploiting the Value of Data Embedded in Payments Systems
      1. Capturing Insights About Offline Customers is Hard
      2. Profiling and Organizing Offline Shoppers
      3. How Many-Sided “Payments Platforms” Can Help
      4. The Intelligence-Enabled Network Effect
      5. How Many-Sided Payments Platforms Can Help Brands Capture Insights on Offline Customers
      6. Conclusion – Payments Platforms as the Google and Facebook of the Offline World
   8. Reinventing the Customer Experience by Focusing on the After-Payment Emotional Experience
      1. The After-Payment Emotional Experience
      2. Start the Right Way
      3. Customer Insights vs. Data
      4. Think After…Before
      5. Improving APEX Doesn’t Need to be Expensive
      6. It’s Time to Act
   9. How Open Banking and Payment Touchpoints Will Save Banks
      1. The Big Questions Facing Banks Today
      2. Making the Change
      3. The Role of Account Aggregators in Preventing the Commoditization of Banks
      4. Banks Must be Open to Open Banking
      5. Businesses Benefit Too
      6. Platform Banking for SMEs
      7. Seamless Multi-Banking Experiences for Large Corporates
      8. Big Banks are Embracing Open Banking Too
      9. Embracing Payments to Embrace Change
      10. Banks Will Use Open Banking to Remain First-Choice Providers – and Avoid Becoming Commodity Providers
   10. Why Personal Financial Management Will Be Embedded Into the Next Generation of Payments
       1. Payment is Increasingly Fading Into the Shopping Experience
       2. Invisible Payment in Retail
       3. Invisible Payment in Transportation
       4. Invisible Payment Solutions May Deprive Customers of Financial Control
       5. Existing PFM Solutions are Deficient
       6. “Embedded” PFM Solutions Empower Customers with Financial Control
   11. How Helping Microbusinesses Accept Digital Payments Could Transform Kenya’s Economy and Enhance Inclusion
       1. The Frontier Beyond Person-to-Person Payments
       2. But Kenyans Still Buy Most Things Using Cash
       3. The Opportunity for FinTechs and Kenya
       4. Building an Inclusive Payments Technology
       5. Ensuring Rapid Adoption
       6. Using the Internet to Sign Up Micro Merchants
       7. Ensuring Robust Revenue Growth from Micro Merchants
       8. Acquiring and Maintaining Quality Users
       9. Conclusion
   12. How Decentralization Can Create a Customer-Centric Ecosystem
       1. Beyond Current Technologies
       2. Consumer Lifestyles
       3. Consumer Roles
       4. An Interchangeable Wallet
       5. Taking the Long-Term View
10. 6 Blueprint for Change
    1. A Blueprint for Change
       1. Digitalization and the “Dash From Cash”
       2. How We Pay is Changing
       3. Cooperation as a Catalyst of Competition
       4. Money that Knows Us Better than We Know Ourselves
       5. Final Remarks
    2. Accelerating the Adoption of PayTech Innovations
       1. Introduction
       2. Incrementalism is Not an Option for Startups
       3. Consumers Don’t Have Time to be Guinea Pigs
       4. Trust is the Not-So-Secret Sauce
       5. The How-To Section
    3. How to Build a Successful PayTech Product
       1. Find the Problem
       2. Check Out Your Idea
       3. Scale the Business
       4. Takeaways
    4. The Future of Digital Payments Market Infrastructures
       1. Introduction
       2. The Rise of Digital Banking
       3. Emerging Payments Structures
       4. Dynamics of the Service Economy
       5. The Future
    5. It’s Money, Jim, But Not As We Know It
       1. Programmable Money
       2. Open Banking: The Dawn of a New Pay
       3. Two-Sided Ecosystem
       4. What are the Opportunities for Banks?
       5. Customer Centricity
       6. Bank-Grade Digital ID
       7. Self-Sovereign Identity
       8. Completing the Journey: Total Digitization
       9. Stable What?
       10. A New Digital Rail for Open Banking Transactions
       11. Conclusion
    6. Payments as Open Business Banking Enabler for the Gig Economy
       1. SME and Freelancer Banking Today
       2. Imagine…
       3. Relevance is the New “Black”
       4. Bank Account-ing for Freelancers
       5. The Bank as a Third-Party Provider
       6. Open Banking is Open for Business – Today!
    7. The Financial Arms Race: The Game With No Rules
       1. Fraud Landscape
       2. The Priorities
       3. How Criminals Exploit Systemic Weaknesses
       4. Data is the New Oil
       5. The Danger of Biometrics
       6. Rising Costs, Rising Risks
       7. Sophisticated Criminals – KYC Redefined
       8. Fighting the Forces of Fraud
       9. Blending Art and Science in Fraud Prevention
    8. How Network Paradigms Can Lead to New Payments Innovations
       1. Payment Platforms
       2. Chain Shape
       3. Tree Shape
       4. Mesh Network
       5. Conclusion
    9. It’s the Ecosystem, Stupid! Keeping Ahead in a Payments Ecosystem
       1. What is a Payments Ecosystem?
       2. The Challenge in UK Payments
       3. Change for the Better?
       4. A Bigger Ecosystem?
       5. Is the Future International?
    10. Mobile Money: Creating a Cash-Light Africa to Solve the Financial Inclusion Problem
        1. An Overview of Mobile Money in Africa
        2. Drivers Behind the Growth in Mobile Money Adoption
        3. From Money Transfers to Micro-Loans: A Phased Growth
        4. The Impact of Mobile Money
        5. Case Study: EcoCash Zimbabwe
        6. Helping to Solve the Financial Inclusion Problem
        7. Conclusion
    11. Back to the Future: A Miraculous Time-Trip Through the Future, Present and Past of Payments
        1. 2220 AD, Asteroid “3361 Orpheus”
        2. 2119 AD, Proxima Centauri
        3. 2049 AD, Helsingborg, Sweden
        4. 2039 AD, Palo Alto, CA
        5. 2029 AD, Shenzen, China
        6. 2020 AD, London, UK
        7. 1971 AD, Washington, D.C.
        8. 1295 AD, Venice, Italy
        9. 9000 BC, Damascus, Syria
        10. 100,000 BC, Neander Valley, Germany
    12. Fifteen Ways in Which Our Digital Future Will be Shaped by PayTech
        1. The Three Big Ideas From the EPA
        2. Another Dozen Digital Ideas
        3. Change is improving lives everywhere
11. List of Contributors
12. Index
13. End User License Agreement