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The Confusion in Payments

22 July 2015  |  2156 views  |  2

I usually tell new employees at Handpoint that it takes about six months to understand payments and that they shouldn't be overwhelmed by all the acronyms and abbreviations. That is a lie actually, as it takes forever to understand payments. In fact, I have not yet met a person who fully understands payments (down to the the nitty gritty details) - I certainly don’t after over a decade in the payments business (yes, I’m that thick). Every month I’m learning something new; from the current infrastructure, ecosystem as well as new solutions coming to market and I’m fascinated about it all (sad, I know).

When people pay with their credit or debit card (or their phone) they’re not particularly interested in what happens behind the scenes, and why should they be! People just want the process to be quick and end with “Accepted” instead of “Declined”. We, payment professionals, however are fascinated about the process behind it, and it is really amazing that one can pay for goods and services anywhere in the world and instantly pull out money in any currency from ATM. It might be an old system, but it sure works.

It’s been a hobby of mine to understand both the payment ecosystem as well as the technical process behind it, in details. I’ve been asking payment professionals from within all aspects of the ecosystem to explain it to me (and I meet a lot of people in the industry), but so far I haven’t come across a single person who can explain it to me in details. Yes, of course they know the highlights but not the full details from A to Z. Scary, isn’t it!

There is so much happening in #fintech and payments today but there is a lot of confusion and miscommunication about it all. We see start-ups fail (and many more will), as they don’t understand the technology, as well as billion dollar companies blunder tons of money because they don’t understand the ecosystem. And yet, in all of the mess, there is this hope that something big, something revolutionary will come out of it. Some even (wrongly) predict the end of banks. Whether a payments geek or not, that has to be interesting enough to pay attention to; better still, to make a bet and have a stake in the game.


Confusion in payments TagsMobile & onlinePayments

Comments: (2)

Matt Scott
Matt Scott - RenovITe Technologies Inc - London | 29 July, 2015, 16:51 I think one of the main issues is that the industry is a niché and not particularly well covered by academic texts. Christian Radu's book is a helpful start but needs supplementary texts/specifications to have a more complete picture. Then there also the local domestic and regional variances - such as the contrast between card and payment environments in the United Kingdom, Spain, Germany and Sweden.
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Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 30 July, 2015, 16:41

Oh, you haven't met me yet:) Jokes aside, I totally agree with you. The confusion is exacerbated in cross-border payments involving correspondent banks. After having been exposed to the payments industry for over a decade, I still don't get really why Bank A in Country A can't reach Bank C in Country C directly but has to go through not one but many Banks B1, B2,... in between and in many countries.

To some extent, I think the confusion is because the different entities involved in an end-to-end payment want to put a lid on top of what exactly they're doing even from the entity immediate upstream or downstream of themselves. In other words, at the risk of hinting at some kind of conspiracy, the industry takes the motto of "keeping the customer transparent" to the extreme!

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