The PayCommerce Network consists of a banking consortium of over 100 banks transacting in more than 80 countries. PayCommerce’s network members include banks, financial institutions, global corporates and alternate channel providers.
Bobsguide spoke to Abdul Naushad, Founder and Executive Chairman of PayCommerce on the future of cross-border payments and why regtech is a trend to watch in 2017.
What is your role at PayCommerce?
I’m the founder of PayCommerce. The company was formed in 2007, we’re a cross-border payments network that enables account-to-account credits and debits between more than 80 countries worldwide. Most networks only process payments in one direction, our network processes in dual directions.
We processed over 300 million transactions on our network worth over $400bn in 2016. The majority of our customers are banks, seven of the top 25 banks in the world use our services, including Citi and Bank of the China. We’ve recently introduced the instant payments scheme over our entire network.
What gap in the market did you spot to prompt you to launch PayCommerce?
Since the company was created in 2007, the market has of course changed, and companies set up back then have evolved since 2007 in terms of the business model and the concept. We launched with the concept matching with the network, which was initially launched as a domestic network just in the US. As we started building our business we noticed that our customers were driving us towards cross-border payments.
That’s when we found our way from the original idea of domestic payments to creating a cross-border network. It has of course evolved since we started, but the idea of cross-border payments came in 2009, and now we’ve built a system where we connect the leading financial services industry on our network.
In terms of a gap in the market, there are still a lot of problems today, even with cross-border networks. You learn this over time with any industry you’re working in: For the cross-border business, there are basic issues around cost, speed and transparency of the transaction. This goes hand in hand with where the market is heading. We want to address these pain points.
Why did you launch the faster payments scheme? How fast is fast enough in cross-border payments?
These days consumers expect everything to be taken care of instantly due to the rise of social media, technology, and messaging in today’s society. Payments is lagging behind. It’s been 40 years where there hasn’t been anything done in the payments space to improve on what was once founded and created as the foundation of payments in the 1970s – that’s why we wanted to incorporate faster payments.
When we thought about the idea, we brainstormed how to build on top of our domestic systems so that payments could be much faster. We built on that domestic payments concept – the network, the technology – aiming to make payments more real-time because there are a lot of issues with cross-border payments. This is because it faces the risk of foreign exchange fluctuations and the velocity of trade, and is all dependable on how fast payments can go between borders. That’s a really good business case for us to focus on. The faster the payments can go, the better.
PayCommerce recently expanded to EMEA, what was the motivation behind expanding to a new geography?
The American market is our base, we then also heavily expanded into Europe. I think the infrastructure in the Middle East and Africa is being developed very aggressively, and we certainly think this is the right time to be involved in helping some countries fill their gaps in domestic payments and instant payments.
Because our technology enables these payments, our business is mostly focused on cross-border. That’s the premise of us focusing on the Middle East and Africa. We’ve also been expanding in Asia for several years, and continue to do so because we think there are a lot more cross-border transactions coming in and out of that region – mostly in countries such as China and India, as well as emerging markets.
What are the different payment trends in each region?
The general trend of faster payments and making payments instant will be something we’ll see more of in 2017. Globally, there’s supposed to be initiatives in 18 countries worldwide for instant and faster payments. That includes the US and UK. There’s an opportunity for an instant scheme. This trend we’re seeing is certainly going into Europe and the America’s, but also the Asia Pacific.
Other trends we’re seeing geographically is the increase of interest in regtech. It’s gaining traction because of new demands and new models, and regulatory aspects are becoming more challenging. Traditional models of regulatory compliance are hard to implement in the faster payments networks. There needs to be an innovative technology that can do the cleaning in milliseconds – if you want to make an instant payment happen, there needs to be quick screening capabilities, algorithms, predictive models, and a lot of technology behind it that allows it to come together. Regulatory technology is certainly gearing up to catch up with the faster payments and instant payments schemes that are coming out, and are already present in some countries.
The other trend I’m seeing is a lot of payment networks or technologies, whether it’s regtech or payments, starting to offer APIs. There’s an increase in API-driven models and easy access for services that can provide interoperability between technologies and solutions that are already in the market. Predictive analytics is becoming very critical in the payments world, regulatory services as well. These are the key trends I’m finding as I talk to banks worldwide.
Are there any trends that you're watching closely?
There are certainly a lot of AI-based technologies that are gaining momentum. Analytics and algorithms are definitely the main ones. The analytics data can be used for patterned learning, and to create actions from the data without having a human intervention in the picture. There are lot of applications for AI in the fintech world, including payments and regulatory screening, I’m closely watching how that’s getting involved in the payments space.
Instant payments will become more common in the next five to ten years and that’s going to be seen as the norm. We’re already seeing that come into the picture already. We’re certainly pioneering in that area by offering a worldwide solution for cross-border for instant payments, and that’s primarily our focus for the next few years.