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The only globally-crowdsourced book on the future of payments (“PayTech”), offering comprehensive understanding of a rapidly evolving industry at the centre of global commerce

The movement of money between individuals, organisations and governments is crucial to the world economy. The payments industry has undergone immense transformation ­– new regulations, technologies and consumer demands have prompted significant changes to the tools, products and use cases in payments, as well as presented lucrative opportunities for entrepreneurs and FinTech professionals. As payment technologies become faster and more efficient, companies and investors are increasingly favouring PayTech innovation due to better customer experience, increased revenues and manageable risks. The PAYTECH Book brings together a diverse collection of industry experts to provide entrepreneurs, financial services professionals and investors with the answers they need to capitalise on the highly profitable PayTech market.

Written by leaders in the global FinTech and payment sectors, this informative volume explains key industry developments and presents valuable first-hand insights from prominent industry practitioners. Contributors include advisors and consultants to the payments and financial services industry, entrepreneurs and business owners utilising cutting-edge PayTech capabilities, academic researchers exploring the social-political-economic impact of PayTech and many others. Detailed chapters cover essential topics such as cybersecurity, regulation and compliance, wholesale payments and how payment systems currently work and how PayTech can improve them. This book:

  • Defines PayTech and identifies its key players
  • Discusses how PayTech can transform developed markets and accelerate growth in emerging economies
  • Describes how PayTech fits into the larger FinTech ecosystem
  • Explores the future of PayTech and its potential as an agent of social change and financial inclusion
  • Provides diverse perspectives on investment in PayTech and what consolidation and expansion will look like

The PAYTECH Book: The Payment Technology Handbook for Investors, Entrepreneurs and FinTech Visionaries is an indispensable source of information for FinTech investors and entrepreneurs, managers from payments companies and financial services firms and executives responsible for payments in government, corporations, public sector organisations, retailers and users of payments.

Table of Contents

  1. Cover
  2. Preface
  3. About the Editors
  4. Acknowledgements
  5. 1 Payments Explained
    1. Payments are Getting Political Again
    2. Why Payments are Political
    3. Payments in the World’s Largest Economy
    4. Payments Across a World in Turmoil
    5. Payments and their Relevance in Society
    6. What this Means for the Future of Payments
    7. Payments Shaped for People, by People
    8. The Old Questions in Our New Digital World
    9. Acknowledgements
    10. Money: A History of Gods and Codes
    11. What is Money?
    12. From Barter to “Sacred” Money
    13. “Banker Gods” and Temples
    14. The Emergence of the Metallic Coin
    15. Sovereign Money
    16. Monetary Alchemy
    17. The Divinization of Code
    18. Payments Explained
    19. Introduction
    20. How do Payments Work?
    21. Where are Payments Going?
    22. Platforms for Payments
    23. Here Today, Gone Tomorrow
    24. What Could Go Wrong?
    25. From Barter to App – How Payments Have Changed
    26. The Early Days of Payment: From Cowry Shells to Coin Counterfeiters
    27. Payments Today: Electronic and Varied
    28. China: Showing the World How it’s Done
    29. The Future of Payment: Seamless – and Invisible
    30. What Does All this Mean for the Retail World?
    31. Do We Still Need to Pay?
    32. Payment Works
    33. Technology Today Enables Greater Purchases
    34. Responsibility Lies with the Industry
    35. Powerful Technology Empowers
    36. Technology, Payments and Trust
    37. Conclusion
    38. How ACH and Real-Time Payments Clearing and Settlement Works
    39. Introduction
    40. ACH Payments
    41. Settlement Risk
    42. Real-Time Payments
    43. Closing Issues/Recommendations
    44. Payments as a Service
    45. Conclusion
    46. The New Emerging Banks and Their Role in Payments
    47. Traditional Retail Banks
    48. So What is a Neo Bank?
    49. Post Neo Banks
    50. Neo Banks, Where to From Here?
    51. Where in the World?
    52. A Positive but Uncertain Future
    53. The Payments Race
    54. Highlight #5
    55. Highlight #4
    56. Highlight #3
    57. Highlight #2
    58. Highlight #1
    59. PayTech Regulation Trends
    60. 1. Nationalism
    61. 2. Compliant Innovation
    62. 3. Interoperability
    63. 4. Competition
    64. 5. Cybersecurity
    65. The Right Framework to Enable Innovation
    66. An Innovative Local Payments Method in an Ancient Land
    67. What Drives the Rise of Local Payment Methods?
    68. TROY: A Unique Local Payment Solution
    69. Understanding the Success of TROY
    70. Conclusion
  6. 2 Payment System Infrastructures and Money Transfer Technologies
    1. The Convergence of Card Payments and Bank Payments
    2. Current Position
    3. Types of Payment Systems
    4. Market Drivers of Change
    5. Timescales
    6. Early Adopters
    7. Winners and Losers
    8. Role of Standards
    9. Conclusion
    10. Instant Payments: A New Deal for the Payments Market?
    11. Background
    12. An Institutional and Geopolitical Initiative
    13. A Strategic Issue for European Banks
    14. A Step Towards Modern Payments in a Global Market
    15. PIN on Mobile – A Pivotal Moment for Payments
    16. The Transforming Payments Landscape
    17. The Impact on Merchants
    18. New Technology for Tomorrow’s Consumers
    19. Isolation Can Save the Day
    20. Laying the Foundations for a Payments Revolution
    21. A Brighter Payments Future
    22. PayTech in the Cloud
    23. Cloud Security Best Practices
    24. The Rise of a Super-Correspondent Banking Network
    25. Tough Terrain for SME Lending
    26. The End of Banks?
    27. Beyond Lending
    28. Future Banking
    29. Conclusion
    30. Why Distinctions Within Mobile Wallets and Tokenization Matter
    31. Tokenization – The First Steps
    32. Mobile NFC Wallets
    33. Secure Element (SE) Tokenization
    34. Host-Card Emulation (HCE)
    35. What are the Differences?
    36. Conclusion
    37. The Future is Already Here; It is Just Not Evenly Distributed
    38. Introduction
    39. The Process of Exchanging Value
    40. Payment System Over DLT Transaction Flow
    41. Reasons DLT Technology Will Change Real-Time Payments
    42. Conclusion
    43. PSD2 Open Banking: The Challenges of Third-Party Provider Identity and Regulatory Checking
    44. Conclusion
    45. Taking PayTech to the Villages of India
    46. 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
    3. The Rise of the FinTech Revolution
    4. Compliance Challenges
    5. The Various Ways of Preventing Money Laundering
    6. Inexperience Exacerbates the Problem
    7. How to Handle AML and the Digital Revolution
    8. Setting the Standard
    9. Can Operational Agility Grow Payments in the New Online Platform Marketplaces?
    10. Issue 1 – Goods Rental on a Platform
    11. Issue 2 – Rationalizing Due Diligence for Cryptocurrency Exchanges
    12. Issue 3 – “Trust Us” Guarantees in a Marketplace
    13. Conclusion
    14. The Hidden Value of Greater Standardization for the EU-Wide FinTech Market
    15. The Journey from API to Open API and Open Banking
    16. The Characteristics of APIs
    17. Banking Industry Should Put a Premium on Openness
    18. Conclusion
    19. Is Europe a Good Example of Open Banking?
    20. Asia-Pacific Region
    21. Australia
    22. Hong Kong
    23. Conclusion: What Can Europe Learn?
    24. Europe Can Learn From Others
    25. Taking Back the Power: Regulations in the EU are Changing the Face of Banking
    26. What Do the Regulations Mean for Consumers?
    27. How Does This Change Banking?
    28. What About Security?
    29. Changing Consumer Expectations
    30. The Opportunity for Banks
    31. Achieving Control Effectiveness and Sustainable Compliance Using Nine Factors
    32. Factor 1: Control Environment
    33. Factor 2: Control Design
    34. Factor 3: Control Risk
    35. Factor 4: Control Robustness
    36. Factor 5: Control Resilience
    37. Factor 6: Control Lifecycle Management
    38. Factor 7: Performance Management
    39. Factor 8: Maturity Measurement
    40. Factor 9: Self-Assessment
    41. Money Laundering Laws, Technology and Keeping Up With Criminals
    42. Is Legislation Keeping Up With the New Age of Cybercrime?
    43. Into the Hands of the Criminals
    44. What Should Happen Now?
    45. Mindset Change
    46. Rethinking Compliance
    47. Conclusion
    48. Dynamic Regulation Readiness – Implementing the 5th Anti-Money Laundering Directive
    49. The 5th Anti-Money Laundering Directive
    50. Leveraging the Ultimate Beneficial Owner Register
    51. Tooling Up for Future Regulation
    52. Cognitive Technologies in Action
    53. The Application of Data Science
    54. Incumbents and Startups Face Different Challenges
    55. The Principle of Proportionality
    56. eKYC: The Next Mountain for e-Businesses to Climb
    57. The Difficult Nature of KYC
    58. The Rise in Fraudulent Activities
    59. The Crossroads Where eKYC and UX Meet
    60. Automation: The Way Forward
    61. Traditional Approaches are Not Enough
    62. AML Systems After Madoff: Ponzi-Identification Using “Complexity”
    63. What is a Ponzi Scheme?
    64. About Madoff
    65. The Sins of the Deposit
    66. Starting Assumptions for an AML System
    67. Failings of JPM’s AML
    68. The Aftermath
    69. Where PayTech Can Help: Anomaly Anti-Money Laundering Software (AAMLS)
    70. Applying Complexity Rather than Modelling or Machine Learning
    71. Conclusion
  8. 4 Blockchain Regulation Around the World
    1. Understanding Cryptocurrencies, Blockchain Technology and Regulations
    2. On Blockchain Technology
    3. A Primer on Cryptocurrency
    4. Blockchain, Cryptocurrencies and How They Fit Within Current Payments Regulation
    5. What is a Payment Service?
    6. The Three Key Blockchain Payment Models Explained
    7. Navigating the Current Regulatory Framework
    8. Setting Up for the Future
    9. Blockchain and Beyond
    10. Getting Onboard the Regulation Bandwagon
    11. Addressing Our Fears
    12. Conclusion
    13. Will Central Banks Adopt the New World Economy of Cryptocurrencies?
    14. A Vision of Money
    15. Creating Options
    16. A New Money
    17. From Stranger to Friend
    18. The Case for a National Cryptocurrency
    19. Upward Direction of Travel
    20. Taxing Your Share
    21. Act Now
    22. Regulation and the Future of Blockchain: Which Approach Will Succeed?
    23. The USA’s Distrustful Approach
    24. Watchful and Slowly Moving Towards Regulation
    25. Welcoming Regulation
    26. Absent Regulation or Prohibition
    27. Conclusion
    28. Web 3.0 – The Internet of Value
    29. Getting Smart
    30. Developing the Next Generation
    31. Robotics on Blockchains
    32. Adopting Stability
    33. Blockchain – An Elixir for Anti-Money Laundering?
    34. Introduction
    35. Cryptocurrencies
    36. Blockchain
    37. Regulations
    38. Anti-Money Laundering
    39. Identity Management
    40. Facilitating Online Crypto-Payments Now and in the Future
    41. The Emergence of Cryptocurrency Payment Platforms
    42. Growth in Demand for Online Payments
    43. Current Trends and Payment Regulation
    44. A New Law for Derivatives Markets and the Use of Smart Contracts
    45. Regulation of the Financial Derivatives Market in the European Union
    46. Regulation of the Financial Derivatives Market in the USA
    47. Risks Created by Central Counterparties in the Financial Derivatives Market
    48. Smart Contracts
    49. Limitations of Smart Contracts
    50. Implementation of Financial Derivatives Smart Contracts Using Blockchain
    51. PayTech and Blockchain: Adjusting for Security and Risk
    52. Risk Estimates Rise Out of Proportion
    53. The Decentralized Nature of Blockchain is Also its “Achilles Heel”
    54. Cyber-Insurance Against Cyber-Attack
    55. Blockchain and the IoT
    56. The “Cognitive Blockchain” Perspective
    57. Letting Go – a Single Blockchain Economy
    58. Cryptocommodities: An Essential Element of Decentralized Payments
    59. Deployment
    60. Asset Initialization
    61. Asset Conversion
    62. Asset Redemption
    63. Conversion Steps
    64. Points of Exchange
    65. Points of Redemption
    66. Redemption Providers
    67. Redemption Administration
    68. Hypercollateralization
    69. Summary
  9. 5 Payments in Practice
    1. The Perspective of a Passionate Payments CEO
    2. Change Seen from Inside a Payments Company
    3. Growth and Failure
    4. The Open Banking Secret Driving Change
    5. Changes to the Value Chain
    6. Payment Initiation Makes Consumers Into Winners
    7. Raising the Retail Game
    8. Online Innovators Setting the Offline Pace
    9. The Future is Invisible
    10. Sorting the Settlement Problem
    11. Looking East for the Network Effect
    12. Cranking up Crypto
    13. PayTech is the Future
    14. Plugging the Data Black Hole: How Mobile Self-Checkout Can Help Revive the High Street
    15. Challenging Questions for Retailers
    16. Stores are Not Delivering
    17. Using Data to Enhance Experiences
    18. Transforming the In-Store Experience
    19. Benefits Beyond Data
    20. Instant Gratification
    21. Saving the High Street
    22. How UnionPay Quick Pass is Beating Alipay and WeChat Pay in China
    23. From 10m to 120m Users
    24. Full Integration
    25. Fighting Strong Competition
    26. A Fully Integrated and Balanced Strategy
    27. How Payment Agility and Cash-for-Carbon Can Solve a Global Problem for Mankind
    28. PayTech Solutions for Carbon Markets
    29. The Missing Link in Carbon Markets: Payment Agility
    30. Multi-Year Horizons Require a New Solution
    31. The Benefits of a Payments Model for Carbon Pricing
    32. Cash for Carbon – A Look Into the (Near) Future
    33. Revolutionizing the Retail Industry Through Integrated Payments Systems
    34. FinTech and PayTech
    35. PayPal Paves the Way
    36. Widespread Adoption
    37. Keep Raising the Bar Across Retail
    38. From PayPal to Alipay
    39. The Revolution Ahead
    40. Asset Management and Payments in India – So Near and Yet So Far
    41. The Business Pitch to a Billion People
    42. The PayTech that Powers a Billion Dreams
    43. Innovations Riding on the NACH Stack
    44. Further Innovations Enabled by FinTechs
    45. Instant Investments and Redemptions
    46. The Pain of Paper, and of Regulatory Flip Flop
    47. It’s Not All Plain Sailing
    48. Exploiting the Value of Data Embedded in Payments Systems
    49. Capturing Insights About Offline Customers is Hard
    50. Profiling and Organizing Offline Shoppers
    51. How Many-Sided “Payments Platforms” Can Help
    52. The Intelligence-Enabled Network Effect
    53. How Many-Sided Payments Platforms Can Help Brands Capture Insights on Offline Customers
    54. Conclusion – Payments Platforms as the Google and Facebook of the Offline World
    55. Reinventing the Customer Experience by Focusing on the After-Payment Emotional Experience
    56. The After-Payment Emotional Experience
    57. Start the Right Way
    58. Customer Insights vs. Data
    59. Think After…Before
    60. Improving APEX Doesn’t Need to be Expensive
    61. It’s Time to Act
    62. How Open Banking and Payment Touchpoints Will Save Banks
    63. The Big Questions Facing Banks Today
    64. Making the Change
    65. The Role of Account Aggregators in Preventing the Commoditization of Banks
    66. Banks Must be Open to Open Banking
    67. Businesses Benefit Too
    68. Platform Banking for SMEs
    69. Seamless Multi-Banking Experiences for Large Corporates
    70. Big Banks are Embracing Open Banking Too
    71. Embracing Payments to Embrace Change
    72. Banks Will Use Open Banking to Remain First-Choice Providers – and Avoid Becoming Commodity Providers
    73. Why Personal Financial Management Will Be Embedded Into the Next Generation of Payments
    74. Payment is Increasingly Fading Into the Shopping Experience
    75. Invisible Payment in Retail
    76. Invisible Payment in Transportation
    77. Invisible Payment Solutions May Deprive Customers of Financial Control
    78. Existing PFM Solutions are Deficient
    79. “Embedded” PFM Solutions Empower Customers with Financial Control
    80. How Helping Microbusinesses Accept Digital Payments Could Transform Kenya’s Economy and Enhance Inclusion
    81. The Frontier Beyond Person-to-Person Payments
    82. But Kenyans Still Buy Most Things Using Cash
    83. The Opportunity for FinTechs and Kenya
    84. Building an Inclusive Payments Technology
    85. Ensuring Rapid Adoption
    86. Using the Internet to Sign Up Micro Merchants
    87. Ensuring Robust Revenue Growth from Micro Merchants
    88. Acquiring and Maintaining Quality Users
    89. Conclusion
    90. How Decentralization Can Create a Customer-Centric Ecosystem
    91. Beyond Current Technologies
    92. Consumer Lifestyles
    93. Consumer Roles
    94. An Interchangeable Wallet
    95. Taking the Long-Term View
  10. 6 Blueprint for Change
    1. A Blueprint for Change
    2. Digitalization and the “Dash From Cash”
    3. How We Pay is Changing
    4. Cooperation as a Catalyst of Competition
    5. Money that Knows Us Better than We Know Ourselves
    6. Final Remarks
    7. Accelerating the Adoption of PayTech Innovations
    8. Introduction
    9. Incrementalism is Not an Option for Startups
    10. Consumers Don’t Have Time to be Guinea Pigs
    11. Trust is the Not-So-Secret Sauce
    12. The How-To Section
    13. How to Build a Successful PayTech Product
    14. Find the Problem
    15. Check Out Your Idea
    16. Scale the Business
    17. Takeaways
    18. The Future of Digital Payments Market Infrastructures
    19. Introduction
    20. The Rise of Digital Banking
    21. Emerging Payments Structures
    22. Dynamics of the Service Economy
    23. The Future
    24. It’s Money, Jim, But Not As We Know It
    25. Programmable Money
    26. Open Banking: The Dawn of a New Pay
    27. Two-Sided Ecosystem
    28. What are the Opportunities for Banks?
    29. Customer Centricity
    30. Bank-Grade Digital ID
    31. Self-Sovereign Identity
    32. Completing the Journey: Total Digitization
    33. Stable What?
    34. A New Digital Rail for Open Banking Transactions
    35. Conclusion
    36. Payments as Open Business Banking Enabler for the Gig Economy
    37. SME and Freelancer Banking Today
    38. Imagine…
    39. Relevance is the New “Black”
    40. Bank Account-ing for Freelancers
    41. The Bank as a Third-Party Provider
    42. Open Banking is Open for Business – Today!
    43. The Financial Arms Race: The Game With No Rules
    44. Fraud Landscape
    45. The Priorities
    46. How Criminals Exploit Systemic Weaknesses
    47. Data is the New Oil
    48. The Danger of Biometrics
    49. Rising Costs, Rising Risks
    50. Sophisticated Criminals – KYC Redefined
    51. Fighting the Forces of Fraud
    52. Blending Art and Science in Fraud Prevention
    53. How Network Paradigms Can Lead to New Payments Innovations
    54. Payment Platforms
    55. Chain Shape
    56. Tree Shape
    57. Mesh Network
    58. Conclusion
    59. It’s the Ecosystem, Stupid! Keeping Ahead in a Payments Ecosystem
    60. What is a Payments Ecosystem?
    61. The Challenge in UK Payments
    62. Change for the Better?
    63. A Bigger Ecosystem?
    64. Is the Future International?
    65. Mobile Money: Creating a Cash-Light Africa to Solve the Financial Inclusion Problem
    66. An Overview of Mobile Money in Africa
    67. Drivers Behind the Growth in Mobile Money Adoption
    68. From Money Transfers to Micro-Loans: A Phased Growth
    69. The Impact of Mobile Money
    70. Case Study: EcoCash Zimbabwe
    71. Helping to Solve the Financial Inclusion Problem
    72. Conclusion
    73. Back to the Future: A Miraculous Time-Trip Through the Future, Present and Past of Payments
    74. 2220 AD, Asteroid “3361 Orpheus”
    75. 2119 AD, Proxima Centauri
    76. 2049 AD, Helsingborg, Sweden
    77. 2039 AD, Palo Alto, CA
    78. 2029 AD, Shenzen, China
    79. 2020 AD, London, UK
    80. 1971 AD, Washington, D.C.
    81. 1295 AD, Venice, Italy
    82. 9000 BC, Damascus, Syria
    83. 100,000 BC, Neander Valley, Germany
    84. Fifteen Ways in Which Our Digital Future Will be Shaped by PayTech
    85. The Three Big Ideas From the EPA
    86. Another Dozen Digital Ideas
    87. Change is improving lives everywhere
  11. List of Contributors
  12. Index
  13. End User License Agreement
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