Can technology clean the dirty side of payments business?
Payments could have been as simple as exchanging emails. I want to pay you in exchange of some service or goods, I know your 'payment address' (account number, mobile number, email or any other identity) and I send the payment. Payments could have been made free if it were that simple (the minimum operational costs could have been covered by revenue from transactional intelligence for targeted offers etc. - the way any email service works).
Unfortunately Payments have an ugly human side which is very costly - collecting debt from consumers and merchants who are bad actors. Yes, I am talking about loan collections and chargebacks. There will always be consumers who cannot or will not pay on time and there will be huge amount of effort (in mass scale) wasted to push them to move to a payment plan or ultimately waive it off as bad debt. Similarly there will be merchants who will not service the customers properly and payments companies will have to investigate and claim chargeback for their customers. All these cost huge resources for payments companies. On top of it we have other operational and compliance overheads such as Payments Fraud, Money Laundering etc. which are huge reputational risks as well.
Can the latest technologies help payment companies tackle these ugly issues and lower the cost? I think it surely can and will be the next opportunities. Few areas where we can see most traction in future are Tokenization, Predictive Analytics, Machine Learning, Big Data, Internet of Things (IoT) and Fog Computing etc. The way we assess Credit/AML risks today are very limited - in future these analytics technologies can help us link many unrelated incidents which can uncover many risks on a near-real-time basis. With IoT and Fog Computing we can have built in Intelligence in devices to reduce frauds and false claims. The opportunities are limitless...