What will the next era of payments look like?

What will the next era of payments look like?

It’s quite incredible that the turn of the millennium was 15 years ago which seems so long ago and yet just yesterday. In the Payments industry changes are happening at a pace like never before, it rapidly attracts new players and the industry size grows exponentially year on year, and now Payments is Sexy and “The space to be”; exciting times.

We believe that 2014 contained one event that unleashed a new era in payments, and no it was NOT Apple Pay. It happened at the beginning of the year and was a collision of two macro evolutionary paths unfolding; firstly the world is on a clear path of being “awash with money” (see Bain & Co. whitepaper which in simple terms states after the 2008 financial crisis there is a growing mass surplus of money to invest, as supply of available funds continually outstrips demand of investment opportunities that satisfy criteria). Secondly, a critical mass of Banks and Financial Services Organisations in 2014 reached a tipping point and decisions were made to finance the much needed and overdue major rejuvenation across their incumbent and legacy businesses (or face potentially devastating consequences in the next few years). The result of this event culminated in PayX observing numerous Bank programme budgets of $300m-$1billion being signed off, all focused at operational budgets for rejuvenating/rebuilding their payments business.

In January 2014 the tide turned and positive growth momentum built with new spending, slowly but steadily. In 2015 we predict the tide will continue along these lines as those mega operational programmes mobilise into fully rolling juggernauts. We see the next stage, and already have seen enough signs of it, as one of an increasingly stressed industry due to the ability to source and deliver, both at products and services levels. Quite simply demand for delivery capabilities is and will skyrocket; all good news for those of us in the delivery side of business. We predict it will be this increasing stress over the next couple of years that will force the seeking out and success of new ways to achieve desired results. We would love to think that innovation would just create a far better mousetrap but over the last 5 years of payments innovation plenty has come through but nothing has emerged a clear winner. Now the banks are one by one, worldwide, signing off the financing for all hands to radically manoeuvre their payments businesses and we feel it is this momentum will force the new era. If you focus for a moment on the existing supply side in terms of appropriate products and services to build the worlds’ new payments businesses then you realise the challenges are material (just not an ability to scale traditional solutions) and so that gives good indication that the new era of payments will not be formed through evolutionary growth but more radical directions with brave decisions. Once again the smart usage “quality” will win out the availability of “quantity” of masses for the most successful ventures going forward.

What will the next era of payments look like? That’s the billion dollar question and unfortunately not one we will present the answer to; we do however believe in two tip of the iceberg indicators which we saw emerge and gain strength last year. The two indicators are the world of APIs in driving new business (not technology driven), and especially powerful when combined with the second indicator of “Payments will be absorbed by Commerce”. People get up in the morning thinking of what they need to do that day such as obtain products or services; i.e. Commerce, they do not get up in the morning thinking “I want to go out today to make a Payment”. We believe payments will be absorbed into smarter commerce, and APIs enable smarter commerce. These two areas we are ramping up our focus on with our customers in 2015 in helping implement roadmaps to success.

2014 was a stunning year for PayX with strong growth in recurring revenue. We topped over 110 customers covering 6 of the 7 continents (still can’t get Antarctica!). All 4 of our lines of business grew substantially; Technology System Integration, Managed Services, Business Management Consulting, and our Market Analyst & Independent Reports services (PaymentsWorld). Highlights included running RFI/RFP processes choosing new software totalling over $10m, successfully running Managed Services groups saving customers millions in operation costs, helped a banking group choose a substantial JV partner, advised several Investment Banks and Private Equity companies on the payments market, rescued troubled projects, and delivering on- time on-budget when competition stated it could not be done.

To all of you who we worked with in 2014 we sincerely thank you for that privilege and look forward to working with you closer this year; that is to both our customers and our delivery partners and associates. To those of you we did not work with last year we invite you in 2015 to experience the value we deliver, we assure you that you will not be disappointed.

Have a fantastic 2015.

From everyone in the teams at PayX and PaymentsWorld


  • By Paul Love

    Great article Adrian, and thanks you for sharing such very encouraging research at the start of a new year.

    You are right to highlight the potential delivery issues for such a huge backlog of projects. Sticking with the traditional model of delivering core software with a huge development and customisation project is simply not sustainable. Innovation is also required in the way we implement and support such projects.

    The rapid pace of new product development means that many FIs are now faced with a widening gap between off-the-shelf solutions and their requirements, and unless they think differently they will never close it. I echo your call to focus on quality, but would add that speed to market is now also a vital factor.

    2015 looks to be another exciting year!

  • By P K Sengupta

    Good article – but “awash with money” is due to the inaction of the FED in the USA and the quivering Europeans. Could there be another subprime bomb impending?

  • By Justin

    Payments do seem to be approaching a sea change. I have been following Gartner and they are big on the concept of a Payment Framework which will facilitate the build out of a Payment Service Hub. It would seem that this hub should incorporate what\’s currently working well while allowing new and innovative ways of handling payments. Sort of an old world/new world combination. What do you think? Also I\’m not sure I follow the second iceberg tip of payments absorbed in Commerce – I\’m not sure I ever woke up thinking \”I\’ll make a payment\” so how is this different today? Finally I\’d appreciate any thoughts you have regarding micro-payments who and how they will be funded?

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