January 14, 2019

The Global Payments Ecosystem

Evolution of Payments

To know how payments is going to evolve in the next decade, we must take a step back and observe how the transition in payments happened in the past, globally.

It took the ecosystem 40 years to evolve chip based plastic cards, while credit cards were introduced in early 1950s, microprocessor-based cards came into the picture only in 1990s.

Since 1994, when EMV (Europay- Mastercard-Visa) standards were created, the payment ecosystem has seen some drastic evolution — few notable mentions here are Google’s Check-out (for online purchases), Speed pass (Exxon Mobil’s contactless payments in the pump) and NFC’s (Near field Communication) adoption as a technology.

In 2007, when the first digital wallet was rolled out, the online infrastructure for payments was already getting strengthened. In 2011, when Starbucks initiated mobile payments in their offline stores and launched it nationwide in the US, offline payments have become a norm. In stores today, we see the growth of QR code-based payments across developing economies. However, today’s challenge in payments is not just on the possibilities of building a robust infrastructure, but to ensure adoption in the consumer base.

The Basic Criteria That Drives Adoption

Adoption of a technology in payments will be a reality only when three criteria are met, I call it the E-C-U –

1. The experience of using it should be more intrusive than past modes of payments (be it plastic or paper)

2. The shift in the behaviour and cost for the stakeholders (merchant, retailer, online services, customer) should not demand a drastic change.

3. The technology should transcend to use cases apart from payments — which fall into a customer’s day to day life activities

How Will Payments be Different in the Future?

Financial Institutions and Regulators

From the financial perspective, payments must be standardized and pre-emptively detect fraud.

This is where we can see a distributed ledger to be standardised, backed by technologies like block-chain, and build an infrastructure which is inter-operable.

Also, from a regulator perspective the challenge is to build a standard which ensures a fool-proof fraud detection, at the same time encourage multiple new technologies and workflow to be inducted.


Users can be broadly divided into consumers who adopt new payment technologies and merchants/brands/acquiring business who use the technology for their day to day functioning.

This is where we see the major inferences. The users will demand a technology which ensures payment as a default understanding when the commodity is consumedand service is used.

The process of payment must be seamless and invisible, in the coming decade, without un-stabilising the ecosystem’s primary asks — like security and standardization.

ToneTag: A Perspective

This is where a solution like ToneTag, builds a strong candidature in future payments landscape.

Payments over sound covers the basic criteria for E-C-U mentioned earlier.

Basic observations in first world economies is strong interest in digital payments but very low adoption. This is where E factor or the Experience factor is the driving force. For example — if tomorrow I go for breakfast, my act of finishing the meal should ensure the bill is being paid — can we build this experience with NFC?

Observation in other world economies — While technology like NFC is cost centric, the U factor or the Use cases are only on payments today, so the cost is not justified. Can we build seamlessness in QR?

Can we make NFC non-hardware dependent?

A product having a global appeal like ToneTag, is the need of the hour in the payments landscape because we cannot wait for another 40 yearslike we did for credit card with chips, with the present technological advancement.

Food for thought?

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