Fintech Insider Podcast by 11:FS
00:08:27 · Jeremy Balkin
[00:08:27] S4: I think you have to look at the way particularly The US payments system is structured first and foremost. I think rules and rails were designed and built that were fit for purpose twenty, thirty, forty, fifty years ago. I think that's sort of one structural piece to this problem. I think the other is historically merchants and consumers have probably accepted that refunds just have to be terrible and not realize that there could be a better way. And I think, again, part of that is a function of the way payments work today. I think also just consider the fact that we live in an instant gratification digital economy today. So again, when the rules were written, the rails were designed, were built for a set of circumstances and market conditions that were not like we have today. There are tons of structural impediments, but that doesn't mean it has to be that way. And in fact, there's no reason it means it has to be that way. And in fact, I just think refunds has always been a place where people have accepted. This is a place where money goes to die for a merchant. And we actually think it can become an intelligent acquisition channel for merchants and an alternative refund rail needed to be built. And that's really the value proposition of TodayPay in its first instance. And that's what's driving us to be the change Because when you look into the way that the world was designed, it does not have to be this way. It just took someone to say, you know what, enough is enough, let's go fix it.
00:09:57 · Benjamin Ensor
[00:09:57] S0: Pranav, I'd love to bring you in here because you're a little bit of a payments expert too, perhaps not at the same level as Jeremy's wife. What do you think of this? Is this a problem you recognize? Have you hit this a lot?
00:10:11 · Pranav Sood
[00:10:11] S3: Absolutely, we at Airwallex serve a lot of e commerce businesses. The top end, people like Shein, for example, use our payment acceptance product in order to be able to collect payments around the world. And the process to to return money for refunds is is a is a horribly painful one for everybody involved. Obviously, consumer is the one waiting for their money to come back, but there are also people all the way through the value chain who are sitting wondering how to process that that money. And I think what what Jeremy said is is absolutely spot on, which is the last five or six years have seen three or four really quite significant structural changes in the the landscape around payments. So firstly, you know, during COVID, we saw a massive acceleration of of e commerce and and a migration of, you know, offline to online selling. Secondly, we've seen a huge, you know, proliferation of data of all sorts, you know, through open banking and through a whole bunch of other different avenues. And, you know, there are other things as well when you think about the quality of decision making around credit as well, and the improvements that we've seen as a consequence of of big data and and the models that are now being used to do that. And so in that environment where you've had these three or four structural changes, I completely agree with with what Jeremy said, which is why would we carry on doing something that's predicating on a different paradigm if the world has changed?
00:11:31 · Benjamin Ensor
[00:11:31] S0: Thank you. Kate, what do you think? Why hasn't this been done before? Is it because it hasn't been recognised as a problem? I mean, what?
00:11:42 · Kate Moody
[00:11:42] S2: Well, I loved the point you made Jeremy about, you know, customers maybe just accept that this is how things should be. And I think what I come across in my work all the time, as a research nerd and somebody who speaks to customers all the time, is you quite often get asked by like a bank or someone like that, you know, go do a survey, show me the thing that, you know, 90% of people want. And that's not really where innovation happens. Innovation happens from looking, as you say, for the pain points, for the inefficiencies. Quite often, customers, as you say, might just be used to accepting that, they might not have the perspective to see that there could be something better. I think that's what I found so exciting when I was reading this, is you absolutely agree with everything you outlined in terms of how this is broken, and we see this particularly, you know, again, in the context of the cost of living crisis for people where their budgets are really constrained, actually the delay in a refund hitting their account can be huge. So actually, you know, getting that money back into someone's account faster could be the difference between someone being able to make it to the end of the month to their next salary hitting or not, and having to slip into credit. So yeah, I'm super excited about this. I went down such a rabbit warren of thinking all the ways this could help customers as soon as I started reading about it. So yeah, I'm super excited for you and your team.
00:12:54 · Jeremy Balkin
[00:12:54] S4: Thank you, Kate. If I may just say, one thing that drives the team and it's written on the wall, so to speak is the speed of a payment can change someone's life. And that's what drives us as a team if you think about the end customer. But I would just say one, I think very important point is, whilst this is very clearly a consumer pain point, actually it starts at the merchant level, because really the consumer is like the end of the supply chain on a refund. So they have the least agency of all. The merchant is the one who has the agency and to Ben, think to your sort of inference of the question, why hasn't this been done before is I would argue that merchants have never been more powerful in payments than they are today. I think one of the things we've seen over the last decade is this structural shift of power in payments and payment acceptance from issuers to merchants. And I think that is one of the greatest stories that is yet to be fully told. And so if you think about where we are now in 2023, almost 2024, the power is with the merchants and merchants should start using the power, I would argue, in many more ways they have. That's in part how we purposefully designed this to put the hands in the power of the merchant to be able to get, dare I say more of their fair share as it comes to how e commerce works. And therefore the end user ultimately benefits through the consumer, through a faster payment with choice, with certainty, but that ultimately benefits the merchant too by giving the merchant competition of how they wanna issue a refund versus the status quo, any more than the consumer gets an alternative to the status quo. So I think that merchant piece structurally is very important to understand. And also why I think this has never been done or tried before in a meaningful way, because I think that the circumstances are completely different. The merchant has more power than ever, and we wanna help them to use that in way that helps their consumers ultimately as well as themselves. Is that