This article was published on April 22, 2021, by Nick Brown (International Payment System Expert, Founder at Clear Purchase)
This is not a science fiction fantasy of some distant dystopian future — this is a real possibility that could happen within the next 10 years.
The increasing power of Big Tech is already a mammoth story, and governments are no longer sure they can rein Big Tech in the New York Times article
Big Tech is now entering the payment processing industry. If they control this industry, their power will grow exponentially.
Two of the world’s top international payment infrastructure experts, Bashir Fancy and myself, have had several webinar discussions on the likely future of emerging Global Mobile Wallets. Unless preventive action is taken soon, the Global Mobile Wallets will likely sweep through almost all developing countries, causing destruction in their wake. While we here in the West may offer the greatest resistance, that may only mean we will be the last to fall.
The threat of emerging Global Mobile Wallets
Mobile Wallets offer a great service. Free accounts to anyone with a smartphone, your money is secure, and you can easily transact with anyone else who has an account. Transactions are between account holders, which, for the Mobile Wallet, is merely an internal accounting transfer. Instant and inexpensive. Mobile Money (first offered by M-Pesa in Kenya) and conventional banks in developing countries, quite simply, cannot compete.
To get an idea of what will happen, all you have to do is look at AliPay and WeChat Pay in China. They now completely dominate the country — to the point that even physical cash is no longer being used — and are already venturing into other countries.
The recent actions of Facebook, Amazon, and Google show that they understand what is happening, and are looking to compete against AliPay and WeChat Pay. Each company is looking to grab as much of the market as it can, which will also include buying up the smaller national Mobile Wallets.
The likely end result: only 5 or 6 Global Mobile Wallets will be left. The entire financial industry will be decimated – no Mobile Money, no Neo-Banks, no conventional banks, no savings banks or credit unions. All gone.
What does this future look like?
All your money will be in a Facebook account, as there will no longer be any banks. You will no longer have a credit card, as there will no longer be Visa or MasterCard. Everything must be done through Facebook. They would then have the ability to restrict what you can purchase – hopefully, the benevolent Facebook would never do such a thing.
If you have a business selling a product/service, payments would be made through Facebook, and you would have to pay them whatever commission they decide on. If they then decide to offer your product/service themselves, all they have to do is flip a switch to cut you off, and your business is finished, forever.
This is not speculation. All the Global Mobile Wallets have a long history of branching into new industries and in time dominating those industries, one after another. Controlling all payment processing would give them a staggering advantage over existing businesses in any and every new industry they enter. Their obvious desire for controlling everything they can get their hands on will become far easier, and there will be nothing to stop them!
Anyone who has read much science fiction will know where this might be heading: everything would eventually be owned and controlled by a handful of corporations, having replaced countries and governments, with no independent oversight whatsoever.
Preventing this Future
In my opinion, the future described above is something to avoid, if at all possible.
The first thing to understand is, we cannot stop the emergence of Global Mobile Wallets – that will happen, regardless.
Our real focus must be to stop Global Mobile Wallets from becoming so dominant that they control all payment processing.
The good news: It is possible to stop this scenario from happening.
The solution: Payment Rails
Global Mobile Wallets offer a great service – free accounts, and inexpensive instant transfers. They do, however, have one limitation we can take advantage of: they only facilitate Funds Transfers.
There already exists an alternative that actually offers more than Global Mobile Wallets – the Payment Rails here in the West. Everyone connects to the Rails directly or indirectly, and the Rails then facilitate transactions between everyone. This allows for thousands of banks and millions of retailers to all become part of a huge network that is held together by the Rails.
This is a good time to recognize the amazing services card processing companies like Visa and MasterCard offer – almost everyone has a card that can be used at any merchant, even when you travel abroad. We can say the same for the ACH (Automated Clearing House) Inter-Bank funds transfer systems that are generally run by national central banks, as well as the international funds’ transfer systems, like Swift.
Unfortunately, these are not yet prevalent in developing countries, leaving an opening for Global Mobile Wallets to exploit.
We must build Payment Rails across all developing countries, and make them fast, secure, and inexpensive. They must also accommodate tiny transactions so that even the poorest people in each country can use them. These Rails must offer more than the simple Funds Transfers that Global Mobile Wallets offer, something complex enough that it may be years before they attempt it themselves. Purchases would be ideal, especially as they must include purchase guarantees and dispute resolution.
We must do this soon (in the next couple of years), or it will be too late. “When the barbarians are at the gate, there had better be a gate.” – Nick Brown
Progress is already being made
ACH systems around the world are getting more robust and faster all the time.
Visa and MasterCard are making inroads into developing countries, and I would strongly recommend they include purchase guarantees and dispute resolution on all debit card purchases. Unfortunately, it is not possible to offer card services to the poorest people.
The most vulnerable opening for the Global Mobile Wallets involves poor people, those earning up to $5 per day, in developing countries. Mobile Money Operators, like M-Pesa, currently provide basic accounts but are not yet connected to suitable Payment Rails.
The missing piece
That is where I come in.
I have extremely rare specialized technical expertise across the breadth of the payment industry, and one of the few people who has actually built a Payment Switch (Visa’s global debit card system in 1996). In addition, I have developed unique Intellectual Property that makes it possible to do tiny 10¢ purchases, that include purchase guarantees and integrated dispute resolution.
I founded Clear Purchase to fill this vulnerability in the Payment Rails in developing countries.
A better vision of the future
Our collective goal is to have thousands of Financial Institutions and millions of businesses all connected together on sophisticated, fast, inexpensive and secure Payment Rails, facilitating a range of financial transactions that are available to everyone on the planet.