Money2020 is a conference taking place in Las Vegas from October
6-10. It is dedicated to the discussion of the payment industry --
its past, present, and future. Panels, talks, and keynote speeches
are held all day, along with discussion about the global expansion
of the payments industry, the growth of mobile payments, digital
currencies like Bitcoin, gift cards, and the criminal ramifications
of having online and mobile payment options. (See coverage from the
first day of the conference in
Money2020 Conference: Is the Solution to Cyber
Crime a Physical Device?
In a keynote speech given yesterday, Kausik Rajgopal, Director at
McKinsey & Company, said in his opening remarks, "If we had
been here 10 years ago, this would have been not one, but many
conferences." He explained that the payment industry now interacts
directly with banking, telecommunications, retail, and marketing.
Because of that developing intersection, his firm projects that the
payments industry will continue to grow at a rapid pace. Rajgopal
believes that Latin America will grow at the fastest rate, but he
also noted that China has, by far, the most revenue from online
Selling Online in China: It's All About Trust
In 2012, online retail sales in China totaled 1.3 trillion RMB,
which is equivalent to $212 billion USD. By comparison, total
online retail sales in the US for 2012 came in at $186.2 billion.
In the panel discussion "Selling Online in China," Tom Zhang, the
Senior Director of Business Development at Alipay, the Chinese
equivalent of PayPal, discussed the huge market for online payments
and shopping in China, using Taobao, the Chinese equivalent of
), as an example.
He believes that continued growth will be about one thing: trust.
Zhang explained that, at first, people in China were buying only
very small items on Taobao -- products so insignificant that it
wouldn't be a big deal if they never actually got delivered.
However, when those items did arrive, people began to purchase
bigger items. Now they buy furniture and cars on Taobao, which
contributes to the growth of Taobao and total online revenue in
Simple, Secure, Smart
"It has to be incredibly simple, it has to be secure, and it has to
help [consumers] pay smarter."
Echoing Zhang's comments about trust, Mike Abbott, the CEO of
mobile payment company Isis, made this statement, describing the
ideal mobile payment system for consumers. Put simply, consumers
must have as much faith in a mobile payment system as they do their
credit cards. "The competition is plastic, and plastic sets a
really high bar for user experience," he said. (You can decide for
yourself whether or not you agree with him, but certainly
) are more trusted and accepted by consumers than digital wallets
like MPesa and Isis, or digital currencies like Bitcoin.)
Abbott and Isis are trying to incorporate plastic into the mobile
wallet experience. During his keynote speech, Abbott demonstrated
the new Isis mobile payment app, which allows users to put all of
their credit and debit cards in one place. With the app, an actual
picture of each card is displayed, and a user can simply swipe
between each one. Moreover, any card can be flipped with a tap to
see balance information, transfer funds to the card, or transfer
funds from the card to someone else.
"Why the Hell Is Google in Payments?"
The next keynote started with this excellent hook, delivered by
Ariel Bardin, Vice President of Product Management for Payment at
) and self-professed "new kid on the block." Later in his speech,
Bardin offered an answer to his own question: value for users and
value for merchants. Interestingly, I tweeted this question during
the speech, and one of the responses I received, from
@TenderFuturist, was "DATA!" In truth, Google can serve both
consumers and its data needs with Google Wallet; it's up to
consumers to decide whether that's scary or not.
Since its launch three weeks ago on Androids and
(AAPL), Google Wallet has had 2 million activations and 200,000
cards added, most of which have been loyalty cards. But Wallet is
not the only payment system at Google: The tech company now allows
you to make payments on all of its services -- including YouTube
and all apps on Google Play -- via Gmail. You can even send money
to other users using your Gmail account.
Online Currency Exchanges and Organized Crime
Taking a break from the teeming convention room and wide, carpeted
hallways, I sat down for a conversation with Scott Dueweke, Senior
Booz Allen Hamilton
(BAH). Our conversation covered online currency exchanges. We
discussed how organized crime is using these exchanges to move
money, and the fact that this is slowly weakening people's support
of conventional banking and has the potential to undermine the very
notion of the nation-state in the long term.
Dueweke and I discussed Bitcoin, which he believes is overhyped
since it represents only a small portion of digital currencies that
are actually being used. We also talked about Islamic Mint, an
organization that verifies the compliance of currencies in Islamic
countries with standards set by Islamic law (for example, interest
cannot be charged, as stipulated by the Koran). Islamic Mint has
the lofty goal of ending the Western way of banking. When I asked
Dueweke if it was anywhere near reaching that objective, he said it
was most likely not, but the point is that there's an organization
out there that tasks itself with changing banking and how money
And does Dueweke have any solutions for combating criminal
organizations and their uses of anonymous digital currencies? For
starters, he said, digital law enforcement must put a great deal of
effort into learning how these systems work. Criminals have been
using digital currencies like Bitcoin for more than five years now,
perhaps much longer. We've got to catch up with our understanding,
and that will be no easy task.
Digital Currencies Are Here to Stay
The last panel of the day boasted an impressive cast of digital
currency players: Jered Kenna, founder of TradeHill, which was at
one time the second most popular exchange for Bitcoin; Chris
Larsen, the CEO of online exchange system Ripple; and Marc Brule,
the CFO of Royal Canadian Mint, which produces all of the coins
used in Canada, as well as some used by other countries. Brule may
seem like the odd man out on the panel, but in fact, he is the head
of Royal Canadian Mint's digital currency project, MintChip.
One important takeaway from this panel discussion was how digital
currencies work together. Kenna said that he personally uses Ripple
to transfer US dollars between the various Bitcoin exchanges.
(Bitcoin is the currency he uses; Ripple is his means for
transferring funds from one currency to another, such as from
Bitcoin to USD, or vice versa.)
Another important point made had to do with the potential that lies
in digital currencies. Kenna explained how the cost of Visa is
prohibitive: A merchant has to sign a contract and pay an initial
startup fee for the card reading machine. On top of that, there are
additional fees for each transaction that occurs. With Bitcoin,
there are no fees; all that's required is an Internet connection,
so effectively, an $80 smartphone can be used to conduct Bitcoin
Ending the session, Brule asked a question: "The Internet is global
-- why shouldn't there be a currency that goes across all markets?"
Whether they are being used by startups in Africa or by massive
crime organizations in Russia, digital currencies allow a free flow
of money, just as the Internet allows a free flow of information.
Major corporations like Visa and Google will do better in mobile
and online payments if they accept this evolution.
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