How technology is reshaping the future of money and finance (Full Stream 10/24)

e e e e e e e e e e e e e e e e e e e e e e e e e e e e we've got everybody checked in and ready to roll go ahead you're open to both three put it over to the Slate now two one take camera one go jump welcome to the Washington Post welcome to Washington Post Live I'm calwell I'm y Abu Talib I'm David ignacius that was uh quite an intro my gosh we should probably just leave it right there I've hit the big time Washington Post I can like go home and tell my parents what I did today between Facebook Twitter Youtube Washington Post Live itself we are now reaching hundreds of thousands of homes across all 50 states the power of this platform is it takes people into the world of ideas I'm audience members of Washington Post Live are part of the conversation I would like to ask the audience how many of you knew before today's event that heart disease was the number one killer of women okay just me whether it's with cancer scientists or politicians this panel I think was originally called you know two women against Putin it really should be three women against Putin and so the better way to get things done as I've demonstrated is by putting a group together and negotiating something that's good for both uh points of view so tell me what your plan is oh we have lots of plans I think Washington Post Live offers journalists like me a new way to do our job their work is hugely important a new way to connect with our audience hello Senator Schumer welcome to the Washington Post this is going to be fun a new way to deepen our engagement with people who care about the Washington Post and our mission of gathering news in Washington post also said that we were the best film of the year so that was pretty cool as well yes well I mean the Washington Post doesn't Li Jeffrey you know that I'm still having a lot of fun cat like a lot of fun and their individuality comes through more so than just their title J said David take off your tie yes so it's a rare appearance for me a Tech conference no one in the tech World wears TI David so that is the lock from the night of the burglary Jeff Bezos bought it at an auction right and we're trying to find out how much Bezos pay right come back come back next week I'm so grateful to be on a platform like the Washington Post I have I subscribe I read I Love The Washington Post we need films like this so thank you very much Steven Lynn it's been great to talk to you and I'm quite honored that the Washington Post should want to talk with me thank you I cannot thank you all enough hello everyone good afternoon welcome I'm Jennifer Lee events director here at the Washington Post thank you all for joining us here in person and at home for a series of conversations about the future of money in some ways that future is already here I'm sure some of you can't even remember the last time you you use cash to pay for something in fact the majority of Americans now use contactless payment similarly many countries are now experimenting with digital Reserve currencies today we will better understand this new and emerging world of money the promise and risks as well as the forces is shaping it first we will hear from aren Aras Hoffman CEO of the idb lab The Innovation and Venture Capital arm of the inamerican development bank and eshwar prasa professor at Cornell University and author of the book the future of money they will speak with global economics correspondent at the Washington Post David Lynch then Craig vosberg Chief Services officer at MasterCard will sit down with ABA baday economics correspondent at the post and denil Dixon CEO and executive director of Stellar development foundation will talk about how the future of money is being built on chain with our chief Communications officer Kathy bar I would like to thank Stellar development foundation for sponsoring today's program which is in partnership with DC fintech week I will now hand it off to Chris brummer founder of DC fintech week welcome everyone uh my name is again Chris brummer and I am a professor over at Georgetown and founder of DC fintech week it's a conference that takes place across the city and this is actually a bit of a finale we've had uh events uh over at the International Spy Museum over at fny May satellite events across uh the city and it is a true pleasure to uh have our final uh conversation at the most Washingtonian of all institutions The Washington Post uh fintech has gone through various iterations just like money it's in many ways the ultimate consumer product whether or not you have it you still know exactly what it is and yet every institution that attempts to fac facilitate money touch money lend money ultimately has to go through a series of engaging with consumers and increasingly regulators and even Central Bankers uh in terms of putting forward their Vision as to how money and how payments can be facilitated in a way that are both that is both secure and ultimately delivers a use case and value that enhances the well-being of the holder of that money so at DC fintech week for over eight years we've provided a platform for people for everyone regardless of their station to participate in a conversation that again is inherently International as you'll hear and involving Regulators Central Bankers thought leaders diplomats academics and more uh it is a deeply interdisciplinary project where we've roped in the best and brightest of the city and again it's why it's a a real pleasure to have the Washington Post working with us uh in this series of Sation uh if you'd like to learn a little bit more about us you can visit at dcch week.org and uh with that I think we'll just carried on to the uh wonderful conversation to come thank you thank you Chris my colleague David Lynch will be out after this short video now we at the cusp of physical currency essentially disappearing now the question is whether this actually leads to all the benefits that one might think of it's not just an upgrade it's actually a paradigm shift it's opening up a whole new set of opportunities it brings both opportunities but it carries challenges and risks and what we see is a world that is becoming more interconnected more intelligent also more decentralized good afternoon and uh welcome to the Washington Post I'm David J Lynch the papers global econom ICS correspondent we've got a great lineup you've heard the introductions IR Rees Hoffman CEO of idb the Venture Capital arm of the interamerican development bank and ishwar Pad uh former IMF official current professor at Cornell and the author of a a great book uh on uh the future of money uh the end of money um and uh we've got a great topic this afternoon I want to start uh ishwar with some very basic uh sort of setting of the of the landscape um money's changing uh we all know the physical money if I go in and buy a haircut and I put down 220s and get the services but at the end of the month my credit card bill gets settled from my bank nobody picks up a bag of cash and and walks it over to uh uh Visa or or Mastercard um what's the difference between that type of non-physical digital money and the new developments we're seeing in the marketplace so David it's worth thinking about the different roles of money as a medium of exchange that one can use for payment transactions as a store of value and as a unit of account and the reality that as a payment mechanism which is how most of us encounter money money is becoming digital in fact in some corners of the world like China and India money has practically become fully digital um the last time I was in Beijing I tried to use a Yuan bank note um to pay for my taxi ride and the cab driver looked at me like I was from a different planet and of course had no change um what is important though is that the settlement asset um with your credit card bill and also what happens with the sort of interfaces we may use to conduct payment transactions is still money issued by central banks fiat currency but what is interesting is not only are we finding different ways to conduct payment transactions without using physical currency which is certainly on its way out but we also seeing see other types of money emerge privately issued monies which are beginning to compete once again with Central Bank issued Fiat currencies you know many many centuries ago you had competition between Fiat currencies issued by governments and these sorts of private currencies and now you have blockchainbased decentralized cryptocurrencies but also stable coins which effectively are stable because they are backed up by Fiat currencies but can use them more effectively so we seeing a lot of competition and what really matters is what is most effective from the point of view of consumers businesses and so on and here I think digitization is certainly having a lot of benefits and that's the world we moving towards now it it sounds like a a potential uh breakthrough or Advantage but it also sounds like there's the potential for instability as we move from one regime to the next what are what are sort of the risks as we go from a fully Fiat system to one where there is competition from priv uh providers now one issue is how central banks are responding to this competition and in many parts of the world they are responding by issuing digital versions of their own currencies so-called Central Bank digital currencies or cbdcs now at some level one might argue that in a country like the US where still a significant proportion of the population is unbanked about 5% by FDIC estimates um you know you can have Apple pay or Google K but you need to link that to a bank account or a credit card and many people don't have that so cbdc might in fact make it easier to broaden financial inclusion give everybody AC access to a digital payment system now in India and China this is happening without um the government being the front facing payment providers although in India the government is providing the payment infrastructure in China alipe and vatp are doing a great job now with cbdcs you know we might move into a world where we cannot conduct any transactions without physical currency anymore and that is going to be a very convenient world but it's also potentially a scary world where every transaction we undertake I buy you a cup of coffee um either a private payment provider a credit card company or a bank or the government in some form is going to know about it one can also think about Central Bank digital currencies you know being used for other types of Social and economic engineering you know the good thing about digital money is you can control who uses it how it is used which may be wonderful things from a policy point of view but you can see how technology as in many other cases can lead us to a bright world but potentially a much darker world as well where the government uses money essentially as a tool of broad economic and social policies now IR these uh Central Bank digital currencies or other new forms of money how how do they play into your work uh uh for the for the bank and for the particularly in the Venture Capital space are there startups that you've supported that are active in this realm um thank you David and um first uh well we are seeing yes in the Venture Capital space a lot of innovators a lot of startups that are coming up that are digitally native and that are bringing solutions to end consumers in terms of having a digital wallet that is adapted to the needs of farmer organizations in Peru for example Aros is an example of that a company that is allowing these organizations to have for the first time better access to the financial system and to markets in general because they can now store not just value but also data of their product and prove for example that they are compliant with regulations in Europe for um environmental uh standards um so we are seeing in lot of development that goes beyond just the convenience um and the easiness and the the fact that money becomes digital so the the landcape is yes digital money and a lot of innovation happening there on many fronts and uh Professor par mentioned not just the digital private currency is and stable coins but also the cbdcs so digital money is one piece of it digital assets is another piece of it and the networks on which all of this is happening and we are also seeing Innovations on at that level and um I can I can explain a little bit what we're seeing and the also the various degrees of development in different countries that are taking more in initiative uh in from the public side and from the private side and what those are um Brazil comes to mind as one of the best examples following the example of India in terms of building a very consistent stack from digital ID to digital um instant payment systems and bringing people on board into the financial system that never had access and now for the first time on this rail um they they do um so yeah now as I understand it every country in the G20 is at least exploring a central bank digital currency two of the countries that have already uh introduced them Jamaica and the Bahamas are there any lessons learned from their uh experiences that are that are worth noting for other countries that that are going down this path any stumbling blocks that others should watch for yes so many many central banks are experimenting with or doing Pilots or having a road map for issuing their first uh cbdc ER the jam deex or Jamaica digital exchange is an example of that or Bahamas um the one of the first of all I think central banks do have to just do it uh because there's been a lot of pilot in tens of countries just talking about those plans um but second you you need also the entire ecosystem to develop as well for that to really trickle down and benefit and bring value to the end consumers is not just issuing the digital currency that is going to solve it um yeah okay uh isar I want to bring it down to the level of of the average person and we have a question from our listening audience uh Dale Haron from p P Sylvania asks uh we all have pay apps on our phone uh and debit cards why do we need a digital currency that's a hugely important question and to build on what in said um there are U many countries around the world that are looking to cbdcs essentially because nobody uses physical currency anymore China and India are particularly interesting examples because they haven't rolled out their cbdcs Nationwide the digital Yuan and the digital rupee but they're pretty advanced in terms of their planning but in both of these countries the difficulties that the central banks are facing is that nobody seems to want this digital money in China as I mentioned alip and vat pay do a perfectly good job of providing very lowcost easily accessible digital payments in India the government has set up unified payments infrastructure which is a payment Network on top of which private payment providers can provide payment services but they have to provide interoperability which essentially means that these Payment Systems have to talk to each other and it's working remarkably well in both countries so the question is why do we need a cbdc and the answer that these two central banks are coming up with is potentially interesting because you know with digital money the cool thing is you can build in lots of nice features and that can certainly make it very attractive you can build in programmability features which allows these cbdcs to be used not just in traditional Finance but even in blockchainbased decentralized finance which has been the topic of the fintech uh week here um over the last few days um but you can also think about building in other features you know money with expiry dates money that can be used only for certain purposes only by certain people which all sounds wonderful but again I worry a great deal about moving to that world where Central Bank issued money becomes a tool of economic and social policies but having said that there are many benefits and in fact some of these benefits of Shifting away from cash don't even require a c BDC in many low-income countries in Africa like Kenya and Somalia and so on we have basic mobile phone based uh apps and these are not requiring smartphones just flip phones and the good thing for consumers and businesses which are largely small scale businesses there is said you don't have to deal with the hassles of handling cash you don't have to worry about loss you don't have to worry about theft you don't have to worry about the fact that the financial system is not working very well in providing uh Financial Services because now your flip phone gives you a lot of financial power so there is a lot of good coming from this but also something that we as a society should think very hard about building guard rails so that we don't end up in a world where money again becomes an instrument that goes beyond economic policy or payments yeah uh IR I want to ask you to sort of talk about the potential upside for poorer countries uh in terms of uh facilitating crossborder payments uh prompter settlement instant settlement uh in fact from some new forms of money is this are are these developments the changing form of money something that offers real promise to the to the countries that you work with definitely definitely we are still in a world where in most countries um three out of 10 people don't have access to the financial system but they do have a phone and we do have this ability on this new type of infrastructure to transfer do these digital transfers and on board them and bring them into the financial system so that's the upside is financial inclusion is one example of it um it's the ability to um be able to send money home I mean remittances are still for some countries Haiti Honduras 30% of their GDP and a lot of people who have jobs that are now borderless and they may be in their home country and instead of taking a dangerous route and migrating to the us they can actually do their job from their country H cross B um so as a payment means um this is tremendously powerful as a way for them to also receive payment for their job and I make those jobs available to many many more people so those are three examples of the kind of upsite that you can have um and and the companies that we're seeing emerging well you know Stellar Foundation is is is Host co-hosting this we are looking at a company that uh is using their Network um is a company from Mexico and this company is er allowing instant uh payment of or two uh people in Mexico that are doing jobs across across the the the world um and and not just workers in Mexico anywhere in the world how are they doing it because they have built a digital wallet and they are using usdc as a stable coin to transfer the the payment and as they on and off ramp they there are Partners involved money gr with 150,000 outlets around the world is their partner so it's an tangible benefit to somebody who would otherwise be completely cut off the financial system but does not have anym to wait until they can access a bank account or a credit card to be able to participate in the economy in the digital economy great isar I'm going to come back to you with another audience question uh quick question and a quick answer as we're getting low on time uh Jill Carroll from Florida asks uh will the US ever become a cashless digital only society and she says that scares me you know there are three countries in the world Advanced countries that turn out to use cash a lot because they love cash is the US Japan and Switzerland they three very Advanced and very rich countries that is the reality um I mean the convenience um for both businesses and households of using uh digital money is certainly going to make it a pervasive medium of exchange and it's going to come with some cost in terms of privacy and potentially um other aspects of our liberties but I think we might be able to build guard rails around those both domestic and international payments I think the reality is that those are going to become digital as in pointed out right now International payments in particular are bit by all sorts of frictions you know they're very slow expensive um difficult to track in real time when technology is really proving uh to be very beneficial in getting around these hassles and that's going to improve um our lives as consumers and businesses IR is is Jill right to be a little bit afraid of this Brave New World uh cyber risks fraud concerns there's all sorts of issues with technology that that one could get worried about um is is she right to worry or are these problems that'll inevitably inevitably be ironed out well I would say that look we have an opport to um instead of just like you have the ability today of sending a movie across continents on WhatsApp for free instantaneously to do the same with the with financial assets why not a and in terms of fraud actually it would be easier to detect to track because with the flip side that you know you you may be able to control it in different ways but certainly fraud of course is a concern but it's actually less concern than in the current levels of fraud that you have in the Fiat world yeah so it is manageable and the upsite is enormous makes sense in the 30 seconds we have left look to you for a prediction what are what are the chances that the FED gets around to issuing a US Central Bank digital currency within the next Presidential Administration within the next four years highly unlikely I think the us is going to resist that and I think uh like me most of us here do like having our dollar bills still uh the degree of political resistance is great and I think like any other good Central Bank the FED will move forward only there is Broad public and political support for it and we're not there yet so you don't think they're making a mistake taking their time no I think um it's good in this particular case not to move fast and to learn lessons on the experiences of others and build a cbdc in a way that actually works or uh right now the FED has already put in place fed now a suite of uh um retail and wholesale payment services that I think will achieve a lot of what a cbdc or a digital dollar could achieve so we may get to the objective without necessarily having a digital dollar okay fair enough uh I think we may have only scratched the surface this afternoon but if nothing else perhaps we've we've peaked your interest it's a a fascinating topic fast developing uh but we'll have to close there I want to thank my guests and uh say that my colleague ABA baday will be out next with Craig vosberg of MasterCard thanks again I'm David Lynch of the Washington [Applause] Post for BL [Music] hi everyone as we just heard and saw Artificial Intelligence online lending cryptocurrencies and emerging Technologies are reshaping the future of Finance um I'm at Kathy Barrett I'm the chief Communications officer here at the Washington Post and joining me today to discuss how onchain Solutions are accelerating access and transforming how we experience everyday Financial Services is denell Dixon CEO and executive director at Stellar development foundation DaNell thank you so much for joining me oh I'm so happy to be here and I love that video same really good so um Stellar is a network that has so many real world applications in use today from Colombia to Ukraine as we were just watching let's start with the latest story on the network out of Colombia what's happening there what what does this story tell us about blockchain's ability to make an outsized impact in places that traditionally have struggled with financial access it's such a great question and I love it because it focuses on the onchain effects and so much of what blockchain is intended to do is sort of remove borders to make it simple for Value to transfer through that that don't hit a border and create friction and what we're seeing in Colombia is in this in San Francisco Colombia the town that this is highlighting in that video you're actually seeing that the the women in that town were working as um executive assistants for people that were remote they weren't able to get paid except for in cash and then the individual what what you probably didn't see in this is the individual that was the he created the company he actually in delivering the cash he was robbed and almost killed and because he would get the cash from the bank to drive it up two hours from the um into San Francisco and what he then started using is decaf and decaf is a wallet that's built on stellar and there's an integration that we have with money gram Money Gram has 180,000 locations globally seamless uh transition from a digital asset to cash and they could then cash out at the money gr once they Reed received the US dollar backed asset and spend money in their town and have the ability to like have their um an employment in their town so the onchain effects are pretty dramatic when you see what happens in communities like that when you can get access to the digital asset and the cash out requirements y yeah sure so SDF Stellar development foundation has been collaborating with Partners as well in Ukraine on their digital transformation initiatives long before the war broke out even so in the aftermath of the war were you able to mobilize a firstof its kind Cash Aid solution built on blockchain and if so can you tell us about this yeah it was so fun um to be able to do this because we saw we had been working with sininsky and his administration they really wanted to move to a cashless Society this was pre-war the war happened and we were like gosh what can we do to support this and we reached out to the unhcr we started this relationship with them and the unhcr moved from February of that year and we started delivering Aid in November and December of that year which is remarkable for any organization but particularly for an organization of that scale uh and so now they deliver Aid on a weekly basis into Ukraine it's super simple because you can actually send the value you can set the unhcr can send a text message saying you are eligible to receive Aid download this wallet the wallet has the value in it as soon as they download they can then choose with their own independence their own autonomy to go cash out they can hold it they can move it to their bank account they can do a lot of things it just creates a lot of seamless and simplicity for the uh for the refugee or the internally displaced person and it saved the unhcr recently talks about how much money it's saved them on the back end to be able to deliver the aid they have that's a really powerful story and so real time so um from that how has your work in Ukraine evolved most recently we heard you're collaborating with banks and other partners to stand up something really exciting on a national level yeah I think it's been great because we initially started working with them to Pilot which is which is sort of a version of the digital hernia that they could put on chain and they could let see how that worked that was the first thing we then did worked with them to deliver Aid through the unhcr and now we're working with them on this trans parency U payment Network that they're developing there and this is a Consortium of Banks and a digital provider that have come together to be able to provide instant payments on chain again that's with peerto peer but also to Merchants when you get Merchants involved it makes it so that there's no need to cash out ever and you can just use and buy the resources that you need using that and with all this um you know the reformation and all the money coming in to be able to create and develop Ukraine again once the war is over this is going to be a really important part one of the things why zalinsky wanted to cash the society is the idea and this is one of the reasons why the unhcr really likes the blockchain too it's an immutable public record it eliminates fraud makes it very simple it's very transparent anybody can check to see where the value is being transferred and that is huge for everywhere but particularly I think zinsky thought in Ukraine interesting interesting so Switching gears a little bit a really important question s SDF has had an interesting approach over the years to Growing blockchain adoption in particular you've been focused on working with traditional finance and it seems like more players in the space are adopting the strategy now as well why has this been your approach yeah it's so funny when I first started I um I came into this space six years ago I came from traditional um finta I mean Financial infrastructure I mean sorry techn technological infrastructure so Web Two um as those of us old people say and that was a very different model and then when we got to the when I came over here it was like we are going to disrupt and make everybody irrelevant and you're only going to use blockchain and I was like that's just not possible because you need a credit card or a bank account to be able to buy a digital asset so like that made no sense to me and so we really focused on what do we need to do we need to integrate with traditional Financial infrastructure to make it work together to enhance that and then also to demonstrate that the value that companies Like Money Gram 75y old companies already bring to the financial infrastructure on a global basis they can solve a problem that frankly blockchains can't solve because it's that last mile it's getting the turning the the the digital asset into Fiat and it's such an important piece right now un less and in until everyone goes cashless and you don't have Fiat it's a really important piece so the interoperability piece it's coming from my web two days it's very much about like everything should work together seamlessly you can the the uh traditional Financial infrastructure can disrupt Itself by leveraging more of this and that's what we're seeing we're seeing trafi come into this and start to issue their own assets you know we have a money market fund on Stellar that was issued by Franklin Templeton we have Bonds on Stellar issued by FR by Wisdom Tree so it's really cool to be able to work with that kind of infrastructure so on note of everyone everyone adopting what's needed now in order to accelerate adoption and more real world use we have a lot of really amazing um uh like guard rails and infrastructure from uh a legislative and policy standpoint outside of the us we don't have it here yet and I think that in order to really make this speed so that Banks can get involved in it we need to see like stable coin legislation we probably need to see Market structure bills we need to see like a lot more policy engagement in the United States there's been a lot of outside the United States and I think it's moving pretty smoothly so it'd be pretty great to see that you're going to see more financial players come into it which frankly enhances the system and makes every blockchain stronger uh when you have Financial players in this space so I I'm I'm looking forward to seeing that happen in the next year for sure okay I've been saying that for a while though well keep saying it well I think that's it from us today but DaNell Dixon CEO and executive director at Stellar development foundation thank you so much for the conversation I learned a lot in this conversation and now we'll continue with the rest of our programming thank you thank you [Music] [Music] a [Music] [Music] hi everyone I am ABA VRA the economics correspondent here at the Washington Post and I am here with Craig bosberg Chief Services officer at MasterCard Craig welcome to the post thank you it's great to be here I I had to take a minute to read that quote that was a long quote well I'm going to start with what seems like an obvious question but I think for most of us we think of MasterCard as something that's in our wallet that we use to pay for things but the company is actually much bigger than that um it's a credit card Network tell us what that means um what we might not know about it well first I hope it's in all of your wallets and that you all use it very often but uh we're much more than a credit card Network in fact we're often mischaracterized as being a credit card company and uh that's actually not what MasterCard is Mastercard is a technology company we're a data company we're a payments company we use that technology and lots of different ways to intermediate the exchange of value uh and do lots of other things as a relates to payments and the payments ecosystem uh H you know that's often associated with card products obviously debit and credit card products are a very important part of what we do but our payments capabilities extend well beyond that into account to account payments and realtime payments in blockchain enabled payments in dispersements and remittances uh and we're using our technology to to uh enable uh what enable uh economic growth uh all around the world so we've been hearing a lot about the evolution of money this afternoon um from your perspective you talked a lot about how you guys are a technology company what's been the biggest techn technological driver of that Evolution well there this ongoing migration towards the digitization of everything uh and that has such a significant impact uh on all of our Lives as consumers on businesses and how businesses conducted did and with that more broadly on Commerce uh and a critical component of Commerce is payments without the exchange of value in the form of a payment Commerce doesn't happen and so focusing on where and how MasterCard as a company can leverage its technology bring that to Bear to facilitate Commerce in ways that are uh seamless that increasingly meet our expectations as consumers who are sort of bombarded with different sort of stimuli all the time as part of our digital experience whether that's through interacting with a smartphone apps online mobile experiences Etc they all have implications for what we expect from a payments experience uh and that's what we're investing in enabling uh to ensure that we can deliver that kind of payments experience in a way that is intuitive and meets our modern-day expectations for a digital experience that's ubiquitous payments Solutions payments products that don't have ubiquity in terms of their availability and acceptance are not relevant to us as consumers or businesses and importantly and this a theme I think we'll need to come back to as part of this conversation in a digital world ensuring that they're secure uh because it's always been an issue to ensure the security of a payment in a digital context the way in which security manifests and needs to be ingrained or embedded in a payments proposition is a little bit different uh and that's an area where we've invested and focused a significant amount of energy over the years give us a sense of how quickly that's changing what is something that consumers need in Commerce now that maybe wasn't a you know wasn't a factor five years ago or 10 years ago well uh I would say there's an important element of what consumers are looking for that really has to do with choice and it comes back to this the way our expectations evolve and are influenced by living in a world that through digitization we kind of have come to expect infinite choice and instant gratification across multiple dimensions of our lives and so for MasterCard that's mean really investing in ensuring we're providing choice to consumers in how they pay uh actually to any payer a consumer or a business in how they pay and any receiver of a payment in how they get paid uh and I alluded to earlier but the that's really manifested itself in our business in diversifying the capabilities that we have to intermediate the movement of money uh and again moving away from the historical Association of MasterCard as being in the credit and debit card business but really significant investments in helping economies around the world upgrade their payments infrastructure with real-time payments capabilities helping to bring blockchain enabled payments Solutions into into real world uh with real world use cases to improve the exchange of funds between in B2B transactions for example helping consumers move money across borders with remittances maybe to friends or family if they're working overseas more seamlessly more conveniently with more transparency around the cost and the time that it takes to move that money uh enabling dispersements and connectivity to all of these digital devices is to load funds onto wallets be able to get funds out of wallets all this proliferation of choice uh is a really important part of how our business has evolved to meet the uh the expectations of consumers as their expectations have evolved we heard in the first panel that the United States is behind many other countries when it comes to how we pay for things do you agree with that and what should we be doing that other countries are already doing I I would not uh I wouldn't argue that the US is behind I I think when you have to look at that in the context of the evolution of payment systems and their ability to uh deliver on the objectives that any given economy or any given country is seeking through its payment system uh a payment system needs to provide a degree of efficiency to uh to power economic growth right to to uh Power economies and empower people uh to be able to do what it is they need to do we have a very wellestablished payment system our digital payment system is now going on you know the cards payment system is now going on roughly 60 years of existence decades older than many other markets around the world but you have to look at that in the context of the the the widespread availability the widespread acceptance the widespread uh access that consumers and businesses have to that Network we we uh like to say that payments is one of the networks that powers the modern economy uh and that has been true in the United States for many many years yes there will be ongoing investment and Innovation and upgrading the payments infrastructure in the United States but in terms of delivering a seamless secure ubiquitous experience to enable Commerce to take place we have a very wellestablished and very effective system there will be other use cases that will be uh it'll be helpful to see the adoption of real-time payments in this market uh that will have an impact uh that's coming there's two real-time Payment Systems in the US now that are up and running one of which is powered by MasterCards technology uh and so the market will continue to evolve but I think uh my view would be that the payments infrastructure in the US meets the needs of this economy and this Market very effectively perfect um I would like to switch gears just for a minute to the US consumer uh when you look at the economic data they're spending they're spending big they're propelling the economy but you have a really interesting Vantage Point here what are you guys seeing in terms of consumer spending well we've we do have an interesting vantage point we actually use that through uh to to power a broad range of macroeconomic insights uh that we share uh with with many of our partners through the MasterCard economics in Institute uh and of course we see a lot of spending activity within the broad Universe of MasterCard card holders around the globe and what we see what we've continued to see is a very resilient consumer uh despite some of the prognostications around the direction of the economy will we have a soft Landing a hard Landing whatever the case may be the consumer has continued to uh to be alive and well and is uh continuing to spend on the things that matter to them there's a little bit of a reallocation within the consumer's wallet particularly across different income strata uh where not surprisingly given some of the inflationary pressures that we've had we've seen some reallocation at the at the mid to lower income strata into necessities and the mid to Upper income strata we continue to see very healthy spending around things that it seems like we all really missed during the pandemic and we're still catching up on on travel on experience es on spending time with friends and family and doing the things that that we all enjoy and so uh we remain optimistic on the outlook on the consumer and and hope for that resilience to continue what about buy now pay later we've been seeing these programs any everywhere how does that fit into the picture here well buy now pay later is uh is another capability when you talk about giving consumer's Choice that's another kind of capability that we power through our Network in uh in giving the banks who we work with so closely to issue MasterCard product to their consumers the opportunity to leverage MasterCard installments which is effectively a buy now pay later capability they can white label and offer into their into their customer base and we have a number of Partners in the US and other markets around the world who are offering that uh it has uh the buy now pay later option I think is one that has resonated with certain segments of consumers and it's again back to that notion of choice and wanting to ensure that we play a role in providing that choice but doing so under an umbrella of of trust of security uh with while delivering a great consumer experience is uh that's an important part of our payment strategy and buy now pay later propositions fit right in there um looking ahead of it How likely is it that we are headed towards an entirely cashless Future How soon might that happen sort of what are your thoughts there what are we seeing yeah it's an interesting question and I heard that asked to the the previous speakers as well you know if you look around the globe there are vastly differing levels of cash still in circulation in different country markets in some markets markets like the nordics which are extremely digitized to the point of cash being very very low single digits going on the border on verging towards non-existent to other markets including very mature economies where cash is still a prevalent way to pay I think there's an element of this that has to do with uh societal preferences and and values there's an element of this that will have to do with government policy I don't expect cash to disappear I think cash will always play a role in every economy to some extent uh I do think there's additional opportunity for digital payments payments to continue to displace cash because there are there's benefits around convenience particularly as things continue to digitize Commerce continues to go more and more online uh even things you know as historically cash driven as paying to ride the bus or the subway uh back in the day when we used to put cash in a machine and get a token uh now you hold your contactless card at the terminal or you hold your phone and you're making that payment with your credit or your debit card those kinds of things are they're they're beneficial to society they they are beneficial to Consumers they're hugely beneficial to those transit systems that are taking a lot of cost out of the system uh and so we'll continue to see areas like that where digital payments will proliferate but I think there'll always be a role for cash perfect on the flip side of that what are the risks when it comes to digital digital digitized payments and how should we think about the tradeoffs here yeah I think with I I'm alluded to this earlier but the digitization of payments introduces some risk into a payment transaction in in new forms new ways to uh to commit fraud or to introduce the risk of fraud new risks associated with cyber security and the uh you know the ability of any of the the participants in that digital ecosystem to protect their uh their digital infrastructure from Cy potential cyber security attacks uh new kinds of challenges in uh understanding the identity and being able to authenticate the identity of the counterparties to a transaction if I'm giving you cash you can see that it's me if you and I are transacting online perhaps on you know opposite sides of the globe it's hard for you to know it's actually me am I the person who's authorized to use this payment credential to make a payment to you Etc and all of these are things that have become very important parts of our business uh in as much as ultimately what MasterCard stands for in the payments ecosystem is trust and providing trust with uh transactions to ensure the Integrity of the transactions to minimize the impact of fraud in those transactions to maximize the ability to authenticate the identity the identity and the uh the authority that individual has to use a credential to make a payment and then in the event that something goes wrong to have a way to to remediate the situation to have a dispute resolution process to to fix things when a payment goes Ary uh those are all things that we've invested in significantly as well as providing cyber security uh protection not just for MasterCard itself but to each of our partners who are connected to the MasterCard Network to enable them to better protect themselves against cyber security threats so there's sort of a broad range of bucket of risks that sort of come with increasing digitization uh uh and those are things that we're very focused on trying to minimize paint a picture for us here what is the exchange of money going to look like in five or 10 years we've established that cash is never completely going away but how do you expect things to keep changing in the next few years uh well I think a lot of a lot of that is going to be driven by consumer and business behavior I'm I'm I'm alluding a lot to Consumers but the same is true of small businesses that are really important uh stakeholders in the payments ecosystem uh the expectations around uh increasing Choice the expectations around kind of instant gratification increasing expectations around the level of security that's provided as part of a payment transaction while also increasing expectations about reducing the amount of friction that's associated with enabling that security we can make any payment very secure by introducing so much friction prove to me that you're you prove to me that you're you that that becomes a bad consumer experience at some point that has uh the wrong effect ultimately so getting that balance right from a consumer expectation perspective uh these are these are all things that uh I think are going to continue to impact and and shape the way that payments evolve but again uh it's hard to predict what the medium ultim ultimately will be through which money is moved but the one thing that you can say in any exchange of value that ensuring that there's a high level of trust asso associated with that transaction will that will never change and uh and that's something that we're very focused on I should say related to the Future and kind of the digitization I I heard some of the commentary earlier related to data data is a very important uh component of this dialogue and how it will shape the future as things continue to digitize data provides an extremely powerful ingredient to improve the quality of those payments to identify and detect fraud to help with authentication to protect against cyber security all these things that I've mentioned it's also a very powerful tool in increasing the value of the payments transaction itself to the consumer to enable things like increased personalization uh getting having things be more relev to you to reduce all of the Clutter all of the noise associated with that but data has to be used in the right way and this comes back to the notion of trust and ensuring that they really a firm commitment as we have at MasterCard to data principles that are grounded in protecting consumer's interest protecting the business's interest uh to whom that data is associated uh and using it in ways that are enhancing the Integrity of the ecosystem without exposing individuals to additional risk who in that scenario is at risk of losing out or getting left behind and how can we make sure that doesn't happen how can we address that yeah well I think it comes back ultimately to this issue of the the digital divide and the comment I made about payments being one of the networks that powers the modern economy we have to ensure that there's broad access to that in terms of maximizing consumer access giving them ability to to connect into that Network maximizing businesses access importantly small businesses uh and we saw a massive uh we made a massive effort and we saw a massive migration of small businesses online during the pandemic when there is a urgency around increasing their access to customers diversifying their channels diversifying their revenue streams an important part of that is establishing a payments uh a digital payments capability again with the right security uh the right uh risk management uh exposures Etc so ensuring access because there will be you know uh this is a driver of economic empowerment and economic growth and we need as many people as possible to be connected into that capability fantastic well this has been a fabulous conversation thank you so much Craig for joining us pleas yeah my pleasure um and thank you to all of you for joining us both here and virtually please stick around for a reception right outside of these doors and if you're not already a subscriber please sign up for a free trial by visiting washingtonpost.com I am ABA vatry thank you again thank you yeah thank you e e e 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2024-10-28 07:15

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