Class 6: Payments | Summary and Q&A

TL;DR

The payment system landscape is dominated by commercial banks, card companies, and payment service providers. Big Tech companies and startups are also entering the space, while cryptocurrencies are trying to address pain points and lower costs.

Key Insights

• 🖐️ Payment systems play a crucial role in facilitating transactions and changing ledgers.
• 🎴 The landscape is diverse, with banks, card companies, payment service providers, Big Tech companies, startups, and cryptocurrencies all playing a part.
• 😥 Pain points such as high costs, complexity, and limited inclusivity present opportunities for disruption and innovation.
• 👾 Real-time gross settlement and mobile wallets are emerging trends in the payment space.

Transcript

Read and summarize the transcript of this video on Glasp Reader (beta).

Questions & Answers

Q: What are the major pain points in the current payment system?

Some major pain points include high costs, complexity, fraud, cross-border payments, and limited inclusivity. These challenges create opportunities for disruption and innovation in the space.

Q: How do Big Tech companies and startups enter the payment system landscape?

Big Tech companies like Alipay and WeChat Pay have gained significant market share through convenient user interfaces, network effects, and collaboration with governments. Startups focus on specific niches, such as Plaid facilitating software integration or TransferWise targeting cross-border payments.

Q: What role do cryptocurrencies play in the payment system landscape?

Cryptocurrencies aim to address pain points in the current system by providing instant payments, reducing costs, and increasing inclusivity. However, adoption and regulatory challenges remain, and their impact on the payment system is still evolving.

Summary & Key Takeaways

• Payment systems are a method to change ledgers through payment instructions, providing authorization, and enabling clearing and settlement.

• The payment landscape includes commercial banks, card companies, payment service providers, Big Tech companies, startups, and cryptocurrencies.

• Trends include the rise of mobile wallets, the decline of cash, and the move towards real-time gross settlement in some countries.