Regtech: Enabling zero-cost payments for a PSD2 world
Payments today are expensive. As regular bank customers we don’t see this cost, but the shops we buy at do, and they increase the price we pay as a result.
This cost can be above 2% per transaction. This is the result of a multiple stage process to take money from Peter to pay Paul and high margins charged by middle-men in transactions.
This market is being disrupted. PSD2 will bring about huge changes aimed in part at changing the cost to customers and merchants through opening service and data channels. This represents a huge change to the Banking industry, creating greater transparency, more competition and generally applying downward pressure on prices.
Fundamentals such as payment settlement will still run on old, costly infrastructure (or ‘old rails’) for a time. Through downward price pressure, someone will absorb costs. If it’s a customer, you can bet they will look elsewhere. If it’s you as a payment services provider, then this is not good for staying in the payments business.
Best to start looking at reducing the cost of the old rails.
Or, better still, get new ones.
Distributed Ledger Technology (DLT) offers new rails through removing the costly ‘man in the middle’ structure. This enables direct customer to merchant transactions. It uses technology that has been authorised by the FCA as an e-money issuer to reduce payment costs to almost zero, enabling competitiveness at any price point. It also enables instant settlement between parties – easing pressure on cash flow. Lastly, it’s secure, using encryption techniques that can still scale (unlike many other DLT solutions and cryptocurrencies).
The problems above shouldn’t be anything new to those in the industry. You might even know how you might try to solve them.
Axis Corporate and Billon have formed a partnership to enable Financial Institutions to drive adoption of a new digital payment solution. This is cheaper for customers, better for merchants and allows banks to operate in a lower cost environment without having to subsidise the service with higher charges elsewhere.
Knowing how you can potentially solve a problem in your business is very different to making it a reality. Our partnership with you can help craft a solution, because as with any good technology, there are multiple use cases – we can make solution a reality.
To hear more about what our partnership can do for you and our other partners speaking at our Regtech event next Wednesday (11th October), please register here.
Axis Corporate works with financial institutions to help to deliver their regulatory, efficiency, and innovation agendas. We help clients to prepare for regulatory compliance, transform their business and operating models, and deliver new products and services to market.