If you missed our Advanced Payments workshop in San Francisco last month, tune in to this episode to hear Yvette Bohanan and Russ Jones discuss the key topics and conversations from the session, including card network updates, stablecoins, and agentic commerce.

Join us for a live, virtual Advanced Payments workshop on May 12-13 for more updates and insights into critical industry topics, or deep dive into stablecoins with our new 2-hour, self-paced module.

 

 

 

 

Yvette Bohanan: Welcome to Payments on Fire. I am Yvette Bohanan, and joining me for this Fanning the Flames is Russ Jones. Russ, hello.

Russ Jones: Hi, Yvette how are you? Good to see you again.

Yvette Bohanan: Again, yes, and we had just seen each other, what is it now, a week or so ago?

Russ Jones: Yeah, we were in San Francisco at the Glenbrook Advanced Payments Workshop.

Yvette Bohanan: Well, the Boot Camp and the Advanced Payments Workshop.

Russ Jones: Yeah, yeah, yeah,

Yvette Bohanan: It was a big deal because we haven’t done one of these public in-person workshops for a while, so it was nice.

Russ Jones: Yeah. Plus we got to ride in a Waymo, so yeah.

Yvette Bohanan: We got to ride in a Waymo two times which was really cool.

Russ Jones: I am sure somewhere in there, so there’s some payments innovation.

Yvette Bohanan: And just to be clear, we kind of spread it around because I think we cabbed, we Ubered, we Lyfted, and we Waymo’d, all, you know,

Russ Jones: everything but walk.

Yvette Bohanan: So yeah, it was great. We had some really, really interesting conversations during these workshops. The energy in the room is always so nice when you’re in person and, honestly, it was one of those times where the questions and the dialogue and the people and the energy just kept the whole thing going and it, those three days just flew by. But the one we like the most, I think, our favorite part of the three days is always the advanced topics.

Russ Jones: Sure it is.

Yvette Bohanan: Yeah. It’s hard because we have to put together a bunch of new material to do the workshop, so it’s pretty challenging.

Russ Jones: But it’s stuff that’s endlessly fascinating. The other challenge is it’s a little bit ripped from the headlines, as they say. You think three weeks ahead of time, okay, we’re all set for this workshop, but then the next day, uh, we’re not all set for this workshop. Here’s another twist on what we’re gonna be talking about.

Yvette Bohanan: Exactly, and Jill’s trying to get this stuff printed for everybody at the same time.

So, speaking of endlessly fascinating topics, the endless part of that was in the card update section. I think we talked about card network updates and part of it was around the big settlement.

Russ Jones: Yeah, it was really three things we were talking about. We were talking about the proposed Visa Mastercard interchange class action settlement. We were talking about the rollout of the Capital One’s acquisition of Discover, and the initiative that Mastercard has to eliminate the PAN in the checkout flow and online purchases, which is specific to. Europe, but it seems to be spreading to some countries in Asia Pacific as well. And those topics, class action settlement really spurned a lot of discussion.

Yvette Bohanan: I had to chuckle at the end of that part because there were some folks in that session that were still, I would say, relatively new to payments, just like maybe a few years.

Russ Jones: Yeah. Yeah.

Yvette Bohanan: You had everyone sort of frothed up about all of these, the settlement and breaking it down and explaining it, and people were kind of, and then you said, Oh, but this has been going on for, what, 15 years?

Russ Jones: Right.

Yvette Bohanan: Oh, yeah, okay. Let’s put it into perspective here.

Russ Jones: Yeah. Somebody said, Well, what’s your read on what issuers are doing right now? And of course our read is they’re not doing anything right now because this thing is at least 12 months away from maybe being ratified by a judge, and maybe it won’t be ratified by a judge as well. So it, it really is just a proposal.

But one of the things that really struck me about the conversation is, it is like we’re chasing our tail on surcharging.

Yvette Bohanan: Like humanity is?

Russ Jones: Yeah. Yeah. Well, humanity in the United States is chasing its tail on surcharging. Is it good? Is it bad? Is it inevitable? Is it being done correctly? Specifically in that settlement, how were the new proposed terms for surcharging different than what’s already happening at the farmer’s market? And so we kind of had to break it down. We really didn’t anticipate doing that from a workshop point of view, but from an understanding point of view, we had to break it down.

And it’s probably a good way to think about surcharging is what’s the current rule set, the current model, the current requirements if you’re going to surcharge as a merchant versus what’s possible under this proposed settlement. So that was interesting.

But I can never talk about surcharging without reminding people that survey data says consumers hate surcharging and they hate merchants that surcharge. So, think about that in the next marketing meeting.

Yvette Bohanan: Yeah. Well, yeah. And so it was an interesting sort of sidebar that we got off on it when we were chatting in the workshop. But what’s always interesting is you have a table of people who are legal team members. You have a regulator in the room, you have merchants in the room, you have providers in the room, fintechs and incumbents, networks.

So the whole dialogue and the questions that surface it’s really an interesting sort of, I don’t know, cohesion, co, I don’t know what word am I think, co-mingling of ideas and thoughts and perspectives in the conversation that when we’re sort of breaking it down.

Russ Jones: This is a Glenbrook thing. We always, every time there’s something new going on in the industry, a change, a new regulation, whatever it is, we always like to run it through the stakeholder lens. How does a bank view this versus a payment network versus a PSP versus a merchant, a biller, a consumer or a business, a regulator. And you get different answers. Some of them love it, some hate it, some don’t care.

Yvette Bohanan: Right, exactly.

Russ Jones: We saw that in real time in that discussion of surcharging, I think.

Yvette Bohanan: Confluence. That’s the word I was trying to think of.

Russ Jones: That’s a big word, confluence.

Yvette Bohanan: I need another cup of coffee. This is an early recording.

So we had the card networks and then we moved into stablecoins and that had a lot of interest. Stablecoins are having a moment. We’ve done a lot of podcasts with really great folks over the course of this year on stablecoins.

But what we were talking about before we hit the workshop was sort of the arc of the story of digital currency systems, and we’ve definitely shifted from COMPSCI explaining what cryptographically secure pointers in the blockchain. There was a moment where Ashley did have to sort of say, just remember what this is that’s moving.

But it’s moved from that conversation of how does it work to the implications. And I think the part that you worked on the most here was around the whole economics of this stuff.

Russ Jones: I am always sort of trying to drop things to the bottom line. And stablecoins have all sorts of things going for it. And you never know, are they going for it because it’s just inherently sort of like architecturally how it’s done or is this market speak or is it conventional wisdom, which is worse still.

And so, we did look a lot at the economics in the world of stablecoins, identifying the points of monetization in the stablecoin ecosystem, and why it could be cost effective in some cases and why it could be not cost effective in other cases. Knowing which is which is super important.

So, in sort of our journey here, the observation is one of the things that makes stablecoin so cost effective is because 99%, I guess it’s 99% plus, of all stablecoin transactions are pegged to the US dollar. Let’s take FX as a cost and just put it aside. Let’s take taxes as an issue and just put them on the back burner for now.

My perspective, which I shared with the workshop participants was that’s not the real world. There’s a lot of currencies in the world and we dug into the Swift currencies used in cross border payments and it’s about 48, 49% the US dollar, with Euro having a big, a big component as well as other currencies around the world. And you just look at the headlines in the industry, and banks and central governments all over the world are waking up and realizing that stablecoins are taking off, and it’s all denominated in US dollar pegged stablecoins.

Yvette Bohanan: We were sitting there the first morning of the Boot Camp workshop and there was a headline about the European Union coming out and saying they’re getting in the game here for that very reason, right.

Russ Jones: Yeah. And during the workshop, like 10 European banks announced that they were collaborating on a Euro-backed stable coin. So there were some interesting discussions in the room. But some people pointed out that the economics of stablecoin issuing is not uniform around the world. And it’s all primarily driven by the interest yield that comes off of the reserves that the stablecoins are backed with. And different countries have different interest rates. Some countries have negative interest rates. And that creates a context where, in some countries, there just won’t be a market for stablecoin issuance until that condition sort of turns itself upside down.

That was super interesting to me. It doesn’t sort of change the observation that banks and governments all over the world are realizing that the stablecoin world is a US dollar world. And so if you say at some point there will be different types of pegged stablecoins, then all of a sudden you’re back into the world of FX, and FX is FX.

Yvette Bohanan: Right. Yeah. And there people are trying to sort of crack the nut on this problem, right, in a lot of different ways. Governments are trying to crack it. We had MANSA on a podcast talking about it this year. And there’s just a lot of different ways people are thinking about this, trying to figure out how can this technology, how can this capability now shift the model?

But right now the model is the model, right? The technology has shifted, but the underlying sort of fact pattern, I guess, of all of the currency situations around the world has not. We’re at a very interesting moment, I think.

Russ Jones: That was a very expansive conversation around stablecoins in the workshop.

Yvette Bohanan: It got a lot of play. It got so much play, we ran out of time.

Russ Jones: Yeah.

Yvette Bohanan: But we didn’t run out of time before we got to agentic. If stablecoins was all about the economics, the implications, the use cases, the shift in other dynamics and macroeconomic factors and currency factors and all that, we went right back into COMPSCI 301 with agentic. We were all about protocols and mechanics and tools, just, what the heck is this? What are we talking about?

I think the person who very bravely raised their hand and said, Isn’t this just a bunch of APIs? We already have APIs. Reminded me we were doing a live in-person public Boot Camp and someone in the back of the room bravely raised their hand and said, What do you mean, uh, digital currency systems? Aren’t all payments digital at this point?

And we had to back up and say, payments are electronic. Digital is different and digital currency is different, right? Digital wallet is different from digital currency. And here we were, Well, it’s an API. And you went into some, example about bird food and having to, trying to explain.

Russ Jones: The reality, I think, of agentic commerce is the industry, all the different providers, all the different companies that are coming out with different protocols and different services and different suites of solutions and things like that. We’re way past the forest, we’re right into the trees on agentic commerce. And you had told me that you thought our discussion of agentic commerce was too protocol heavy.

And I said, that’s where we’re at right now. It is about protocols. It’s about complementary protocols, competing protocols, and a lot of uncertainty about what’s really needed, if you will. And so, the background here was I had assembled the material on agentic commerce and Yvette was going to present. So I was super interested in what she was, how she was gonna approach it.

Yvette Bohanan: I wouldn’t tell you before I got up and started talking.

Russ Jones: Right. So I was all ears. And the thing that became extraordinarily obvious as you talked about it, was that we need a lot more thinking about how this fits into the commerce lifecycle, the familiar commerce lifecycle of search, discovery, compare, purchase, fulfill, support. That sort of lifecycle. It’s wide open there.

And so all the examples we were sort of coming up with off the top of our head really weren’t about the specifics. They were kind of going back to that lifecycle and where does the genetic commerce fit into it? Where does it not fit? When might it add value? When might it subtract value?

Yvette Bohanan: What has to change, right.

Russ Jones: Yeah. That was a big theme is what has to change.

Yvette Bohanan: And who has to decide to invest in making those changes? These protocols are like, I was trying to think of a better analogy than the canary bird food but basically people are being given tools for a toolbox and they’re saying, well, you know, I have all these tools in my toolbox already to write code and do commerce and remote commerce and all this stuff. Why do I need these tools?

And people are saying, well, you don’t need them for what you’ve been doing. You need them for what you’re going to do. And I think, so the tools always sort of come first. It’s just that there’s a whole lot more discussion and visibility around those tools, those protocols that are evolving right now.

And people are still trying to figure out simultaneously, what am I trying to do with these tools? And I think that’s the ambiguity that has to kind of come to the forefront and then be discussed and be sorted out. And everyone has a different part to play in using the tools in their piece of the value chain to make it work with the system so that the thing actually works end to end.

I’ve been playing around with this, like everybody, like I’ve been playing around with it and yesterday I was on one of the tools, just trying to use sort of a Gen AI interface and planning a trip around Oregon and I wanted to know the shortest path to get to three destinations.

It’s offering up, well, I can go out and make reservations for you and this and that. And I said, sure, go do that. Because I just wanted to see where would it stop, right? And it came back with, go to these websites and make the reservation. And I think that is very telling, right? It can get to a point, but unless the website can talk to it with the new protocol, nothing’s gonna happen. Right?

Russ Jones: One of the things we did in this section of the workshop is we laid out the landscape. Who are the players, what are the pieces out on the playing board? I’m not even gonna say players because the pieces out on the playing board here are the companies that have buying agents, Chat GPT and Claude and stuff like that. Wallet frameworks, MCP servers from all sorts of different providers of services in the industry, competing and complementary protocols, agentic protocols, and then consumers and merchants.

And then, structured data standards. All this is gonna be driven by structured data and there’s structured data, as I’ll always like to say, payments can be very political. Structured data is about as political as it gets. My data is rich, but you can’t have it. It’ll be a cold day in hell when I share my structured data with you. I’m not gonna let you take my data and do blah, blah, blah, blah, blah, blah. So you have all that stuff going on.

And we highlighted there’s 12 million standalone websites that sell things. 12 million standalone online merchants. And there’s a little part of the industry that thinks every one of these merchants is going to implement an MCP server. And that’s clearly just madness, you know?

Yvette Bohanan: Alternatives, using restful APIs and all that stuff that allow you not to have that, right. And I think we got to use one of our favorite words in the industry, co-opetition, during that part of the discussion, because right now these protocols seemingly are, well, it could be super confusing to suss it all out. That’s why we were talking about it.

But people were asking, well, is this protocol competing with that one and is this one competing with that one? And I think that gets back to, first of all, most of them right now are not, they’re sort of cooperating and complimenting, but nobody stays in their swim lane. So eventually they’ll build out and they will start to feel a little more competitive in some ways.

But it gets back to each protocol is focused on a part of the problem to get the entire arc of the commerce chain automated. Not just the shopping cart, not just checkout, not just looking up inventory, you have to do the whole thing, right. And that’s the point-

Russ Jones: and that’s the flywheel. That’s the commerce flywheel.

Yvette Bohanan: Right. And each protocol right now, for the most part, there’s some exceptions, it is kind of like targeting one part of the broader problem. But eventually they’re either gonna have to have a way of saying, okay, I’m fine with this, or fine with that. Or they’re going to be kind of merging together.

Interestingly, a lot of this stuff is already being turned over to Linux Foundation as open source, so who knows how it’s all gonna evolve and who’s going to keep some of this? Is it just the data that everyone’s going to protect, and they give away the protocol so that they can cooperate at the protocol level and compete at the data level?

How are we thinking about this as it sort of susses out? But right now, it didn’t make my reservations for me. I had to go intervene and help the agents out.

Russ Jones: Yeah, sometimes they just need all the help I can get.

Yvette Bohanan: Yeah. Now, is there another, are we gonna do this again? Advanced topics.

Russ Jones: Absolutely. We’re going to do a Advanced Payments workshop, online virtual so anyone can join, that’s gonna be May 12th and 13th. 2-day, six hour workshop, three hours on May 12th, three hours on May 13th. And I’m gonna go out on a limb and say, we’re gonna talk about stablecoins and agentic commerce there. And the material we’re gonna use doesn’t exist yet.

We’re also in the process of rolling out a self-paced learning course on stablecoins, and that will be released in January. That’ll be a two hour, self-paced course on stablecoins going through risk exposures and economics, and the makeup of the stablecoin market actually cover a lot more topics than we were able to cover in the advanced payments workshop.

Yvette Bohanan: Fantastic. It was a great way to wrap up the year, to have that live workshop. Are we doing another public live event?

Russ Jones: We’re considering that. We haven’t announced dates or location yet, but we’d like to do a in-person payments bootcamp in New York later next year.

Yvette Bohanan: Fantastic. Well, Russ, it’s that special time, so thanks for joining me. Thanks for a wonderful workshop in San Francisco and we hope everyone who attended got a lot out of it. Thank you all who attended, if you’re listening, and stay tuned folks for the materials to be released if you’re interested in these topics. We’ll be out there talking about them more in the new year.

Russ Jones: All right. Thank you for having me on Yvette.

Yvette Bohanan: Thanks to our listeners. Until next time, keep up the good work. Bye for now.