Surprise! We spent a lot of the past month thinking about banks. March confronted us with stumbling blocks for fintechs and their sponsor banks, a bank-led battle for the checkout page, and a clearer view of the path forward for U.S. fast payments. Let’s dive into it in this second edition of Payments Post, our monthly round up of the headlines that got the Glenbrook team talking.
First, the elephant in the room: SVB. The bank’s collapse was shocking, but shock quickly turned to pragmatism for ourselves, our clients, and folks across the fintech ecosystem. Many startups and fintechs found themselves asking “how can we fund payroll?” or, like Rippling, “how can we make sure our clients can fund their payroll?” The SVB crisis highlights a concern our colleague Chris Uriarte wrote about in a recent Glenbrook Payments Views post (and presented on at MRC in Las Vegas): bank redundancy and resiliency. As Chris argues, the operational concerns demonstrate the importance of having a secondary partner for payment processing and embedded financial services. Even if you don’t expect your partners to unravel in the way SVB did, it can be useful to have a backup provider in case a client comes to you asking for help with a novel use case, for example. As an aside, if you’re interested in a more in-depth look at the reasons behind the SVB collapse, I’d recommend Matt Levine’s Money Stuff piece on the subject.
Despite all the sobering bank-related headlines this month, bank-owned Early Warning System announced a new checkout acceleration product, Paze. Paze is a wallet solution that allows users (i.e., bank customers) to store payments credentials, reducing friction in ecommerce checkout. You might think of it as the bank response to Apple Pay and similar wallet services. We’ve seen numerous attempts to solve ‘the ecommerce problem’ over the years and we’re curious how Paze will incent merchant and consumer adoption, especially given the level of competition on the checkout page today. We are also curious about the long term goals of Paze. Are you an issuer or acquirer looking to implement this kind of solution? Or even just a consumer/payments geek who would be interested in seeing your bank adopt something like this? Let us know your thoughts.
Our last news item is as mundane as it is significant. FedNow has an official go-live date: July 2023. It’s no secret that we Glenbrookers are excited by fast payments systems in general, so we’re excited to see how FedNow’s transition out of the pilot stage will affect the U.S. payments landscape. As we wrote in our last installment of payments post, we’ve observed industry adoption of fast payments is lagging, in part, because industry participants have been waiting on the introduction of FedNow. Having an official launch date for FedNow may spur adoption, though there is still a lot of work to be done. For more on fast payments in the U.S., take a look at our three part Payments Views series on the topic coming out this month. The first is here, as Joanna Wisniecka talks about fast payments market opportunities.
That’s it for Payments Post until next month, but do let us know if there’s anything we can do to help your organization in the meantime.
All the best,
Justin
