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  • Milos Dunjic

Pandemiology Of Payments

I sincerely apologize to all of the enthusiastic supporters of Paydeology, who kept persistently and politely asking for new blog posts about payments innovations, for the noticeable period of inactivity. Honestly, I did not have enough inspiration to write anything about, since my last blog (Jan 4th). Things were chugging along in the mainstream payment land just fine, despite all of the attention PayTechs were getting in the press. Innovation was happening at usual and normal pace. Then everything changed. For everybody individually and every business enterprise. Big time.


I am again getting inspired and here I am, writing. As bizarre as it may sound, in this messy situation, I must say that my inventor's part of the brain is starting to get visibly excited. We are collectively faced with unprecedented level of disruption in the way we work and live, as the COVID-19 global pandemic is unfolding in front of our eyes and threatening to overwhelm almost every single country's healthcare system.


Main megapolis areas, mid size towns and rural cities, are literally turning into ghost-like places across the globe, as the result of government and municipal lockdowns, in order to fight the pandemic and flatten the epidemiology curve. Most of the workforce has completely switched to working from home these days. Everyone is shopping online. Remotely interacting and telecommuting is the new normal.


Going Forward Beyond Pandemic

The complete rapid change of lifestyle revolves around minimizing physical contacts and germs transmissions, in pretty much every daily activity. Inevitably, payments will naturally have to follow suit quickly and adapt at quicker pace than so far.


Take as an example card rails based payments ... face to face or at the gas pump. Today's POS terminals and PIN pads (traditional or smart phone based) are passed between merchant's and customer's hands all the time, and customers are required to touch keyboards in the process. Most of home deliveries are still paid traditionally, through physical portable (GPRS capable) POS terminals in similar way. Passing cash is even more risky. I never thought about it myself, however right now I am already starting to be more and more uncomfortable with getting POS terminals into my hands. Since those devices simply can't be maintained clean enough, we may see many customers turning into germaphobes as the result of the current crisis.


Contactless payments could be the answer, but only up to a point. There is a limit for PIN-less payments and there will always be need for PIN entry required beyond threshold certain transaction size. At some point touching merchant's device becomes inevitable unfortunately.


Ideally, consumer and merchant should only interact with their personal devices as part of the payment experience. Uber seems already very close, with their in-app payments for food deliveries (or rides), where you only handle your own phone and payment is done either via OEM-Pay wallet or simply using stored card on file. However, what if I want to personally tip the delivery person, directly to their bank account, instead of relying on Uber to redistribute fairly tips collected through their app? Next, how can this direct tipping be completed, without even need to open front door, and using P2P service like Venmo (in US) or Interac e-Transfer (here in Canada), with a complete stranger?


In order to rely only on interaction with our own mobile phones during payments, it would require seamless nearby proximity discovery of payer's and payee devices. On top of that it requires establishing bank grade, reliable trusted communication channel between those devices and corresponding FIs on an ad-hoc basis - without need to exchange passwords, participants' emails, card numbers or phone numbers. I call those asocial payments. Payers should not care who the payees are, what's their email, card number or phone number; nor they necessarily want to add payee as their permanent contact in P2P app. They ideally just need to be able to participate in proximity, frictionless, ad-hoc, secure and completely trusted transacting experience - that allows them to respect social distancing etiquette.


We are clearly not there yet, but we already have the perfect storm of converging and interesting technologies (some of them in isolation have nothing to do with payments), which could be creatively combined to deliver advanced experiences like these and hopefully make the next pandemic somewhat easier to endure.


Hope everyone's safe and healthy these days.

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