Alternative Payments: Evolution or Revolution

Webinar: Alternative Payments:
Evolution or Revolution
Nasreen Quibria | Managing Director & Founder
September 23, 2015

http://www.qinsights.net
Today’s Discussion…
2http://www.qinsights.net

Defining (r)evolution
3
ev·o·lu·tion (ĕv′ə-lo͞ o′shən, ē′və-)
n.
a process of slow change and
development
rev·o·lu·tion (rĕv′ə-lo͞ o′shən)
n.
a sudden, radical, or complete change

Evolution of Payments
5
CHECKS used as mass
instrument in 1950s & 1960s
CREDIT CARDS invented in the 1950s
Widespread use by 1970s
Peaked as a % of consumer transactions in 1990s
ALTERNATE FORM FACTORS
DEBIT CARDS invented in the 1970s
Not widespread until 1990s
Not yet peaked
1950s 1970s 1980s 1990s1960s 2000s 2010s
Present – Future
NEW PAYMENT
INSTRUMENTS

Forces Driving Change
6
falling cost of
computing
real-time data
pressure to
reduce costs
tech
innovation
consumer
preferences
shifting dynamics
digitalization

m-Lexicon
8
broad array of
financial
services, includes
mobile banking,
mobile payment,
and mobile
money transfers
mFinancial
Services
mCommerce
extension of ecommerce
covering wide scope of
applications including
mobile financial services
and mobile marketing
mBanking
extension of online
banking
mPayments
payment transactions
executed on a mobile
device

Common Mobile Payment Types & Technologies
9
Near Field
Communications
SMS QR Codes m-app
wallet
mPOS Location-based
beacon tech

Spotlight: Apple Pay versus Starbucks
10
SOURCE: https://www.youtube.com/watch?t=1&v=xDK2tjws_uw

(Near) Real-Time Payments in the U.S.
12
Same Day
ACH

What is Digital Currency?
14
Digital currencies are very similar to physical
currencies. They can be used to pay for
products and services and can be exchanged
for other currencies
aka virtual or crytocurrency

Cryptocurrencies
15
SOURCE: 2015 PwC Consumer Cryptocurrency Survey

What Are People Saying About Bitcoin?
17
[Bitcoin] is a techno tour
de force
Bill Gates
Founder of Microsoft
It's money 2.0, a huge
huge huge deal
Chamath Palihapitiya
Previous head of AOL instant messenger
It’s a bubble. It has to have
intrinsic value. You have to
really stretch your
imagination to infer what the
intrinsic value of Bitcoin is. I
haven’t been able to do it.
Maybe somebody else can.
It’s gold for nerds
Stephen Colbert
Late Night Show Host
Alan Greenspan
Former Federal Reserve Chairman
I think there is a 20% chance
that Bitcoin will become a huge,
worldwide success
Peter Thiel
Co-Founder of PayPal
Bitcoin Today is the
Internet in 1994
Marc Andreessen
Venture Capitalist and Co-Founder
of Netscape

What is Bitcoin?
18
SOURCE: https://www.youtube.com/watch?v=Um63OQz3bjo

The Good, the Bad and The Ugly
19
21 million
The Good The Bad and the Ugly
Direct transfer -
decentralized, no
middleman
Faster transaction
time
Lower transaction
fees
Secure
Universality -
independent of
government,
country, or banking
system
Anonymous
Irreversible
Volatile prices
Block-size limit
Attracted criminals
Unregulated
Not insured

Bitcoin Investment Ecosystem
20
NOTE: Representative companies and not an exhaustive list
Bank Labs / Research Investors
Startups

What is BLOCKCHAIN?
22
Technology underpinning bitcoin, a public decentralized ledger
of all transactions

How does it work?
23
Blocks can carry a certain value of bitcoin or other pieces of information
which makes the Blockchain so powerful!
Mining math
Block n
Block 2Block 1Block 0
Hash Hash
Each block contains the hash of the previous block that link together in a long chain
Miners’ computers
calculate
cryptographic hash
functions, a unique
"fingerprint" that
makes
transactions verifiable
Computers bundle transactions into a
new transaction block

Blockchain Applications
24
Blockchain uses being explored today... irrespective of the use of bitcoin
smart contracts smart property
digitization of documents
and proof of ownership
for transfers
digitally recorded assets
stock exchanges
digital trading platform
music distribution
proof of ownership for
digital content
health records
decentralized patient
records management
secure digital
voting
fraud-proof, anonymous
digital voting solutions

Blockchain Applications Continued…
25
business-to-business
payments
Other potential uses of the Blockchain still yet to be realized!
Just to name a few...These are early days!
cross-border
transactions
international financial
transactions 2
correspondent banking1
peer-to-peer remittances3

27
Thank You – Questions? Let’s Connect…
Nasreen Quibria| Managing Director & Founder
nasreen.quibria@qinsights.net
(m) 617.388.6207
nasreenquibria
@nquibria

Appendix – Resources
28
› Quibria, Nasreen. "Blockchain Holds Promise for Cross-Border
Payments." American Banker. 7 August 2015.
› Quibria, Nasreen. "Can Apple Pay Change the Way People Shop?"
American Banker. 26 September 2014.
› Quibria, Nasreen. "Mobile Primer: What Does it All Mean?" BAI Banking
Strategies. 10 February 2012.
› Quibria, Nasreen. "The Real-Time Payments Revolution." Bank Systems
& Technology. 28 March 2014.
› Quibria, Nasreen. "The Reality, or Not, of Bitcoin." BAI Banking
Strategies. 8 September 2014.

Q INSIGHTS is an independent
payments research and
consulting company. Combining
deep expertise and data driven
insights, Q INSIGHTS provides
companies with a roadmap for
success.
617.388.6207
www.qinsights.net

Alternative Payments: Evolution or Revolution

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