Banking-as-a-Service, digital wallets, the rise of digital ledger technology, the decline of cash. These are all central points covered in the long-awaited interview. kit yaker.
European payment provider services PPS Engage startups and established businesses that need a scalable partner to manage their processing, issuance, and account-based needs.
Yarker is the company’s product marketing director, where he Fintech Times It provides fascinating insight into the rapidly evolving payments landscape and explains how revolutionary new technologies are changing the way payments are made forever.
So, can you tell us a little bit about what PPS is and who it aims to serve?
PPS has been around for about 22 years, so majority ownership is eden red When master Card Joint venture company.
PPS started by offering a closed-loop gift card and built its own processor to handle it. Tie into retail systems to transact beyond the Mastercard rails, visaBut over the years it has added more products and features.
We have a full Electronic Money Authority (EMI) license, one in the UK Financial Conduct Authority (FCA), and Belgian National Bank For EA, we will be able to issue IBANs and accounts across Europe, including the UK.
We are also a principal member of Mastercard, which allows us to issue cards throughout the region using our own processors.
We do everything onsite and in-house. That is, clients can pick and choose specific services. You can use the entire suite or individually select the modular components you want to use.
We have been banking as a service and paying clients for over 5 years.
Have you noticed that certain aspects of your service have become more popular than others in recent years?
I think it’s changing from what’s happening in the market in general, not specifically with regards to PPS.
With the rise of neobanks over the years it’s obviously very much driven by the e-money licenses they use and they tend to use people in their own or other companies and get their own There is a tendency to
I believe some of these entities create their own licenses. So there is still a lot of work to do with them, but it tends to change.
What I’m seeing in the industry at the moment is really starting to create opportunities in the B2B space where entities with their own licenses are looking for their own capabilities.
For example, a client might say, “I actually have my own EMI license, but I need the ability to issue” or “I have the ability to issue, but I need the ability to serve accounts.”
Four to five years ago, it was banking as a service, offering sanctioned activities to unsanctioned entities with a set of capabilities from account to card processing.
What we’re seeing now is a mixed trend. The client is saying, “I actually have a few things myself. I need help with these things,” or, “Actually, I don’t need everything. The value is this, so all you really need is this part ‘It’.
Therefore, I believe that companies that can modularize and offer more customized views to their clients will do well in the future.
How can you expect the market for BaaS products to develop over the next 18 months?
When I look at this industry, we have banking as a service and under that we have the scope of finance.
And then there is payment as a service. It uses someone else’s license but provides plumbing under it.
If you look at the payments industry as a whole, I think it’s interesting. Banking as a service is an important part of that.
I think banking-as-a-service, which includes services like processing and card issuance, is becoming very commodity-based.
There are many companies that can provide some or all of these services. I think what will change in the next 18 months to two years is the value-added services around it.
Besides licensing and backend help, the question remains. What else can I do to help with that? How can I add that value?
Essentially, if it’s a commodity, you don’t want its price to be the determining factor.
How will digital wallet use cases expand in the future? Will it mean the death of cash?
I was actually talking to someone this week and they were talking about youth cards. So we are currently looking at what is best for them.
I can’t remember which country they specifically mentioned, but they were talking about cash as pocket money being one of the last big things in that market.
People give cash to children because they want to teach them about the physical value of money. But delivering that allowance electronically slows down the process.
So I don’t think the cash ran out all at once. A lot of cash is still in use.
Digital wallets are best for those who are familiar with them. But the Boulevard retail bank has to serve everyone from the age of 99 to her 18-year-old, so the Boulevard branch has to do things the traditional way.
So they have that legacy, but digital banks and digital wallets don’t because they are purely digital.
I don’t think cash is dead. I think it’s still changing.
Even with Covid accelerating the use of digital wallets, change will continue, but it will still take time and I think the cash will be there for a while.
Which new payment technology will have the greatest impact this time next year?
When everyone talks about crypto, everyone just thinks of coins and there are different versions. Everyone thinks about money, but how do I spend it? But I think what’s really most interesting is the underlying distributed ledger technology.
Crypto is what it is, you need traditional payment methods to get into it. You must have a physical account somewhere. So how is it resolved?
If cryptocurrencies are to become truly mass-market, regulation needs to mitigate the risk of banks getting used to cryptocurrencies and becoming softer.
So I think the cipher will continue. It hasn’t gone away, it’s still going on, but it’s the underlying blockchain technology that’s really changing the payments industry.
When you think of those applications, from KYC to AI, everything comes with it, and you think about payment issues, KYC costs, manual disposition, and more. time.
If we could look at digital ledger technology and provide a secure, immutable view, that would really help. Especially in terms of financial inclusion.
A lot of banks make decisions when someone doesn’t necessarily get an account because the credit risk is low or they have no credit. Digital ledger technology can really help.
There are challenges with this. For example, if your credit score is low and you looked at it and they were wrong, you could probably change it, but blockchain doesn’t allow you to change that.
So are you causing another problem there? Maybe, but I think technology across the payments industry could really start to drive change.
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