The PaymentsJournal Podcast The PaymentsJournal Podcast

Organizations have faced the challenge of deriving insights from their data for a long time. Some enterprises have the ability and resources to do this, but others are far behind. Artificial intelligence (AI) has the capability of catapulting data analysis into the future, allowing enterprise analytics to fit into the daily, general health and success of a company.







Billtrust has been at the forefront of using AI to build out analytics processes, especially within the payments landscape. In a recent PaymentsJournal podcast, Ahsan Shah, Billtrust’s Senior Vice President of Data Analytics, talked about the AI-fueled future of data analytics with Christopher Miller, Lead Analyst of Emerging Payments at Javelin Strategy & Research.





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The Democratization of AI







Organizations can no longer say they are not looking at AI. The success for most is going to come with the democratization of generative AI as opposed to a top-down mandate.







“Some companies are more advanced than others, just by allowing people to try it in the form of their goals and their own self-training,” Shah said. “Some of our teams here at Billtrust are doing hackathons where they just learn how to do this amazing thing. I think it’s going to flourish organically, and I think that’s the right way.”







AI is poised to go from a foundational model universe to a large set of tools, tooling, infrastructure, and services. The technology advancements are moving much faster than the rate of adoption. OpenAI is already at the forefront of multi-modality.







“There has been an explosion in the number of different systems that are monitoring various parts of how a business operates, ranging from frontline customer success to the nitty-gritty details of actual payment processing or chargeback processes, all the way up to when is revenue recognized and how is cash managed,” Miller said. “One of the challenges for teams has been to figure out how to put together those different pieces.”







An Explosion of Data







Most companies ask someone to piece together various pieces of information or cut and paste some data in a spreadsheet. Maybe they have a dashboard that brings together different pieces, but even maintaining that dashboard,

Instant payments systems have gained traction in countries that had cash-based payments infrastructures. While services like FedNow and the RTP network have launched in the U.S., instant payments haven’t taken hold due to the firmly established financial system.







In a recent PaymentsJournal podcast, Abeer Bhatia, CEO of Personal Lending & Head of Enterprise Payments at Wells Fargo, and Elisa Tavilla, Director of Debit Advisory Services at Javelin Strategy & Research, discussed the past, present, and future of instant payments.





PaymentsJournalA Powerful Nexus: The Present and Future of Instant PaymentsPaymentsJournal A Powerful Nexus: The Present and Future of Instant PaymentsPaymentsJournaljQuery(document).ready(function ($){var settings_ap46260606 = { design_skin: "skin-wave" ,autoplay: "off",disable_volume:"default" ,loop:"off" ,cue: "on" ,embedded: "off" ,preload_method:"metadata" ,design_animateplaypause:"off" ,skinwave_dynamicwaves:"off" ,skinwave_enableSpectrum:"off" ,skinwave_enableReflect:"on",settings_backup_type:"full",playfrom:"default",soundcloud_apikey:"" ,skinwave_comments_enable:"off",settings_php_handler:window.ajaxurl,skinwave_wave_mode:"canvas",pcm_data_try_to_generate: "on","pcm_notice": "off","notice_no_media": "on",design_color_bg: "111111",design_color_highlight: "ef6b13",skinwave_wave_mode_canvas_waves_number: "3",skinwave_wave_mode_canvas_waves_padding: "1",skinwave_wave_mode_canvas_reflection_size: "0.25",skinwave_comments_playerid:"46260606",php_retriever:"https://www.paymentsjournal.com/wp-content/plugins/dzs-zoomsounds/soundcloudretriever.php" }; try{ dzsap_init(".ap_idx_450304_5",settings_ap46260606); }catch(err){ console.warn("cannot init player", err); } });





An Infinite List of Trends







The payments space has undergone massive shifts in the past few years, driven by a few central undercurrents.







“There’s almost an infinite list of trends happening, but two stand out most,” Bhatia said. “One is the increase in instant payments and the attention it’s received since the launch of FedNow and RTP. The second is the expanded availability of data that companies have within the new formats.”







Instant payments services allow for much richer data to be transmitted between sender and recipient. It’s facilitated by the ISO 20022 messaging standard, which acts as a universal payment language. So far, countries outside of the U.S. have been swifter to adopt the new model.







“There are unique aspects about markets like Brazilian and Indian which caused instant payments to take off there,” Bhatia said. “The main reason is it’s needed. It’s a compelling alternative to cash payments, and it allows them to conduct both P2P and customer-to-business (C2B) payments.”







Barriers to U.S. Ubiquity







In India and Brazil, the government has effectively mandated the use of instant payment rails, making growth fundamentally faster. The U.S. isn’t likely to get a government mandate anytime soon, but that’s not the only factor slowing instant payments adoption.







“The U.S. is highly card centric,” Tavilla said. “Cards are convenient to use and accepted virtually everywhere. There are also over 9,000 institutions in America and two real-time settlement systems. Getting all the financial institutions on board and connected to the networks will take time.”







“P2P has been a primary instant payment use case in markets like Brazil and India,” she said. “P2P has been adopted in the U.S. but, behind the scenes, it’s not really an instant payment. The settlement is asynchronous,

Organizations turn to fintechs for payment solutions that are as efficient and seamless as the transactions they facilitate. However, behind these smooth interfaces lies a labyrinth of challenges. Security concerns, regulatory compliance, and constant technological upgrades are just a few of the hurdles fintechs must navigate to provide what appear to be simple solutions. For clients, the expectation is straightforward: a payment solution that works flawlessly. The intricate complexity involved in meeting this expectation, though, often goes unnoticed.







It’s easy to make something simple complicated. But it’s difficult to make something complicated simple. In a recent PaymentsJournal podcast, Kieran Draper and Tom Jennings, the U.S. and EU/UK CEOs of B4B Payments, and Brian Riley, Co-Head of Payments at Javelin Strategy & Research, spoke about the strategies fintechs employ to ensure their solutions remain both effective and invisible to the user. Highlighted is the delicate balance between simplicity and complexity, especially in the world of international embedded payments.





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Fintechs Deal With a World of Complexity







Ideally, payments get processed with the press of a button, no different from dialing a number and knowing, without having to think about it, that the right person will answer. Customers making payments expect something simple and effective.













But it’s a challenging environment for fintechs right now as they try to deliver that experience, with their funding drying up and regulators coming down on them. On the upside, it’s also a vibrant market. Demand is expanding, as more and more businesses seek to make payments across geographic boundaries and across platforms.







“For a fintech like us, there are a tremendous number of things that we need to take into consideration,” Draper said. “The transactions need to be secure, we have to be compliant in multiple jurisdictions, and the solution needs to be auditable. The trick is to try and figure out how to present a solution to these businesses that shields them from all of this complexity.”







One area with great complexity for companies is offering services across borders and the need to juggle varying regulations and payment methods. To take one example, B4B works with maritime businesses that make and receive payments in multiple currencies,

With gift card spend projected to reach $267.3 billion by 2028, it’s clear that gift cards  are an influential force in the market. And the rise of digital gift cards, a trend that continues to gain momentum, is opening up new avenues to engage younger generations.







During a recent PaymentsJournal podcast, Blackhawk Network’s (BHN) Sarah Kositzke, Director of Research and Hilary Spidaliere, Director of Product Marketing, as well as Jordan Hirschfield, Director of Prepaid at Javelin Strategy & Research, explored, analyzed, and amplified the insights from this year’s Benchmark Report: 2024 Digital Gift Card Leaders, conducted by NAPCO research in partnership with BHN. This market-leading report on the gift card industry, which evaluated the digital gift card programs of 100 U.S. merchants, identifies best practices and opportunities for how retailers can optimize their own gift card programs.  





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Gift Card Industry Trends







During the 2023 holiday season, the average individual received around three gift cards, totaling roughly $160 in value. However, when recipients made their purchases, they spent an average of $78 more than the card’s value1. Leveraging a gift card to purchase a bigger-ticket item is commonplace and one of the reasons why gift cards are so valuable to retailers – driving that additional overspend and store visits.







“About a third of people said their favorite gift was a gift card,” Kositzke said. “Most people are still getting single-branded cards, like Starbucks or Amazon, which account for 75% of gift card buys. The Visa and Mastercard options and multi-branded cards are picking up steam though1.”







According to BHN, 77% of purchases were physical cards, even when the transactions occurred online. Physical cards are considered more personal, especially when there’s an option to customize the card. Despite the increasing popularity of online shopping, most gift card transactions still happen in-store, making up 85% of purchases1. But that is likely to change.







“Looking a little further out to 2030, digital cards are going to continue to gain ground,” Hirschfield said. “By the end of the decade, it’s likely to be a 50/50 split. That’s driven by Gen Z and Millennials, who are also significantly more likely to extend their purchases beyond the gifted amount.

Reconciliation is an essential aspect of the accounting process that improves transparency, maximizes decision-making, and ensures regulatory compliance. However, many merchants and payments organizations still rely on inefficient processes that can result in errors, financial losses, or violations.







In a recent PaymentsJournal podcast, Nick Botha, Global Payments Sales Manager at Autorek, and Don Apgar, Director of Merchant Payments at Javelin Strategy & Research, discussed the importance of optimizing the payments reconciliation process and explored the influence of automation on its efficiency.





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An End-to-End Process







The reconciliation process is often fragmented among business divisions, which can lead to inaccurate reporting.   







“It should be viewed as an end-to-end process,” Botha said. “That includes financial controls, operational processes, payment flows, the whole of financial operations. Reconciliation has become integral to the success or failure of a middle and back office these days, and it must be a single, continuous process.”













Another pain point is the reliance on legacy-based processes or manual workarounds to process complex financial data. As a business scales, inefficient methods increase the potential for a costly reconciliation error.







“A function of paying money out is reconciling it,” Apgar said. “There’s been so much growth in the fintech space, and so many companies have stepped in that don’t realize how complex it is. They don’t understand the sheer number of data sources there are, the number of categories, and how many feed types to apply.”







The move to faster payments is likely to compound reconciliation challenges. As instant payments rails like FedNow and RTP gain traction, companies will be compelled to adopt reconciliation processes capable of operating in real-time environments.







Fit for Purpose







Mastercard and Visa recently settled with merchants, agreeing to relax certain restrictions and reduce credit card interchange fees. The settlement is expected to save merchants $30 billion over the next three years.







“It’s a splashy headline,” Apgar said. “It boils down to a four-basis-point rate reduction for merchants, which is not much. The big news was the rules changes that allowed large enterprise merchants to negotia...

The United States is a unique banking market, with more than 11,000 financial institutions and some of the most stringent regulations in the world. With the launch of FedNow last year, The Clearing House’s RTP network, and a new messaging standard in ISO 20022, U.S.real-time payments have finally arrived. There’s only one problem: The infrastructure here is not ready. 







In a recent PaymentsJournal podcast, Himanshu Pujara, Managing Director for Euronet Worldwide, and Elisa Tavilla, Director of Debit Payments at Javelin Strategy & Research, spoke about how instant payments are happening around the globe today, and how banks can develop payment platforms that take advantage of increased standardization and interoperability, as regulatory bodies push for a more interconnected financial ecosystem.





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Playing Catch-Up With the World







The state of global payments varies depending on where you look.













“We’ve connected to many RTP networks and have been processing instant payments for over a decade now,” Pujara said. “In India, the Unified Payments Interface has been a game-changer, enabling billions of transactions monthly with its simple, mobile-driven approach. Then there’s the EU’s SEPA Instant Credit Transfer, which streamlines cross-border payments efficiently within Europe. In Brazil, the Pix system has revolutionized the speed of payments, quickly becoming a mainstay in their financial ecosystem. We process millions of transactions every single month for our customers in the emerging markets, and in all of these markets real-time payments has become a dominant form of payment in the day to day lives of consumers.”







These global trends have not yet matured in the U.S. market. While the United States has had limited access to instant payments in the past, FedNow has sped up the timeline for banks to offer such payments to consumers and merchants. This gives banks the opportunity to enhance transaction efficiency, financial inclusion, and economic growth.  







Seeking Harmony







Although there are different U.S. regulatory and market environments, the future points toward more collaborative efforts to harmonize regulations and technical standards, making it easier to transact instantly and across borders. Financial institutions have the opportunity to use the real-time payment rails to launch innovative use cases for custome...