There is a digital payments boom and a shift from the traditional electronic payments systems. Most countries have had a national payment network authorized by a central authority to transfer money between banks. This is time-consuming as the funds could take days and their tracking was challenging.
Growing competition in payment systems provision spaces
With the growth in the digital payment systems companies such as Google have developed apps that help make easier transfer of money and make tracking seamless. Diana Layfield, the payments team executive at Google says that people are not interested in making payments but doing what the payment facilitates. Thus, the largest struggles of the industry happen in the shadows where card companies and tech firms are vying to control the digital flow of cash.
There have been maneuvers by various industry competitors, but card companies Visa (NYSE:V) and MasterCard Inc. (NYSE:MA) are not ready to give up the industry they invented almost 50 years ago. The two companies control around 90% of card payments globally outside China and have established a way of getting into action.
Visa and MasterCard enhancing their offerings
Recently, MasterCard entered a collaboration agreement with ACI Worldwide, a real-time payment system software maker, to offer such services worldwide. The move is part of the card company’s efforts launched in 2016 of moving away from plastic following the acquisition of Vocalink. Vocalink is a software company built and running the UK’s fast, automated clearinghouses (ACH) and powers payment systems in other countries.
On the other hand, Visa has launched Visa Direct, an option to fast ACH that offers services like security tools, which helps enhance countries’ payment networks. Most national payment systems have been built under the same principles, but most can’t work together, which leaves an opportunity to innovate for Visa and MasterCard’s likes.
SWIFT, which is popular for interbank messaging and cross-border transfers, is also enhancing its offering, and recently it unveiled a strategy facilitating seamless and instant transfers using cloud tech.