Ajay Banga, the chief executive officer (CEO) of Mastercard, is adamantly against any attempts to fracture the Global Payments Systems (GPS) into national domains.
The worldwide move from cash to electronic payments has triggered privacy concerns among users, but that is not a reason to change a system that works. He called pursuits of dismantling the GPS in favor of national payments systems ‘stupid.’
“The economic cost of building siloed systems in a world where citizens travel globally is really stupid, and where crime travels globally is even more stupid, and where technology is completely global is even three times more stupid,” he told FT, emphasizing each time he said “stupid.”
Privacy-weary consumers could return to cash if governments push in the direction of nationalization of payments, Banga warned.
He said it is “better, faster, cheaper” to partner with Mastercard, which already connects over 30,000 financial institutes in 200 countries “with local legal regs” built into the system. He added that “everybody, even the digital giants, realizes that is a [lot] of heavy lifting to try and do.”
And many analysts concur that the barrier to entry is high when it comes to payments. “It’s not easy to break into payments — many entrants have found that out, quickly and the hard way,” says Sanjay Sakhrani of KBW.
Mastercard is transparent about user data it sparingly collects, with only minimal information tapped — account number, transaction amount, time of day, merchant code. The company also makes sure that users “receive some benefit” when their information is used.
Banga said other drawbacks to having local networks over the current GPS would be the expense — “redundant investment” would be necessary — as well as splintered analytics and the inability to process international transactions.
Speed, scale and engagement will shape daily consumer interactions in the coming years as digital disbursements stand as one of the main areas of innovation and disruption for the practice of payments into the future.