In a payment facilitator-focused fight that could be painted as Wall Street lobbyists against Silicon Valley lobbyists, a tech group—consisting of Amazon, Apple, Google, Intuit and PayPal—has created a payments lobbying group solely designed to counter the influence of traditional financial players, including Visa, MasterCard, Amex, Chase and Citibank. The group announced its formation on Tuesday (Nov. 3).
The new group calls itself Financial Innovation Now (FIN) and argues that it wants to persuade politicians to go a different route. That said, the group has not articulated what specific different arguments it wants to make. It did list a series of topic goals, but those goals are all ones that existing financial players would applaud. Those goals were: “Realize trust and safety of new technologies; Leverage technology to reduce barriers and enhance access for the underserved; Enable real-time payments clearing processes; Expand the online marketplace for consumer and small business lending; and unlock the power of financial applications.”
Complicating matters is the diversity of the FIN group. The concerns of Amazon, Apple and Google, for example, are aligned, in that they are major financial players in retail, hardware, mobile and search engines that are exploring payments initiatives, initiatives that are likely to remain secondary to their primary revenue lines. But PayPal and Intuit are much more closely involved in financial services, with PayPal being every bit as much of a pure payments player as Visa.
“We want to make sure that old rules are not placed on new technologies,” said one FIN official who asked that his name not be used.
The group’s executive director is Brian Peters, a former lobbyist for Research In Motion (of BlackBerry infamy) who also served as a U.S. House of Representative legislative aide for five years. Peters’ LinkedIn profile has him serving in his FIN role since July 2015.
In an interview, Peters said the group “formalized their efforts” in July, but didn’t announce until November. In the Tuesday news release announcing the formation, the group described itself this way: “Financial Innovation Now is an alliance of technology leaders, including Amazon, Apple, Google, Intuit and PayPal, that are working together to modernize the way consumers and businesses manage money and conduct commerce.” But despite saying that the group “included” those five, Peters said those five are the only members, for now.
Asked how his group’s lobbying efforts would differ from those from the card brands and the major banks, he said that they would offer a focus on mobile rather EMV. “We’re about people paying with their smartphone, their wearable, more than chip and signature or chip and PIN,” he said.
Another difference, he said, would be with payments security standards and particularly tokenization. “We want open and interoperable standards. What we have right now is a payment system that is largely defined by the existing rails and they are less open. They are closed and proprietary,” Peters said. “One person’s tokenization is not another person’s tokenization.”
Todd Ablowitz, president of the Double Diamond Group payments consulting firm and to Co-Founder/Publisher of PaymentFacilitator.com, said this kind of a group could potentially serve an important role in adding a tech perspective for federal and state legislators and regulators.
“This is the sort of non-governmental organization that can advocate to reduce friction in the payment facilitator world,” Ablowitz said. “We need powerful tech companies like these—not just the so-called big bad banks—to battle overzealous bureaucrats. To be clear, banks are needed, too.”
Ablowitz cited a recent Pennsylvania decision as a good example of the kind of cases where not only banks are at risk, but the tech companies are also at the center of the issue. “In Pennsylvania, it’s hurting the very people it’s trying to help,” he said.
Peters said he was aware of the Pennsylvania decision, but not versed in the details. “Our core focus is at the federal level,” he said.
As a practical matter, the issue goes far beyond a handful of overzealous legislators. It’s more often a case of ignorant legislators and banks and card brands whose lobbyists are only too happy to train them—and to train them to see things solely from a Wall Street perspective.
At a big picture level, the card brands and the major banks are open to make enhancements to the payments system, but they want to ride on the existing rails as much as possible. The more changes that hits the payments fundamentals, the better the chance for today’s payments leaders to lose more marketshare. Companies like Amazon, Apple and Google have far less stake in the existing financial rails so they are more open to proposing more radical deviations. And policy-makers and legislators need to understand that perspective as well before making decisions.
Given that PayPal has one foot in each camp, it’s not inconceivable that PayPal may have different perspectives than it’s colleagues. But PayPal is still going to have a stronger break-the-rails-if-needed perspective than, for example, Visa or Chase.