This newsletter explores how money moves, around the world — and why it matters.

I hope you’ve had a good start to the year. It feels like it’s rained every day in the UK so far in 2026. In fact, this is the case for some places: a village in Cornwall had 50 consecutive days of rain. While we endure this deluge, we get plenty of chance to stay indoors, to write, and experiment with AI 🥲

Before getting into this week’s essay — a few short updates:

• I’ve set up a reader survey for this newsletter. It takes a maximum of 4 minutes to complete, and your feedback really helps me understand what is and isn’t working. One respondent, selected at random, will receive a $100 gift card. I would really appreciate if you could take a few minutes to share your thoughts.

• This January I took on a position as Co-Editor of the UK and Europe edition of This Week in Fintech. This means I put together the region's newsletter every other week. Each edition of This Week in Fintech (TWIF) is focused on fintech news from the past week, rather than long-form writing (like this newsletter), so it works as a nice complement to writing Payments Culture.

• I recently did an interview with Yap Global, a leading financial and technology PR consultancy. From reading the interview you can learn which book I was reading on a beach in Malta back in 2025, and my thoughts on how the payments industry has changed over the years.

• I’ll be in New Zealand for much of the next three weeks. If any of my readers are based in Aotearoa let me know. It’d be interesting to learn more about the local fintech scene over at flat white or two.

As ever, you can contact me on LinkedIn, on Twitter (X), via email, and here.

Finding Claude Code

Last month I spent some time with my parents in the countryside in Wales. My grandma was sick and nearing the end of her life. My mom and aunt were providing round-the-clock care. I was helping wherever I could, sometimes this meant taking care of the dog (who woke me up one night at 4am by licking my face), other times it meant providing emotional support, and being on hand with whatever was needed. Whenever I found the time, I tried writing. I had half-finished essays I wanted to get done, but I often struggled. With everything that was going on it was tough to concentrate.

Although I did unexpectedly pick up something else. It was a tool suited to dipping in and out whenever time allowed. Like many of you reading, I’ve been using a variety of LLMs over the past couple of years. I experimented, and soon, Chat GPT and Claude became my apps of choice (these are not LLMs themselves, rather they are interfaces to a selection of various proprietary LLMs developed by two of the largest AI companies — Open AI and Anthropic). I’d not yet seriously tried what often gets described as Vibe Coding. Building with prompts rather than having to know programming in any depth. Yet I started to tinker with Claude Code, which sits within the Claude app, or can be used in a more developer-centric terminal interface.

My grandma was born in 1928, into a world very different from our own. A world in which a basic radio was a rarity and outdoor toilets were still common in much of the UK. Almost one hundred years later, we can build complex software in days and launch globally in weeks. My grandma lived long enough to see the internet and smartphones — although, like many people of her generation, her interactions with technology were largely through her family sharing photos and videos on our devices. She passed away a little over a month ago while I was still in Wales. I wrote this essay on the way back from her funeral. 

I’ve spent much of the past month working on various projects with Claude Code. In my opinion, we’re in the midst of the biggest move in AI since Chat GPT went viral a few years back (in November 2022). In the previous phase of AI building, many startups built AI wrappers, with software that links to and interacts with AI models. The downside of such an approach was the challenge of providing more value than a user could get from using an LLM directly, and the ever-present risk of depending on the underlying AI model in terms of cost and platform risk. Companies who build AI wrappers always run the risk of the model provider itself moving into the product category and competing directly, or the model provider helping others compete with you.

This new era is a paradigm shift in consumer and corporate AI. We’ve had chatbots that gave us answers to almost any question in the world, and now, in this new phase centred on AI coding, users can build their own products directly rather than merely adding a wrapper around a model. The AI is now a co-creation tool that can help plan, provide options, and do the work that previously would have taken teams of engineers and other staff. 

The newsletter and consultancy Semi-Analysis recently highlighted this change:

We believe that Claude Code is the inflection point for AI “Agents” and is a glimpse into the future of how AI will function. It is set to drive exceptional revenue growth for Anthropic in 2026, enabling the lab to dramatically outgrow OpenAI.

While there have been various tools centred around building with AI, it’s Claude Code which has really broken through. Tools such as Cursor, Replit, and Windsurf are still valuable. But the recent change in perception has largely emanated from a slew of stories that emerged over the past couple of months, highlighting the leap in capability in the latest updates to Claude Code.

• In January, a senior Google engineer noted that the latest version of Claude Code, running on the Opus 4.6 model, was able to produce complex distributed systems architecture in one hour, which her team had spent a full year building.

• In Silicon Valley thousands of software engineers spent their Christmas holiday period experimenting with the latest version of Claude Code. In what became known as Claude Christmas, some engineers came back to work in the new year with the refrain that coding is “now solved”. The big leap was that not only did Claude Code help developers work more quickly, but it proposed architecture, presented plans, and “execute[s] sophisticated projects with little — or no — human guidance” (an excellent piece in the San Francisco Standard goes into this in a lot more detail).

• Various software companies have seen their shares drop by 35% or more since the start of the year, as investors question whether existing moats remain relevant. If a competitor can build a comparable product in a matter of weeks, software becomes less defensible.

There have even been reports that many highly skilled and prolific software engineers have entirely stopped writing their own code. Senior engineers in global firms such as Spotify have barely written any code directly since December. Andrej Karpathy, an AI expert and part of the founding team at Open AI states that agent-led coding is around 80% of his workflow, with the remaining 20% for manual edits. He commented that this is “easily the biggest change to my basic coding workflow in ~2 decades of programming and it happened over the course of a few weeks.”

This is a trend which is only getting started. Again from Semi-Analysis:

Coders will stop doing code and rather request jobs to be done on their behalf. And the magic of Claude Code is it just works. Many famous coders are finally giving into the new wave of vibe coding and now realizing that coding is effectively close to a solved problem that is better off supported by Agents than humans.

Though, despite the clear breakthrough, not everyone is sold on the short-term impact of AI. Ethan Mollick, an author and keen observer of AI’s impact on the workplace, has cautioned against assuming change will happen as quickly as many forecast.

The question is whether companies trapped by corporate inertia will be overtaken by those who move more quickly.

In the fintech domain I’ve recently spoken with founders who are using agent-led coding to move at a much faster pace than previously possible. Not slightly faster, but multiple times faster. Work that might have taken a week can be done in a day. This means more experimentation and the ability to rule things out if they don’t work, testing and learning day by day, rather than waiting on weeks of development resource before a new feature can be tried and tested. However, competitors will also have the same possibilities, and not all companies are looking at this the same way. Some fintechs are cautious of using AI, scared and scarred by hallucinations when they’ve previously tried, but the technology has moved so fast, that those who do not embrace AI run big risks.

Different industries will be impacted differently. At the task level, many aspects of fintech are ripe for disruption. The extent to which some large banks and legacy payment providers still process activities manually seemed antiquated years ago, let alone today. The question is whether to disrupt from within or watch the market move right past you. As Matt Schumer, CEO of OthersideAI, recently noted:

The models available today are unrecognizable from what existed even six months ago. The debate about whether AI is “really getting better” or “hitting a wall” — which has been going on for over a year — is over. It’s done. Anyone still making that argument either hasn’t used the current models, has an incentive to downplay what’s happening, or is evaluating based on an experience from 2024 that is no longer relevant.

Based on my own research and analysis, I estimate that companies that required $50m funding a few years back, will now be able to build the same product for $5m or less. 

This doesn’t mean to say that similar levels of capital won’t be required to build great companies. But expectations will change. What can be built for a certain level of capital will change, and every company will be scrutinised differently. In this new world possibilities will grow and compound as new opportunities open up. Predicting winners and losers in any fintech category will get harder, as growth becomes less linear, and expansion, whether horizontal (into new segments) or vertical (into new product lines), will at the same time have the potential to be faster than ever, yet less predictable.

In some areas, up until now, fintechs have formed a competitive moat by being the first to market and building strong customer relationships with a product that was “good enough” — now, the components of moats will change. In regulated financial services, it’s often thought that licences to operate in specific markets, relationships with regulators, and compliance practices can themselves form part of a competitive moat. Though my instinct is that this discussion will keep evolving, and the reality may not be so black and white. In the future, what forms a defensible moat could be quite different from what we think today. 

In fact, a sense of community, independent of the quality of software itself, could be a key defensive moat. Personal relationships take time to build, and no vibe-coded app or AI-led initiative can replace real-life interactions. That is, until AI agents start getting their own social community! Which has already started to happen with the Moltbook phenomenon. A foretaste of things to come?

Thanks for reading Payments Culture! In a future post I’ll share what I’ve actually been building with Claude Code over the past month. Following this I have some collaboration posts planned, and some longer analysis posts are in progress.

Please leave a comment or share with a friend or colleague if you enjoyed reading this edition. It’s much appreciated and helps grow the audience of this newsletter.

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Note that views expressed on this Substack are my own and do not represent any other organisation. Also nothing I say should be taken as investment advice.

Ukraine has been at war since 2014. That was when Russia invaded and annexed Crimea, and conflict soon erupted in the eastern Donbas region. Despite the human cost, much of the world took little notice. It was seen as a low-intensity conflict — something to be managed, and to much of the international community, an annoyance they hoped would go away. The Minsk negotiations were a sign of this approach. Yet in February 2022, with the full-scale Russian invasion, everything changed.

“The first challenge after February 2022 was: does the financial infrastructure still work?“ Andrew explained to me that in war, things we take for granted are under threat.

“Can you pay in a store? Can a business accept payments? Does the client have access to funds?” All of these basic questions were in flux.

Not only was Ukraine under bombardment from physical attack, but cyber attacks on national infrastructure — including core financial systems — were part of the assault from day one. The maelstrom of war meant keeping the financial lights on was a big challenge in itself.

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A new operational discipline emerged. “Redundancy, duplication, cybersecurity, strict risk monitoring — all became more fundamental than ever before.” But Andrew was clear that it wasn’t all plain sailing. “It’s not to say there weren’t challenges in the early days. There was, of course, uncertainty in the first couple of months following February 2022.” Yet soon enough, Ukrainians realised that payment and banking services — essential to daily life — continued to operate, with only limited interruption.

In fact, Ukraine's financial system has held up better than anyone could have expected given the circumstances.

Plenty has been written about Ukraine's evolution — even revolution — in the military domain. What worked four years ago has changed; the war itself has changed over time. Ukrainian-American journalist David Kirichenko, writing for the Atlantic Council, described Ukraine as a "drone superpower", noting that many Western countries have a lot to learn from Ukraine when it comes to emerging military tactics and technology.

But while the world has watched Ukraine transform its tactics under fire, the story of how Ukraine's financial sector adapted is rarely told. The results are equally impressive. My conversation with Andrew only scratches the surface, but it provides real-life examples of resilience in practice.

Ukraine’s banking infrastructure

To understand how Ukraine’s infrastructure has held up during wartime, it helps to appreciate the historical context. Ten years back, Ukraine’s tech culture was running ahead of Western markets in some respects. Partly this was due to talent. Andrew highlighted that Ukraine has, for a long time, had a “developer first entrepreneurial mindset” and a deep pool of software developers, some of whom gained experience working for international firms. That experience soon flowed back into local products and companies.

One foundational difference between payments and banking in Western Europe and Ukraine was the use of card-based versus account-based infrastructure. Ukraine was a card-first market, though in a different way to what you might expect. In terms of payments, the UK is a card-centric market. We use contactless cards, either directly or via Apple Pay, to make the vast majority of our purchases, but in Ukraine, cards are also used for sending money. Both major international card schemes have long offered products that allow money to be sent from card to card. Visa Money Transfer and Mastercard MoneySend were precursors of the current products we know as Visa Direct and Mastercard Send. In Ukraine, person-to-person payments were card-to-card payments. In Western Europe, this would usually mean account-to-account payments.

Privatbank was central to this growth of cards as a means of money transfer. Founded in 1992, it became Ukraine’s largest bank and a genuine innovator. Early on, the bank built out specific products for different customer segments, such as retail, SMBs, and large corporates. LiqPay, its e-wallet, became a key payment method for small businesses and is still widely used today.

When Privatbank was nationalised in 2016, many expected the tech-first culture to fade away. But this didn’t happen. The bank maintained its pace of innovation even under state ownership.

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This brings us to Monobank. Founded by former Privatbank execs, Monobank is Ukraine’s leading neobank — a bank with no branches. It took only weeks for the bank to gain one million customers when it launched in 2017, and in 2025 it reached the milestone of ten million customers.

Rather than holding its own banking licence, Monobank operates under the licence of Universal Bank, which is a longstanding commercial bank in Ukraine. Universal Bank is regarded as one of the country’s systemically important banks, but it does not have a substantial consumer banking unit. In essence, Monobank was created as Universal Bank’s retail proposition, and the arrangement suits both parties — the Monobank team gets to focus on helping customers rather than dealing with regulation and licensing. 

This customer focus soon becomes evident. Looking at Monobank’s homepage, compared with banks in the UK and much of the EU, it’s easy to see a whole host of innovative products and solutions that don’t exist in Western Europe. For example:

• The ability to contact the bank’s customer support and concierge services via the Telegram messenger app.

• Short-term loans known as “until tomorrow” which usually last from a few days to a month and can be provided quickly to customers who need short-term capital.

• Credit and debit cards with both Visa and Mastercard on one card — users get specific perks and discounts tied to each card brand.

• A live dashboard that shows customer spending across the bank in real time, by category and at the merchant level.

And then there’s the eRecovery card — a social programme providing funds to those whose homes have been damaged during the war. A product that could only exist in Ukraine right now.

I asked Andrew how Monobank compares to Revolut, which is the closest reference point I have. “Very comparable,” he said, “and in some aspects Monobank is even better.” Looking at what they’ve built, it’s hard to argue. Although, sadly, as the bank only operates in Ukraine, it’s difficult to experience it firsthand.

Kiosks and cards

Today Ukraine is home to one of the world’s leading neobanks and other innovations. But back in the 2000s and 2010s, physical payment kiosks were a common sight in malls and supermarkets.

Payment kiosks are self-service terminals operating under brands such as EasyPay and iBox. They allow people to pay utility bills, top up mobile accounts, and add cash to bank cards instantly. While mobile banking has grown rapidly, kiosks remain relevant as an offline payment channel, especially in smaller cities and in times when people value redundancy and accessibility.

As a sharp contrast to kiosk infrastructure, data from Mastercard highlights Ukraine’s advanced attitudes to digital payments. 41% of Ukrainians surveyed carry only a digital card — such as in their Apple Wallet — and more than 95% of card-present transactions are contactless payments. It is this balance between physical infrastructure and digital technology, not only in the financial system, but in broader society that has held Ukraine in good stead during wartime.

Innovation during war

Monobank added jars to its app in 2019 (банка in Ukrainian). Similar in many ways to Monzo’s concept of pots, Monobank’s jars allow users to set up a savings account with specific goals, often with visual cues — if you’re saving for a holiday, why not add an image of a beach? As you may have anticipated, Monobank has taken this one step further than many other neobanks. Users can send a link on messenger apps for friends and family to add to jars, anyone can contribute (not just Monobank customers), and even Apple Pay can be used to pay into a jar.

In 2022 jars took on a new purpose. When the full-scale invasion happened, the military needed equipment faster than government procurement could manage. Ukrainians began using jars to collect donations to support the war effort. Volunteers, including friends, family, and work colleagues of those on the frontline, and society at large stepped in. People gave whatever hryvnias they could afford. Jars were set up to buy body armour, medical supplies, and thermal imaging equipment. To facilitate this cultural phenomenon, Monobank stepped up.

“People just intuitively started to use jars to collect donations,” Andrew explained. “And Monobank created a separate product for donations.” Additionally, foreign cardholders were soon able to add to jars, leading to links being shared on social media as Western citizens sought to help the Ukrainian war effort. Some years earlier such transactions would have likely been blocked by the payment processor in Ukraine or the card issuer in the UK (for example), yet they worked easily and seamlessly in most cases.

The innovation hasn't been limited to jars. Like much of the world, Ukraine has seen significant growth in BNPL in recent years. These solutions are powered by a mix of banks and specialist BNPL providers. The sector is well-regulated and operates within Ukraine's financial and consumer credit framework. It has become a useful means for consumers to spread out payments during times of uncertainty.

Diia and European integration

A couple of years ago, I spent some time in Estonia. I discovered that it’s a country where almost everything can be done online, and done efficiently too. Almost zero paperwork, and integrations that make life much easier than anything we have in the UK. From talking with Andrew, I learned that Ukraine’s e-government system, known as Diia (Дія, meaning "action" in Ukrainian), is perhaps even better. “I would say that Diia is by far better than other e-government apps.” This got me intrigued. He added, “I couldn’t name any similar project in the world which has such sophisticated functionality.”

The array of functions Diia supports is impressive.

Within the Diia app, users can store identity documents and driving licences, track traffic fines, monitor debts, and access a wide array of government services. The Akurateco team told me about one particular feature that I wanted to highlight as it’s something specific to the situation the country finds itself in. Inside Diia, users can buy Military Bonds. These government-issued war bonds are named after Ukrainian cities and places under occupation — for example Alchevsk (Алчевськ), Foros (Форос), and Livadia (Лівадія) — adding a symbolic layer to the investment product.

Ukraine is aiming to join the European Union in the coming years. This means aligning with various financial-sector frameworks. Andrew explained that Ukraine’s central bank has been proactive in this area. “Even now we are ready to meet the criteria and requirements. In some cases, Ukrainian regulations are already stricter than EU standards require.”

Despite the ongoing war, this focus on European integration is important.

Reconstruction and claiming a place in the wider European project is key to Ukraine’s future. Yet it’s not only in military terms that the West has a lot to learn from Ukraine. When it comes to the financial sector and wider technological innovation, Ukraine is leading the way, and much of Europe has plenty of catching up to do.

Thanks for reading Payments Culture!

It was great working with Andrew, Kateryna, and the Akurateco team on this post. It’s a topic I have long wanted to learn more about, and even though we barely scratched the surface, I hope it gives readers a useful window into Ukraine's story.

Akurateco is a payment software vendor offering a white-label payment orchestration solution for acquiring banks, PSPs, and enterprise merchants. Around 50% of the team is currently based in Ukraine, and they continue operating despite wartime conditions — something that has shaped not only their internal resilience, but also how they think about reliability, redundancy, and uptime in payments.

In 2024, Akurateco was selected as part of Ukraine’s official delegation to London Tech Week, alongside seven other Ukrainian startups — highlighting their role within the broader Ukrainian fintech ecosystem that keeps building internationally while remaining closely connected to the realities on the ground.

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Note that views expressed on this Substack are my own and do not represent any other organisation. Also nothing I say should be taken as investment advice.

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You tell me: If you were in Mexico City, would you rather have a crisp $50 bill in your pocket, or try to explain to your taxi driver how to set up a Bitcoin wallet? As a means of payment nothing comes close to US dollar bills.

Almost anywhere in the world, businesses accept dollars for goods or services (surprisingly you can pay with dollars in North Korea). Even if officially you can’t pay with USD in-store in many countries, unofficially, everyone knows it’s the currency that’s easiest to exchange, and whose value is universally recognised.

But go to any stablecoin event, and you’ll notice how most founders focus on the technical feat - moving money on-chain or from wallet to wallet. There’s a deeper story yet to unfold. Let’s consider that, at least so far, the story of stablecoins is the story of digital dollars. And the dollar itself, whether physical or digital, is the de facto global currency.

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Stablecoins gained acclaim in 2025 as a means of moving dollars around the world at low cost. Yet we are in an era of shifting paradigms of money, where a maelstrom of forces intersect and the outcome is unknown. The next years will see the bifurcation of money unfold at breakneck pace — it’s a split between private and sovereign (government) money. How you're affected depends on your geography, and what's in your (digital) wallet.

In geopolitics, analysts often talk of a move from a unipolar to a multipolar world. A world in which US dominance is met with a spate of rising powers.

Writing in a recent edition of Wired UK, economist and author Keyu Jin states that “2026 will be the year when the US dollar dilution starts to build momentum”, and economies in the BRICS bloc are working on schemes such as mBridge and BRICS Pay, which bypass the current US-led financial system.

But according to Helen Thomas “it’s one thing to want the dollar to be less important and another thing for the dollar to be less important” (emphasis mine). Stablecoins may have something to say about this so-called dollar dilution. Measured by market capitalisation US dollar stablecoins account for nearly 99% of the stablecoin market. Despite their role as private money — as opposed to central bank-issued money — stablecoins are held 1-1 with reserve assets such as US Treasuries, making them a de facto arm of the US financial system.

What are the implications for a world in which digital dollars reach across economies fuelled by venture capital and tech innovation? And how does this challenge the thesis of diminishing dollar dominance? First, let’s understand how we got here.

The rise of the dollar

In the 19th century, the British Pound, bolstered by the reach of the British Empire, was the world’s number one currency. During the First World War, the global dominance of the Great British Pound, often known as Sterling, on international currency markets began to weaken. The United Kingdom and her Empire spent more than it could afford to on the war. The Second World War, just over two decades later, exacerbated the decline of sterling. Despite Britain “winning”, it was financially ruined, the trade empire collapsed and the US took the reins as the global hegemon. Since 1945 the US has been the world’s dominant power. And with global hard power (military) hegemony comes currency dominance.

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As global powers rise and fall, currency wars happen. Sometimes explicitly and sometimes implicitly. Since 1945, not only has the US Dollar (cash) become the de facto global currency, but the main international card networks — Visa and Mastercard — are outgrowths of what started as US domestic payment systems. In the 1960s, there were only a handful of banks that issued Visa or Mastercard (all in the US), but today there are more than 10,000 issuers of Visa and Mastercard.

Even though Visa and Mastercard allow settlement in many currencies, a large share of transactions go via US Dollars. There are several reasons for this. Many countries clear through the dollar system rather than their domestic currency. Visa and Mastercard’s fees are often in Dollars, and many central banks don’t have the level of liquidity required to settle FX in their local currency.

The global payments system, as we know it, is dollar-centric. Stablecoins are the next frontier of dollar dominance. Everyone wants dollars. And, as it stands, stablecoins are often the best way to send, receive, and hold dollars. Crypto wallets, and increasingly neobanks such as Revolut are adding stablecoin functionality, thus allowing users to hold and transact in digital dollars. Added to this are the fintech startups backed by some of the leading venture capitalists in the world today.

As well as the dollar as we’ve long known it, startups everywhere are building for a world that interacts with, and uses, the digital dollar.

Some examples include DolarApp based in Mexico. The app can hold dollars (USD) or stablecoin dollars (USDC) — but to the user there’s no difference. The app logic decides which to use and when. Users only see a general dollar balance covering both assets, and USDC specifically is shown only when needed (for instance, when sending funds to another crypto wallet). Businesses can also set up accounts and send digital dollars 24/7 and near-instantly, whereas fiat dollars are stuck in the banking system paradigm of operating only in business hours.

Funding: In 2022, Dolar App raised a $5M seed round led by Y Combinator and Kaszek Ventures

Karsa is building a global bank based on dollar stablecoins with Pakistan set to be one of the first markets. The app features a USD account and a linked card, with the ability to earn interest on the account balance. Actually, Karsa’s website says interest in one section, and yield in another. Yield is the correct term. With crypto-based accounts, including stablecoins, yield refers to funds earning passive income in the crypto markets — and is not guaranteed. Hence, yield is sometimes provided as a range or based on current expectations rather than a set figure, as in traditional bank accounts or term deposits.

Funding: Karsa was part of Y Combinator, a startup accelerator, but has not raised a large funding round so far.

ZAR is aiming to build a global dollar wallet. Like with Karsa, Pakistan is ZAR’s first market. Although given their funding, the goal is to expand into additional markets sooner rather than later.

USDC is the stablecoin powering the app, and while the company mentions “your dollars, wherever you live”, they have also clearly catered to local nuances, and importantly, local compliance! The homepage mentions that, due to currency controls, some countries do not allow funds to be sent abroad. Addressing market-specific challenges is the right approach, especially if startups want to stay on the right side of local regulators. However, the more local nuances are catered to, the less global appeal a stablecoin wallet may have, particularly as users can always opt for a full-fat crypto exchange.

As well as individual accounts, ZAR offers merchant payment acceptance for businesses and an ambassador programme to allow users to benefit from bringing in new merchants. Showing how a stablecoin startup can build payment infrastructure as well as a wallet experience.

Funding: ZAR is the best funded of the three companies mentioned here. The company has raised a total of $20m, including a recent $12.9m funding round led by Andreessen Horowitz (a16z), with Dragonfly Capital, VanEck Ventures, and Coinbase Ventures also investing.

The downside of digital dollars

Startups —such as those noted above — exist due to genuine consumer demand in non-Western economies for access to dollars. Yet for the world outside the US, dollar stablecoins are not risk-free. They benefit those in countries whose currencies are unstable, and who would prefer to get dollars, but for Hélène Rey, Lord Raj Bagri Professor of Economics at London Business School, there’s another side which should be considered:

For the rest of the world, including Europe, wide adoption of US dollar stablecoins for payment purposes would be equivalent to the privatization of seigniorage by global actors. Along with easier flows linked to tax evasion, fiscal accounts could be affected. On the asset side, the backing of stablecoins means that increased international adoption of those pegged to the dollar could lower demand for non–US government bonds and raise demand for US Treasuries.

As the creation of money, at least in part, moves from governments and central banks to privately run stablecoin issuers, those issuers benefit from the profit of creating currency. But it seems inevitable that the line between fiat and crypto dollars will lessen. The line between sovereign and private money will, in some cases, dissolve, at least as far as the user is concerned.

The CEO of Tether, Paolo Ardoino, whose company issues the world’s largest stablecoin, with more than $183bn in circulation at the time of writing, is explicit about the reality of digital dollars. Last year, in an interview with the Guardian, he made clear his perspective:

We have 400 million users in emerging markets. We are basically selling the US debt outside the US … We are decentralizing the US debt as well, basically pushing for dollar hegemony. That’s how the US can maintain its dominance when it comes to its currency.

Yet as digital dollars grow in prominence, there’s an increasing risk that nations lose control of monetary policy. The more an economy becomes de facto dollarised, the less impact interest rate policy has. It takes a long time to reach that point, but it could be the end result for some nations in the years ahead. Ecuador gave up its domestic currency back in 2000, which has meant no independent interest rate policy, and no ability to strengthen or devalue the currency — even when local conditions call for it. The rise in digital dollars could make this shift happen organically, without a country formally choosing it.

How will policy makers respond? That’s another story. Sometimes it feels like tech and venture funding is running ahead of government and regulators. Why is this the case? Put simply. Everyone wants dollars.

Further reading:

Stablecoin growth – policy challenges and approaches (BIS Bulletin No. 108)

Top of Mind — Stablecoin Summer (Goldman Sachs Research)

Why the world should worry about Stablecoins (Martin Wolf in the Financial Times)

Thanks for reading Payments Culture. I appreciate it!

Please leave a comment or share with a friend or colleague if you enjoyed reading this edition. It’s much appreciated and helps grow the audience of this newsletter.

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Note that views expressed on this Substack are my own and do not represent any other organisation. Also nothing I say should be taken as investment advice

Did you read?

This newsletter explores how money moves, around the world — and why it matters.

Originally, this was going to be an essay on the key fintech trends worth watching in 2026, and my predictions for where the industry is heading. You can probably guess some of the topics: stablecoins, agentic commerce, mobile wallets, and so on. Nothing too unique or remarkable. Likely 90% of the other 2026 prediction posts you’ve read would be similar. But don’t stop reading — at least not yet, because when I started to think a bit more deeply, I started to notice something else.

In this edition: why almost every trend in payments is impacted by our fracturing world, geopolitical competition is seeping through every layer of what we once thought were apolitical networks and rails. In short, fintech is getting messier.

Last week in Davos, Mark Carney, the Prime Minister of Canada, gave a speech that was lauded by many analysts for stating the reality of the world in 2026.

Every day we are reminded that we live in an era of great power rivalry… Many countries are drawing the same conclusions. They must develop greater strategic autonomy: in energy, food, critical minerals, in finance, and supply chains.

This analysis is spot on.

We can all see that the world is mired in tariffs, sanctions, wars, uncertainty. There’s no sign that these trends will decelerate. If anything, we are in a new normal. The world that we had from 1991 to 20221 has gone. The era of relative world peace that lasted from the end of the Cold War to the full-scale Russian invasion of Ukraine2 is over.

The changing dynamics

Today’s flux is partly because the unipolar moment is over.

For the past thirty years or so the US was the only superpower in town. In recent years the relative strength of other countries and blocs has increased. US domestic politics is changing the foreign policy discussion, with the US now focusing increasingly on the Western hemisphere (as seen in November 2025’s National Security Strategy document). Europe is beginning to stand on its own two feet, and Chinese influence is spreading globally.

To understand what all this means for fintech, we need to talk about geopolitics.

It’s a word we hear more and more in the news. Sometimes overused. But understanding how states and organisations interact through the convergence of power, resources, geography and technology is a useful lens for analysing how interconnected systems create both opportunity and vulnerability.

Fintech doesn’t exist in a vacuum — although sometimes industry commentary makes it sound as if it does. We often focus — and we can all be guilty of this — on the latest big trends, gigantic funding rounds, and outsized personalities while some of the biggest shifts, which really make the difference in fintech, are often missed.

How money moves is ever-changing, yet exactly how you’re impacted depends on your geography. In part, this is because geopolitics and fintech rub shoulders every day. You’ll find this dynamic in news stories nestled in the New York Times, The Economist, the Financial Times and beyond.

Consider a few examples from the past decade or so:

A post-Maduro bounce for e-commerce in Latin America?

• Mercado Libre is Latin America’s answer to a super app. Almost 30 cents of every dollar spent online in the region is via the platform. In terms of fintech, Mercado Pago is its fintech arm, processing more than $142bn in payment volume in 2024.

• Following the intervention of the US military in Venezuela and the ousting of President Maduro, Mercado Libre’s share price increased substantially. Climbing by 10% in the three days that followed the military operation.

• In fact, stock markets across the region, including Venezuela’s, popped in the days that followed the raid. After over a decade of less-than-favourable economic policies (from the perspective of capitalism and free enterprise), investors are hoping that the Venezuelan economy will finally stabilise. Firms such as Mercado Libre may soon reap the rewards.

Visa and Mastercard’s exit from Russia

• Following Russia’s annexation of Crimea in March 2014, as a result of US sanctions, Visa and Mastercard cut off several Russian banks from their payment networks, including Bank Rossiya, which US and EU officials claimed was the bank for Putin’s inner circle.

• In response, Russia created the National Payment Card System (NSPK) to ensure all transactions stayed within local data centres. Additionally, a domestic payment scheme called Mir was established to insulate the Russian economy from further impacts of sanctions.

• In the years that followed, several countries began to accept Mir cards. These were countries that are neutral or even friendly with Russia. For instance, Turkey, Belarus, Tajikistan, and Abkhazia — an occupied area of Georgia that’s under Russian control. (Cuba announced acceptance of Mir cards a bit later, in 2023.)

• In 2022, following the full-scale Russian invasion of Ukraine, Visa and Mastercard withdrew entirely from Russia. The country made up around 4% of each company's revenue in 2021. PayPal and American Express also exited Russia at the same time.

• In the past few years many countries have stopped accepting Mir cards at ATMs and blocked them for payment acceptance. Turkey is one such example, and countries that still accept Mir cards often severely limit their acceptance due to the fear of secondary sanctions from the US.

India bans Chinese e-commerce apps

• In 2020, following clashes in the disputed Ladakh region, India banned tens of Chinese-owned apps from operating in the country. The reason given was that the apps were prejudicial to the sovereignty and integrity of India, the defence of India, and the security of state and public order.

• Alipay, Shein, TikTok and various e-commerce apps were among those banned.

• This left space for domestic players to flourish — including UPI3 payment apps such as PhonePe and Paytm, as well as local e-commerce companies such as Myntra.

• India's digital payments ecosystem, now insulated from Chinese tech, has become one of the world's largest.

There are plenty of other such examples. Almost every country is increasingly thinking of fintech and payments in terms of national interest. Regulation is increasingly shaped by geopolitical concerns. Market stability and consumer protection will always be important to regulators, but policymakers are acutely aware that financial flows can be impacted by events happening in faraway lands. 

Case in point. A recent Bank of England paper found that “heightened geopolitical risk is negatively associated with a number of measures of bank stability such as non-performing loans and return on assets”. If central banks are paying attention, so should we. The schisms in trade, diplomacy, and trust can impact even our digital payment rails. What follows is an exploration of two areas where geopolitics and fintech come together: chokepoints, and resilience.

Note: It's worth making clear that geopolitics is not about picking a side, or expressing political views. Geopolitics is about reality, not polemics. It's about seeing the world as it really is, not as you would like it to be. This means understanding why states and organisations act the way they do, even when those actions may be personally objectionable. Geopolitical analysis seeks to understand, not to judge.

Chokepoints

Fintech arose through innovation and disrupting legacy tech. We’re at a stage where data can move, in a flash, across borders and systems. But the legacy rails remain, and the control of networks is a form of power. Scholars Henry Farrell and Abraham Newman explain:

Global economic networks have become a key terrain of geopolitical competition.

States that control central nodes in these networks can exploit asymmetries of interdependence to coerce other states.

For many decades the US has been the most substantial and consequential node in financial infrastructure. If you want to move dollars from one part of the world to another, even if it’s from Latin America to Asia, the transfer will likely go via US correspondent banks.

Author and former diplomat Edward Fishman explains in the video below that the dollar itself is the most important chokepoint, and pre-eminent currency across all use cases of money throughout the global economy. As a unit of account, as a store of value, and as a means of exchange4 — the dollar reigns supreme. Most banks, wherever they are in the world, primarily hold two currencies: their domestic currency and US dollars.

At an institutional level, central banks keep around 60% of their currency reserves in dollars, with the euro in second place at around 20%, and China’s RMB at 5% or below. Dollar dominance has meant the US has been able to wage economic warfare in a way that no other country can. Examples of countries hardest hit by economic sanctions include Cuba, Iraq under Saddam, Iran, and North Korea.

Yet working outside of the US dollar system is hard. But not impossible.

While there's often discussion of how transactions on blockchains can be tracked, enforcement is another matter. Without US-controlled chokepoints, sanctioned states have found ways to move value and garner digital dollars. Analytics firm Elliptic recently identified that Iran has acquired at least half a billion dollars of stablecoins, and this may be the tip of the iceberg — Iranian crypto exchange Nobitex allows users to store USDT. OFAC5, the US government agency that administers sanctions, isn’t going to go after ordinary Iranians, but those who deal with sanctioned exchanges outside the country will find themselves at risk of enforcement. Another heavily sanctioned state, North Korea, reportedly hacked $1.3bn in cryptocurrency in 2025, which passed through the USDT stablecoin on the Tron blockchain.

The irony is that countries barred from dealing in dollars in the real world have found ways to send and receive dollars on-chain. The goal is to keep it clandestine, but the activity is often visible. The chokepoints may be slowly losing their grip.6

Beyond evasion, other structural changes are taking place. The development of Central Bank Digital Currencies (CBDCs) is one force that could gradually erode dollar dominance. If countries can trade directly with each other electronically, the need for correspondent banks to facilitate trade in dollars will diminish over time. This is something that Ross Buckley has explored at length.

Resilience

As the global order discombobulates, we face additional risk. If chokepoints create vulnerability, then the response is to build resilience. This isn't only about dollar dominance, because in reality, every system has its chokepoints.7

The question to ask: what if the infrastructure we take for granted suddenly goes kaput? Some countries8 and companies are ahead of the curve, planning for worst-case scenarios, while others are gradually waking up and finally prioritising resilience.

In October last year, American banking giant JPMorganChase announced a $1.5trn Security and Resiliency Initiative. As part of the initiative, the bank will invest up to $10bn in select American companies. It comes with an impressive external advisory board including Jeff Bezos, Condoleezza Rice, and Michael Dell. Complementing this is the firm’s Center for Geopolitics, set up to provide clients with insights into the latest global trends. 

While the scale of JPMorganChase’s activities stand out, geopolitical analysts such as Velina Tchakarova mention consulting with asset managers and other organisations to help business leaders manage through uncertain times. In 2026 we can expect executives to lean more on independent geopolitics experts for guidance.

Meanwhile, in Europe, the European Central Bank’s (ECB) chief economist Philip Lane believes that Europe’s reliance on American payment companies leaves it open to economic coercion:

We are witnessing a global shift towards a more multipolar monetary system, with payments systems and currencies increasingly wielded as instruments of geopolitical influence.

Such sentiments would have seemed far-fetched a decade ago. Although today, after many decades of reliance on the US, Europe is finally on a path to self-reliance in the military domain. Many want payments to follow the same path. At an institutional level the ECB is pursuing its own digital currency, but this is not scheduled to go live until 2029. In some markets, Wero — an account-to-account payment system that sees strengthening European sovereignty as one of its key objectives — is growing in popularity.

Asia is far down this path. Central banks and national payment authorities in countries such as Malaysia, Thailand, and India have developed payment systems that bypass card networks. Paying via a QR code, whether from a banking app or from within a super-app such as Indonesia’s Gojek, has become the norm across much of the region.

But a successful domestic payment system in itself isn’t enough — the next important step is interoperability. One of my key trends to watch in 2026: Asia’s interlocking mobile wallets. Asia is the most advanced region when it comes to building connectivity across domestic national payment systems. Chinese travellers can pay with their domestic payment apps, such as Alipay, when travelling in Thailand. Indonesia’s central bank is implementing cross-border payments for the QRIS scheme in China and South Korea. Even Hong Kong’s Octopus mobile wallet can be used in Japan via the popular PayPay system.

End note

Fintech is often synonymous with innovation.

Whether you’re accepting payments while running a shop in a favela in Rio or taking an Uber in Bangkok, such innovations have made our lives easier. But resilience and sovereignty are growing in importance too. Companies and countries want to ensure that whatever happens, their payment rails stay connected. Those who succeed will continue innovating while understanding that the ground is always shifting beneath their feet. This is a complex topic with many strands to unpick. Think of this essay as an introduction to how geopolitics is making fintech messier. Welcome to 2026.

Thanks for reading Payments Culture!

The meshing together of money, tech and geopolitics is one of my favourite topics so I really enjoyed writing this one. If you made it this far I assume you found it interesting too! 👾

Please leave a comment or share with a friend or colleague if you enjoyed reading this edition. It’s much appreciated and helps grow the audience of this newsletter.

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Note that views expressed on this Substack are my own and do not represent any other organisation. Also nothing I say should be taken as investment advice.

The Ipsos twice-yearly ranking asks customers how likely they'd be to recommend their bank to friends or family. In the latest results, Monzo scored 82%, with Chase and Starling Bank joint second at 78%. Since 2020, Monzo has led or come joint top almost every time. They also topped the latest YouGov customer satisfaction survey.

Revolut’s first market was the UK, and it’s still Revolut’s biggest, with more than 10 million customers, so you may be wondering: why isn’t Revolut included in these banking satisfaction surveys?

While Revolut has been approved for a UK banking licence, it’s still in the “mobilisation phase”, which means it doesn’t yet have a full banking licence, and therefore is not eligible for these surveys. Part of Revolut’s challenge is that while their international growth has been phenomenal, it has made UK regulators nervous.

Any bank dealing with tens of millions of customers will need to demonstrate they can scale their risk management infrastructure accordingly. It’s a unique situation as most UK banks focus on their home market rather than expanding globally, especially before securing their UK licence.

Since I last wrote about Monzo, a lot has happened, and its future direction makes it one of the most interesting stories to watch this year. The bank has been a huge success in the UK. Now, after ten years of focusing on the UK, the bank is stretching into other markets, and its strategy is evolving faster than ever. All this while major leadership changes are happening at the top.

In this series, I’m going to review the state of Monzo, as it stands at the start of 2026.

The story will unfold in three parts:

• The marketing magic ✨

• The strategy 📖

• The leadership clash ✊🏻

Note: The subsequent posts covering Monzo’s strategy and leadership will follow in the next weeks. Though they will not come immediately after this one, as I’m going to break it up with some other posts in between. Be sure to subscribe not to miss the full series.

Welcome to Payments Culture!

This newsletter explores how money moves, around the world — and why it matters.

Make sure to subscribe, and let’s connect on LinkedIn and on X.

Monzo’s Marketing Magic ✨

At the end of last summer I wrote about my experience at Monzo’s book pop-up.

The event lasted for two days, and it’d be wrong to call it a store. There was nothing to buy as the books were free. The only catch was waiting in line for an hour to get one (luckily it was early September, and not the middle of Winter!). 

As well as a free copy of the book of money, I also got a chocolate bar, a notebook, and a £20 book token. Not bad at all.

One of the key messages in my write up of the book pop-up was that almost all other banks would struggle to approve such a marketing strategy. This experiential marketing approach is not something that can be easily measured in terms of ROI. 

However, it does reflect Monzo’s approach of creating fans. You can call them customers or users, but if you actually create fans then this will cascade.

While only a few thousand lined up to get their free book and chocolate bar, countless more saw and shared the campaign on social media.

The bank has long positioned itself differently to legacy banks. Lacking the deep pockets of the established banks, Monzo had to build a sense of community and connection to gain a foothold. This approach is now set in Monzo’s DNA and continues in many ways.

Monzo’s Sponsorship of Coventry City FC

These days, football teams in some parts of the world are franchises that get created seemingly out of thin air (think Inter Miami). But the origins of most football teams in the UK are in the local community. Many were founded by working-class men who spent six days a week in coal mines or factories, then spent their one day off each week playing football. From their hobby emerged the teams we know and love today.

These origins are why football teams in England are usually based in working-class neighbourhoods. Industrial towns such as Burnley and Blackburn in the North of England have long-standing and very successful teams given their population size.

Monzo have been the shirt sponsor of Coventry City FC since the start of last season. Coventry is not a glamorous club. They are not in the Premier League. They are not based in London. Coventry is a small city in the Midlands around 20 miles from Birmingham. However, they are a good match for Monzo.

Frank Lampard, former Chelsea and England captain, manages Coventry City, who currently sit top of the Championship (England’s second-tier league). There’s a good chance they’ll be a Premier League team next season. If they get promoted, it’ll be the first time the team has made it to England’s top league since the 2000-2001 season.

Likewise, Monzo is also on a journey from underdog to champion. Despite having millions of customers, the bank is often still referred to as a challenger bank. There’s still a long way to go in attracting customer deposits at a similar level to the big legacy banks, and there’s considerable room to expand their product suite.

From a financial perspective sponsoring a Championship team makes sense:

• Sponsoring a Premier League team can cost upwards of £50m per annum.

• Sponsoring a Championship team can cost £5m per annum (perhaps less).

The benefit of sponsoring a Premier League team is the global reach that you get from TV viewership and social media. But for Monzo this isn’t so important right now - their focus remains the UK market. In addition, working with a smaller team allows Monzo greater scope and creativity when building that sense of community, which is important to their own ethos and to football fans, including those of Coventry City.

If Coventry City win promotion, Monzo may find itself sponsoring a Premier League team. But this past weekend brought its own excitement. There was a mini-frenzy in the city. Coventry City football shirts were for sale for 1p. The shirt on offer was Coventry City’s away kit, which is in Monzo’s trademark hot coral colour. The only requirement was to have a Monzo account and to pay the 1p with your Monzo card.

The BBC reported:

Coventry City fans were able to purchase a coral away shirt at two pop-up shops. By mid-morning there was an expected wait time of more than three hours at the city centre stand.

The company offered the shirts at the CBS Arena and Broadgate Square ahead of the Sky Blues match against Leicester City at the CBS arena.

Fans were queuing for more than hour before the Broadgate pop-up shop, run by online bank Monzo, opened. Some fans on social media joked they would still be in the queue when the match kicked off at midday

On the club’s website, Vuokko Aro, Monzo’s Chief Design Officer emphasised the community aspect, and how Monzo’s motto fits with the moment:

We know how much the kit means to Coventry fans, so we wanted to do something special to kick off the year. For one day only, we’re covering the cost so fans can get their hands on it for just 1p. It’s a simple way to show our support for the club and the community, and a reminder of what we stand for at Monzo: making money work for everyone.

As expected, many fans were keen on getting a football shirt for a penny, especially as the adult sizes can cost up to £80. Behind the 1p shirts was a logic that Monzo fans would understand. It wasn’t a coincidence that the shirts were sold for a penny and not for a pound. It all links back to one of Monzo’s most successful annual marketing campaigns.

Making Saving and Switching Easy and Fun

At the start of each year Monzo publicises the 1p Saving Challenge. The idea is simple. Users save 1p on the first day of the year, 2p on the second day of the year, 3p on the third and so on. If a customer signs up on January 1st and continues throughout the year, after the addition of £3.65 on the last day of the year, they’ll have saved a total of £667.95 (before any interest).

The end result may not seem substantial, but the goal of the 1p Saving Challenge is to encourage those who may not have a strong habit of saving money to get used to putting the pennies away. The challenge shows that by even starting small, savings can add up, and encourage the saving habit to grow.

In announcing the 1p football shirt offer Coventry City linked the promotion back to Monzo’s ambition of making money work for everyone. And a key part of this mantra is building sustainable savings habits:

Why 1p? Because pennies add up. Monzo is kickstarting long lasting saving habits and fronting the cost of the shirt to show just how much impact a single penny can have - and how easy it is to turn small daily savings into something big.

The concept of a year-long daily savings challenge existed before Monzo productised it.

It was often discussed on the popular personal finance website Money Saving Expert, and in various Reddit groups. But the Monzo magic was in automating the user experience. Once enrolled, the daily savings goal is automatically moved from a user's current account to a savings pot each day — no manual transfers required.

Deepening customer engagement

As well as those looking to enhance their savings habits interest in the 1p Saving Challenge this year has been spurred by Monzo’s use of gamification, or what I’m calling lotto-isation. Let me explain. In joining the 1p Saving Challenge before the end of January, Monzo customers are eligible to win £10k in a prize draw provided they complete 365 days of daily saving. Additionally those with paid accounts have the chance to win £100, with 100 prizes on offer each month.

This isn’t the first time that Monzo has taken this approach of rewarding customers with a giveaway. Double Payday was launched at the end of last year and generated lots of publicity for the bank. There are still many customers who use Monzo — and other neobanks — as their second bank, such as for tracking expenses, when spending money abroad, or to make payments easily. Double Payday is a way to nudge customers to pay their salary into Monzo, and to use it as their main bank account.

Billsback works similarly but targets recurring payments. Each month, Monzo refunds around 1,000 customer bills in full (up to £150 each). Everything from Netflix to utility bills is in scope provided your Monzo debit card is used for payment. It’s a direct financial incentive for users to move regular payments across to Monzo, and those who do so will likely make Monzo their primary account.

Traditional banks have long offered switching bonuses, for instance rewarding consumers with a one-off payment for moving across their main account, usually on the proviso that they pay in a minimum salary and set up some direct debits. Some users game the system by cycling through banks to collect multiple bonuses.

Monzo’s approach is different. Customers are offered many ways and incentives to ramp up engagement. It’s not just about signing up for an account (though you do get £10 for referring a friend). Rather, ongoing lottery-style rewards deepen engagement and interaction with the bank. This is where marketing and strategy come together, and Monzo’s strategy will be the topic of the next post in this series.

Thanks for reading Payments Culture. I appreciate it!

Please leave a comment or share with a friend or colleague if you enjoyed reading this edition. It’s much appreciated and helps grow the audience of this newsletter.

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This newsletter explores how money moves, around the world — and why it matters.

I’m currently looking for new opportunities. I’m open to short-term assignments as well as permanent positions. You can email me or contact me on LinkedIn to discuss further.

Thank you for reading this Substack. It’s really appreciated.

When you first start writing a newsletter like this one, the first months often feel like writing into the void. Unless you bring a large audience from another platform, with any new Substack, at first, the only readers are friends, family, and some industry contacts. A couple of years later, it’s rewarding to have built up a few thousand subscribers, many of whom provide valuable feedback and share my writing within their network.

I decided not to do a typical look-back-on-the-industry type post at the end of last year. Yet, now looking back, with 2025 over and done, it was useful for me to assess which content performed well and proved most popular, and why certain topics in particular resonated with my readers.

In 2025, I published 24 unique posts on Payments Culture, amounting to over 60,000 words. The quietest month was January, with only a single post, whereas June and October both saw four posts. My goal is to publish 3-4 times a month, yet given that some posts in 2025 were quite lengthy, I am happy with the level of output.

The five most read posts covered a variety of topics, with posts on specific companies doing the best, but as you’d expect, topics like stablecoins and Apple Pay also proved popular. Here are the top five in descending order:

1. Can Revolut Compete With American Express? (published in July)

I remember finishing this post when travelling to Money 2020 in Amsterdam. I was typing away, hunched in the waiting area of London St Pancras station, sipping my coffee, waiting to board my Eurostar train. I finished proofreading when I got to my hotel and hit publish right before I hit the sack. I had a feeling this one would be prove to be popular. But I was surprised it was the most read of the year.

The idea for this post came when I read in Sifted that Revolut was building a rewards credit card. Due to regulations and caps on interchange fees in the UK and Europe, it’s not possible for a Visa or Mastercard card to compete with American Express. In the post I explain this dynamic, and it made for an intriguing explainer.

As well as being my most-read and most-shared post, it was also the post that attracted the largest number of new subscribers. This was partly because I posted a version on LinkedIn, which drove new subscribers to Substack. Posting duplicates of Substack posts on LinkedIn is a double-edged sword. It’s a reality that LinkedIn is the main platform for many fintech aficionados, and many prefer to stay on the platform rather than reading long-form posts on Substack. But the risk is that readers get used to reading content on LinkedIn when my goal is to grow my readership primarily on Substack. This is something I’m going to continue experimenting with.

2. Why Ryanair Wants You to Pay by Bank (published in September)

Writing about Open Banking often proves to be popular. My most popular posts of 2024 were on the topic of Open Banking so I’m not surprised to see that this one also did well. The popularity mainly stems from readers in the UK and US, where Open Banking hasn’t taken off as expected, and many are curious whether any new developments might finally unlock mainstream adoption. At the same time, readers in markets such as Brazil, India, and even in Southeast Asia are amazed that account-to-account payments are still such a rarity in the West, where cards, for better or for worse, still run the show.

My interest in this particular angle came about when I saw Pay by Bank as an option at the checkout when booking flights with Ryanair. Paying directly from a bank account instead of via card is something that’s great for airlines. It means cheaper fees, no chargebacks, and merchants will receive settlement immediately rather than in subsequent days. In my post I estimated that Ryanair would save at least £3 million per annum if they converted only a small proportion of payments from cards to Pay by Bank. And this is only considering the transaction fee element, let alone savings from avoiding chargeback fees and other operational costs.

To nudge consumers to try Pay by Bank Ryanair and their Open Banking provider, True Layer, put in place a 5% cashback incentive — capped at £10 per transaction — for a limited time period. Although such an incentive is costly, it may change user behaviour at the margins, and changes to the checkout UX may also play a part, as Pay by Bank is shown as the default payment option.

3. Did Curve Force Visa and Mastercard to Innovate? (published in December)

In what was my longest post of the year at over 5,000 words, I looked at the impact of Curve on the payments industry, a story which had unfolded over many years. Originally, due to compliance reasons, Curve struggled to get their partnership with Mastercard off the ground. Yet some years later the company had millions of customers and while Curve’s exact business model had its flaws, similar products have since been launched by both Visa and Mastercard. The idea of switching between payment options from a single source clearly inspired both card companies.

Lloyds Banking Group acquired Curve in November. This acquisition had been on the cards for some months, and it’ll be interesting to see what happens to Curve in the months ahead — will it continue to exist as a standalone company? Or get absorbed into the Lloyds Banking Group ecosystem?

4. Stablecoins Have Had a Rocket Boost (published in March)

This post acted as a bare-bones stablecoin explainer and an overview of key industry dynamics at the time, such as Stripe’s acquisition of Bridge. Before writing, I noticed that much of the content available captured the stablecoin hype but didn’t explain the basics or the implications for legacy payment providers. I watched various interviews, spoke with others in the industry, and brought together my own view on stablecoins. The GENIUS Act passed in the months that followed, and 2025 saw stablecoin mania — especially in the US — something which looks set to continue in 2026.

5. Eleven Ways That Apple Pay Changed Payments

   Part 1 (published in October)

   Part 2 (published in November)

This topic had been pending on my to-do list for over a year. I missed the ten-year anniversary of Apple Pay and then put it on hold, returning to it this autumn around the eleven-year mark. The content got too long, so I split it into two parts, with part 1 covering items 1-5, and part 2 covering items 6-11.

The Apple Pay story got bigger the more I examined it. On the surface it’s a means of making a contactless payment, but over time, the wider ecosystem and additional features have made it invaluable. It’s the preferred payment option for many in the UK, not just in stores, but when using the Tube or buses. Apple Wallet now incorporates Digital ID (US only for now), and virtual cards let digital banks onboard customers immediately, eliminating the need to wait days or weeks for a physical card to arrive.

In the next edition: What I’m watching in fintech in 2026

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After decades of sky-high inflation, it’s become a necessity. And while Americans complained about the price of eggs doubling in 2024, Argentinians have dealt with an average inflation rate of 204% since 2015. So with the Argentine Peso losing value like it’s going out of fashion, it’s no surprise that crypto is widely used in the country as a store of value.

In Argentina, crypto apps are popular not only as a means of buying Bitcoin, but also to acquire digital dollars (stablecoins). And those living outside the country use crypto apps to send money back home.

The Community Comes Together

At the end of November, the Ethereum community hosted its flagship event, DevConnect Week, in Buenos Aires. The gathering brought together crypto enthusiasts from around the world to experience Argentina’s crypto innovation firsthand.

While the Ethereum community was in town, another event — WalletCon— also took place in Buenos Aires. This event brought together WalletConnect partners, including developers, infrastructure builders, and wallet providers.

Founded in 2018, WalletConnect began as a protocol enabling crypto wallets to communicate with crypto apps.1 It links more than 700 wallets with over 80,000 applications for more than 52.5 million end users. The network is on track to support a payment volume of more than $400 billion in 2025. This surpasses Square’s 2024 volume of $241 billion, and Checkout.com’s anticipated $300 billion of processing volume this year.2

WalletConnect had recently launched WalletConnect Pay, and was showcasing the solution at WalletCon. In Buenos Aires, attendees could use it to buy WalletConnect merchandise on payment terminals throughout the event. It was a culmination of more than a year’s work.

Protocol to Payment Product

Not long after WalletCon, I spoke with Jess Houlgrave, CEO of WalletConnect, to learn more about WalletConnect Pay and how payment processors can add comprehensive crypto acceptance to their payments stack in days rather than months.

Jess told me that prior to WalletConnect Pay, “our technology wasn’t specifically designed for payments, and those companies [launching crypto payments] had to stitch together a whole bunch of other stuff at the back end in order to provide a clean end-to-end flow.”

Now with WalletConnect Pay, the company provides not only the wallet connectivity, but the settlement infrastructure and risk management tools. Payment providers can accept payments from all wallets connected to the WalletConnect ecosystem and receive settlement in a variety of crypto assets, including stablecoins, or even fiat currency, if they so wish.

Jess started building in the crypto space in the late 2010s, and more recently gained experience building in a traditional fintech environment, working as Chief of Staff, and then Head of Crypto Strategy at fintech unicorn Checkout.com. Now, as CEO of WalletConnect, Jess noted “I sit between the two [traditional payments and crypto] and we get to build the standards with the industry, and help bring everyone closer together.”

Enabling PSPs to Accept Crypto

WalletConnect’s goal isn’t to sell directly to merchants, but to partner with PSPs, enabling them to integrate crypto payment acceptance alongside cards, and mobile wallets such as Apple Pay.

This reminds me how payment gateways evolved ten years ago. Back then, card payments and PayPal were table stakes, but integrations into local payment methods could be done in one of two ways.

Either payment gateways could build their own integrations into local payment methods, or they could work with an orchestration platform such as PPRO to gain access to a wide range of local payment options through a single integration. As an equivalent, WalletConnect Pay acts as that aggregation platform for crypto wallets.

For PSPs, this unlocks a valuable customer segment. There’s substantial wealth held in crypto, and customers are looking to spend it. This is particularly attractive to those purchasing luxury products such as Ferraris and Malibu seaside homes. If you need to settle a $25,000 tab at a Buenos Aires nightclub, crypto can come in handy — for transaction values this eye-watering, credit cards can struggle to work their magic.

Managing Risk For PSPs

Usually, the upper limit of any single payment transaction is restricted. Card issuers set a limit based on the available credit line, and card acquirers may have a maximum transaction value hard-coded into their systems. Even with open banking, each bank sets its ceiling based on its risk tolerance, and any payment over this threshold requires prior authorisation.

Crypto payments solve for some of the constraints of card payments, but they present a different challenge — there is no upper transaction limit.

Crypto wealth can be easily spent, but PSPs still need to be cautious of money laundering and other compliance risks. Jess explained that WalletConnect Pay offers PSPs control, “WalletConnect offers a modular solution. The PSP can impose their own limits. The goal here is not to get around laws and regulations that payment companies need to follow. Each PSP manages their own compliance—we give them infrastructure flexible enough to meet whatever requirements they face.”

As demonstrated at WalletCon, WalletConnect Pay can operate both on a point of sale device, as well as in an ecommerce environment. In-person payments currently rely on QR codes, which are a common user experience in Southeast Asia, India and Brazil, but less so in the US, UK and Europe. In these markets, the simplicity of contactless payments and especially Apple Pay and Google Pay are more common.

Closing the UX Gap

Jess acknowledged that the user experience for crypto payments can be improved. “A crypto payment, even though it works today, is still a worse experience, typically, than tapping my Apple pay. I take my phone out. Done. There’s more intensive action today required for a crypto payment.” In 2026, this will be something to watch — can crypto payments become as easy to use and familiar as card payments?

WalletConnect has an ambitious road map. A recent White Paper outlines plans to optimise the checkout experience and integrate with other QR-based systems. The goal is for a world in which “PSPs can operate a dual-rail future where card and crypto acceptance coexist seamlessly” and merchants “gain lower fees, direct crypto settlement, and fraud protection without sacrificing existing operational standards.”

Heading into 2026, WalletConnect Pay offers PSPs a practical option — one integration connecting millions of end users, with settlement in crypto or fiat.

Thanks for reading Payments Culture!

Special thanks to Jess Houlgrave at WalletConnect for the discussion.

If you are a fintech company and want to share your story please reach out and let’s talk further. You can contact me via email, on LinkedIn, or on X.

Note that views expressed on this Substack are my own and do not represent any other organisation. Also nothing I say should be taken as investment advice.

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This newsletter explores how money moves, around the world, and why it matters.

Curve has been on quite a journey. It was founded by Shachar Bialick in 2015, and last week, after much speculation, Lloyds Banking Group1 announced the acquisition of Curve. The price is reported to be £120m (approximately US $165m). But the impact of Curve goes well beyond the relatively modest acquisition price.2

The fintech had grand ambitions from the get-go — to be the access point to “everything money” — yet in an early meeting the challenge was made clear. In that meeting, Mastercard reportedly laughed Shachar Bialick “out of the room.”3 Based on Mastercard’s rulebook, what Curve wanted to do wasn’t feasible. It wasn’t compliant. But like all successful startups, Curve’s vision shone through, they got up and running, and the rest is history.

If we are successful in our mission with Curve, you will still have Revolut, Amex, Monzo, and all those great fintech and financial institutions out there. It’s just that with Curve, we’re going to be this access point to your gateway to everything money. It’s going to be one place from which you access everything, exactly like with Spotify [and music].

Curve Founder, Shachar Bialick, talking on the Secret Leaders podcast earlier this year.

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Curve has been one of the most interesting fintech startups of the past decade. The company’s impact has been broader than the UK market alone. What Curve built has had a global impact, and to understand the full picture a number of key questions need answering.

• What did Curve build, and how did it work?

• Was Curve’s approach a threat to Visa and Mastercard?

• What is unique about the card schemes’ business models?

• How did Visa and Mastercard innovate in response to Curve?

As a follow up, in a future edition of this newsletter, I’ll ask the question: Why did Lloyds Banking Group buy Curve? The answer will build on some of the key themes and discussion points from this essay, with additional insights on bank-level strategy.

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• Some weeks, I’ll add additional content including personal essays, case studies, and interviews with fintech leaders.

• Paid subscribers get at least 1x additional essay(s) per month, access to the full archive, and more features currently under development.

The long-form analysis found in this newsletter is not sponsored. I rely on readers for their support to keep writing. My next essay — out in the coming week — will be for paid members only. If you are able to support my writing it’s much appreciated.

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Understanding Curve’s Business Model

Curve’s business model is simple: users can combine all their credit and debit cards into a single card and one interface.

Users download the Curve app and add their existing non-Curve cards to their Curve account. Each time a card is added, users authenticate through their respective banking or credit card app. Prior to any payment transaction, users select their preferred card in their Curve app, which acts as the pass-through card for any subsequent transactions until the pass-through card is changed in-app.

Curve isn’t linked to a bank account or a direct funding source, but to the various cards added in the Curve app. When you pay with your Curve card, Curve fronts the transaction and pushes it through to the underlying card you’ve selected as the funding source.

Consider how this model impacts a standard card payment transaction flow.

A transaction originates when a cardholder pays a merchant. What follows is the settlement of interchange and scheme fees to the card scheme4, and the cardholder gets debited for the transaction, with the merchant receiving funds net of any fees.

With a Curve transaction, the transaction flow differs.

From a cardholder perspective, it seems like there’s an additional step where the Curve card sends the transaction to the underlying card issuer.

However, the above diagram is actually wrong ❌

What’s taking place are two unique transactions. From a cardholder perspective it seems like a single transaction, but there are two legs. In order for Curve’s pass-through model to operate, two unique transactions take place almost instantaneously.

Leg 1 is what’s known as a Customer Initiated Transaction (CIT).

• A CIT seems like a normal transaction initiated either in-store or online

• But in this leg Curve fronts the transaction

• This transaction is subject to Secure Customer Authentication (SCA) rules5

• The merchant’s acquirer processes the transaction

• And Curve — or their issuing partner — is the card issuer

• The Curve app will show the full merchant name

Leg 2 is what’s known as a Merchant Initiated Transaction (MIT).

• The cardholder doesn’t see the MIT taking place

• In this leg, Curve is the Merchant of Record (MoR)

• This transaction doesn’t need cardholder authorisation, as the cardholder provided their permission to Curve to initiate such transactions when they added their card(s) to the app6

• Curve’s acquirer processes the transaction

• The issuer is the underlying card company or bank selected in the Curve app

• The cardholder statement will show something like CRV*STARBUCKS

For card issuers, the downside of Curve’s model is that when Curve is used, they don’t get the level of information they expect, and are used to getting from each transaction. They know it’s a Curve transaction, but they don’t get merchant location detail, and even the full merchant name may not flow through. This lack of merchant-level information makes it hard for banks to detect fraud patterns and build customer profiles. On the other hand, Curve knows where you shop and how much you spend across the various cards connected to their app.

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From a revenue perspective, Curve gains interchange revenue on Leg 1. In the UK and EU, this is 0.20% on debit card and 0.30% on credit card transactions.7 However, on Leg 2, Curve loses money. They have to pay the full set of acquiring fees as well as other related fees, such as any payment gateway costs. Additionally, if Leg 2 fails, Curve may retry the transaction, but if ultimately the transaction is unsuccessful, then Curve may bear a loss equal to the full transaction amount.

These factors mean that, structurally speaking, on a transaction-by-transaction basis, Curve’s business model is loss-making.8 The transaction economics mean that even if revenue per user rises through increasing interchange income, it won’t close the gap between top-line growth and profitability. To combat this, Curve expanded into adjacent areas and launched additional product lines away from this discrepancy between interchange income (Leg 1) and total fees (Leg 2).

Curve’s Other Revenue Drivers

In the last available financial results9 — which are for the full year 2023 — after interchange income (£14.6m), Curve’s biggest revenue line was subscription income (£7.2m), and then platform income (£4.9m).

Platform income came from several sources. Retailers paid fees to be featured as cashback partners in the Curve app. Companies such as Samsung and Huawei used Curve’s technology as the mobile payments layer on some of their devices. And the platform income line also included FX fees, ATM fees, and revenue from Curve Flex — an instalment payment product.

Moving on to subscription income. This has become a mainstay of the fintech business model. Monzo, Revolut, and now even Klarna offer paid subscription plans. The consumer pays a monthly fee for a membership tier that offers benefits such as travel insurance, airport lounge access, and various company-specific benefits. In theory, the package that comes with any monthly membership should be good value for consumers yet profitable for the fintech.

Most importantly, the consumers who are happy to pay a monthly fee are likely to be the most engaged customers and use the product more than free users.10 Although for Curve, the challenge is that given the mismatch between Legs 1 and 2, a more engaged customer could, in some cases, equate to a less profitable customer.

Curve has paid plans at £5.99, £9.99, and the most expensive paid plan comes in at £17.99 a month — the top plan offers features such as “Unlimited past payment transfers from one card to another for 120 days” and “£100,000 fee-free spending abroad”. Some of the monthly fees are steep, yet Curve generated almost 50% of their interchange income from subscription revenue.

On closer analysis, the subscriptions numbers are not so impressive. If we take the £7.2m subscription income and assume an average monthly subscription of £10, this equates to around 60,000 paying subscribers. Given this £7.2m is from data which ends in 2023 (per the last available annual report), even being generous in future revenue assumptions means that less than 1.5%11 of the reported 6m user base12 have paid accounts.

Monzo is an interesting counterpoint. It is a company that has a more engaged customer base than Curve. Even though one is a bank and one is an all-in-one card — it’s not a like-for-like comparison — still, with around 1m paid subscriptions across their user base of more than 12m, Monzo has a paid subscriber ratio of 8%.13 The quantum of the difference illustrates the extent to which Curve has struggled to convert its customer base to paid subscriptions, while Monzo has been hugely successful.

There have been other examples of where Curve struggled with user engagement. Back in 2019, information leaked revealing that of Curve’s 500,000 customers only 14% were Monthly Active Users (MAU). This gave credence to the view that some had long held about Curve. It was an app many users downloaded to test and try, but they rarely stuck with it. They didn’t see the benefit. This was especially the case in markets like the UK, where the popularity of Apple Pay meant that users already had a de facto mobile wallet that held all their cards.

Curve had to work hard to stay relevant, while consistently innovating and seeking to grow their user base, all while trying to close the gap between revenue and profitability. The company made cumulative losses of at least £140m before acquisition.14 However, they still undoubtedly had a substantial impact, and to understand this significance, we need to get into the skin of how the card scheme giants operate.

Curve vs Visa and Mastercard (and Amex)

Curve has developed a unique and innovative business model that relies on access to payment networks and is subject to their rules. Payment networks could adopt new operating rules, or reinterpret existing rules, which would hamper Curve’s business model.

Curve’s annual report for the financial year ending 31st December 202315 highlighted a key risk to the business model. If the payment networks changed their rules then Curve would struggle. Their innovative business model was dependent on the card network’s support.

Initially, Curve founder Shachar Bialick struggled to get up and running. He’d built a prototype with £1.2m of seed funding, but in order to launch, he needed one of the two main card networks — Visa or Mastercard — to approve his business idea.

Once one was onboard, he knew the solution could be used at every merchant location that accepted Visa or Mastercard. The opposite scenario, if he couldn’t win over one of the two card giants, would be signing up merchants and partners directly, something which would be time-consuming and resource-intensive. But with one of the large networks on board, he could short-circuit the acceptance side. However, achieving this was tough.

Mastercard were not initially supportive with Curve’s approach, but after much wrangling, they permitted a pilot of Curve in 2016 before a full public launch in 2018.

Mastercard were initially sceptical as Curve changed core aspects of the card payments model. For instance, the fact that the card presented for payment isn’t the ultimate funding source for a transaction was a big change. And some of Curve’s features, such as Go Back in Time16, allowed users to change the funding source up to 120 days after the initial transaction, was something that hadn’t been seen before. In many respects, Curve’s product offering sat in a compliance grey area — it was a solution that didn’t fit within existing business models, such as that of card issuing, processing, or programme manager.17

Although, it was always like that either Visa or Mastercard would agree to work with Curve. If the concept was a success, there was plenty of upside in terms of additional transaction revenue, especially since there would be two sets of scheme fees18 for every normal transaction. Additionally, while Curve did pose a challenge for the card schemes’ existing rulebooks, regulations such as PSD219 led to more open competition.20

Crucially, the regulation confirmed that Merchant Initiated Transactions (MIT) would not be subject to the same customer authentication rules as Customer Initiated Transactions (CIT). Therefore, Leg 2 in Curve’s business model could remain friction-free, provided the underlying card had been authorised by the cardholder when loading into the Curve app.

At this point it’s worth noting Curve’s travails with American Express (Amex).

Initially, one reason many UK consumers got excited about Curve was that it supported Amex cards. While the situation has gradually improved over time, fewer businesses accept Amex cards than Visa or Mastercard cards. This is due to cost. Amex nearly always has higher fees than Visa and Mastercard, which means some retailers refuse to accept Amex.21 Retailers can take this stance as every cardholder will always have at least one other card in their wallet (or Apple Wallet) that they can use if Amex is not offered as a payment option.

Consumers were happy that via Curve they’d now be able to use Amex everywhere. To retailers the card would appear as a Mastercard transaction (Leg 1). Leg 2 would operate differently for Amex than for other card brands, as Amex operates a closed-loop network in which it is both the card issuer and the acquirer.

As Curve’s UK volumes grew, Amex was frustrated by the lack of data and the general operating model of Curve. Amex has strict acceptance criteria and sees its offering as a premium brand. For Amex, they want to stay front and centre — and not just act as a funding source. Amex blocked Curve after a few months in 2016, and while they relaunched Amex support with a different model22 in 2019, this didn’t last long either.23

Competitive and Business Model Dynamics

Curve’s relationship with Visa and Mastercard has been one of coopetition. Curve needed the card schemes for reach, but the ultimate business model conflicted. To understand this conflict in more detail, we need to understand the differences in the respective business models. Curve sought to offer their users payment choice from one connection point. But the card schemes have a business model that is dependent on deep and enduring relationships with their issuing bank partners.

Coopetitive relationships are complex as they consist of two diametrically different logics of interaction. Actors involved in coopetition are involved in a relationship that on the one hand consists of hostility due to conflicting interests and on the other hand consists of friendliness due to common interests.

From a paper by Bengtsson and Kock, who popularised the concept of coopetition — a relationship in which firms cooperate and compete with each other at the same time.24

Visa and Mastercard’s core customers are, and always have been, issuing banks.25

Their networks facilitate card payments globally, and banks know their customers can spend in almost every country in the world, provided their cards have either a Visa or Mastercard badge. The companies have diversified into other products in recent years, including payment gateway solutions, fraud prevention, and more recently, stablecoin offerings. Yet the vast majority of card scheme revenue still comes from card issuing relationships.

In the 1960s, neither card scheme had more than tens of bank partners and all partner banks were located in the US. Today, there are thousands of financial institutions, located in 200+ countries and territories, that work with Visa and/or Mastercard.

Within Visa and Mastercard, every bank has an account manager. For large institutions, the relationship can be intensive—entire teams work with these major banks day-to-day to optimise card programmes, launch new products, and grow their business together. Some of the world’s largest issuers may have ten or more dedicated Visa or Mastercard staff involved day to day in their partnership. In return, these banks generate enormous revenue for the card schemes. As you would expect, the precise numbers behind any particular partnership aren’t disclosed, but with both networks earning a small fee on every transaction, there are many issuers generating tens of millions of pounds in card scheme fees annually.

So if we consider that Visa and Mastercard both benefit from deep long-term relationships with their issuing bank partners, then Curve differs. Its business model isn’t concerned with depth of issuing bank relationships. Rather, the ability to switch between issuing banks is the central aspect of Curve’s model.

Curve’s customers are its users — those who log into their app every day and choose which card to apply to which transaction. Issuing banks themselves are merely one of many connection points.

With a model like Curve, there’s always the potential to bypass issuing banks entirely for some transactions. This is something that Curve has tried with their cashback product. Known as “Curve Cash” which provides cashback of 1% (or more) at selected retailers. The cashback is returned to the user as stored value within the Curve app, and then shows as a “Curve Cash” payment option. It’s a quasi-currency that can be accumulated, selected, and then spent like any other payment option. This was a clear example of how transactions could take place without any bank involvement. And while users accumulated only modest amounts, the concept was proven. In the future, issuing banks would potentially be only one of the payment options for Curve account holders.

As years went by, the two card schemes could see Curve’s growth. US expansion barely got out of first gear before pulling back, yet Curve had, for the most part, shown real momentum.26 Hype often followed the company, it innovated quickly in expanding its product offering, and while it never turned a profit, its numbers were improving over time. But it wasn’t enough. Curve got acquired by Lloyds Banking Group after expressing concern that the company would run out of money if it didn’t find a buyer this year.

The reality is that Curve was never a competitive threat for Visa and Mastercard. It needed them. They worked together. At the same time, Curve proved that its model of switching between cards worked — at least to some extent. In recent years, both Visa and Mastercard responded with their own offerings, which took inspiration from Curve. However, as you would expect, the models the card schemes settled on were different; their offerings are issuer-centric, in line with their overall business models.

The New World — Credentials Over Cards?

While Mastercard was Curve’s primary partner, periodic discussions with Visa were held to keep Visa informed of Curve’s business and explain the operating model. This dialogue was critical as Visa never blocked Curve. Visa kept a close eye on how the fintech operated, and it was Visa who first launched the card networks’ answer to Curve.

Visa Flexible Credential (VFC) was announced by Visa in 2024 and launched first in Asia before announcing partnerships in the US and the Middle East later in the year. The product assigns a specific card number to a VFC customer account.27 This is known as the primary credential, and once assigned, allows consumers to dynamically select from various funding sources — known as secondary credentials. Examples of funding sources include debit, credit, instalments, as well as joint accounts, multi-currency accounts, and rewards points.

The financial landscape is undergoing a radical transformation, and at the heart of this revolution is the move towards flexible payment credentials. Traditional one-size-fits-all credit is rapidly being replaced by dynamic, consumer-centric financing options

- Ex CEO of Marqeta, writing recently on his Substack

The innovation is a single payment credential with rules that route spend based on predefined criteria.28 Use cases include:

• Users may utilise their debit card as their main day-to-day spending card.

• But for transactions over £100, they can direct this payment to a credit card.

• Transactions over £1,000 can be split into instalments, such as the option to pay in four equal instalments.

• For some couples, even if they keep individual accounts, they may wish to pay their utility bills from a joint account and direct debit payments specifically to a joint account.

• In some markets, consumers pay in both local currency and non-local currency — such as US Dollars. Rules can change the funding source between different currency balances.

• Some card issuers offer rewards points as part of their ecosystem and users can draw on their rewards points at certain merchants.

The transaction is authorised on the primary credential and then settled to Visa with the secondary credential alongside information confirming it was a VFC transaction.

This difference between funding source and payment source is one similarity with Curve’s model. Yet in the case of Visa’s offering, the main difference is that the primary and secondary credentials are both within the same issuing bank. This should be no surprise. Visa’s core customers are issuing banks, and improving the offering of issuing banks and level of spend within banks is a core objective of Visa.

Mastercard launched a similar product to Visa Flexible Credential called Mastercard One Credential. The products position themselves slightly differently, yet for their bank partners the outcome is the same. Both provide a rules engine to select a transaction funding source on top of existing card rails, with APIs for issuers, and settlement that links primary and secondary credentials.29

What we’re not doing at this time is going beyond the walls of their bank and asking the consumer to connect other accounts from other institutions. Note that this is not a design limitation—it’s actually by design.

Mastercard’s Chief Consumer Product Officer Bunita Sawhney confirmed that Mastercard actively seeks to keep the user within the walls of their bank. This is a key aspect of the card schemes’ response to Curve — provide infrastructure to issuing partners to build their own flexible model within their own ecosystem, as reported in The Financial Brand.

We’ve seen that Visa and Mastercard’s response to Curve was to build solutions within their own ecosystems to help deepen relationships with their issuers. Essentially, if you can utilise multiple funding sources within one bank, then why would you want to utilise external funding sources? But ultimately it’s up to issuers themselves to make their proposition compelling for consumers.

One last point I want to make is how flexible credentials change the competitive dynamic between Visa and Mastercard. This is potentially the most unexplored aspect of this story.

In terms of card issuing, ways in which Visa and Mastercard can grow revenue include:

• Capturing organic transaction growth from increasing volumes of card payments as more of the world economy goes cashless.

• Raising charges from card scheme fees, which are not regulated to anywhere near the extent that interchange fees are.30

• Winning volumes from each other!

The last point is key. Many banks traditionally maintain relationships with both Visa and Mastercard. It’s common for banks to use one network for debit cards and the other for credit cards. The account managers within Visa and Mastercard are looking to grow volumes with each issuer they manage. And banks know that by actively using both card schemes, they can compare and contrast service levels, product innovation, and commercial value offered by each network.

However, flexible credential products only function effectively if a bank’s entire portfolio is either with Visa or Mastercard.31 If your credit cards are with Visa but debit with Mastercard, then you can’t switch between them. This creates a “winner-takes-all” dynamic where success in selling a flexible credential approach also depends on converting as much of an issuer’s portfolio as possible to the respective network.

This dynamic is why you’re likely to see many neobanks and spin-off banks opt for flexible credential offerings in the short term, rather than longstanding traditional legacy banks. Newer organisations have a clean slate in terms of card scheme relationships and will find it easier to opt for one network wholesale. They also have API-first architecture suited to integrating with third-party providers, which is helpful, as flexible credential offerings will often require third parties to help integrate and run aspects of the programme.32 Additionally, while legacy banks often manage their credit and debit portfolios separately — sometimes even within different parts of the bank — neobanks don’t have this constraint.

Thanks for reading Payments Culture!

Please leave a comment or share with a friend or colleague if you enjoyed reading this edition. It’s much appreciated and helps grow the audience of this newsletter.

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Note that views expressed on this Substack are my own and do not represent any other organisation. Also nothing I say should be taken as investment advice.

This newsletter explores how money moves, around the world, and why it matters.

This is part two of a two-part series examining eleven ways that Apple Pay changed payments. Why eleven? Because this year marks the eleventh anniversary of Apple Pay, which launched in the US on October 20th, 2014. Part one can be found here.

Imagine waking up at 5am on a Monday morning. It’s early November and you’ve got an important flight to catch. It’s a business trip. You’re excited to get to New York as you’ll be meeting your favourite client. He always meets you at the same coffee shop downtown, with oversized comfy chairs, and the best espresso you’ve found outside of Italy. You dress, grab your backpack, and jump in a taxi. But when you get to the airport, it hits you like a ton of bricks. You’ve left your passport at home.

Yet this stomach-churning situation may soon be a thing of the past.

#6.

Digital ID Integrates Payments and Identity Verification

Last week, Apple announced Digital ID for Apple Wallet. The same device that holds your boarding pass and credit cards will soon allow you to add your passport to an iPhone or even an Apple Watch. Here’s how it works: Rather than presenting your passport at the airport, tapping your Apple device at a TSA checkpoint will be enough. These days, no one leaves home without their iPhone (or another smartphone model), so at least for US domestic travel, your stress is about to melt away. Although, to be clear, the solution will not entirely replace a passport as Digital ID is not sufficient for international travel, a passport will still be needed for that. Yet it seems possible that within the next ten years, a Digital ID could suffice for some international flights.

Note: Not all domestic US airports are utilising Digital ID at this time so please check before you travel, and at this early stage it’s best to take your passport as well just in case the solution doesn’t work as intended.

Looking back over the past 11 years of Apple Pay, this progression from payments to Digital ID stands out as a key milestone. Consumers are comfortable double-tapping their phones to pay, and Digital ID sits within Apple Wallet — the ecosystem that stores not only payment credentials but now, digital identity too.

Questions of identity and payments are often thought of as adjacent yet separate challenges. Apple is now starting to bring this together. Think of the last time you opened a bank account on your iPhone or opened an account on a crypto app. It’s likely you had to take a photo of an ID, such as a passport or a driver’s license, and then verify with a selfie. This process will, in some cases, get replaced with Apple’s Digital ID. And is there the prospect to bring payments and identity together in other use cases?

#7.

Apple Pay Accelerated Virtual Cards

Ten years ago opening a bank account meant going into a branch to make an appointment to open an account, and going back to the branch on another day to provide documents and sign some forms (this is exactly what happened to me). What followed was a wait of days to get paperwork in the post confirming the account opening. Cards arrived separately. And of course, the PIN number for any cards took another few days to arrive. In total, it could easily take a week for a new account to be truly operational.

The rise of neobanks changed this experience dramatically. Opening a bank account now takes minutes, especially with a bank like Revolut. However, what’s made the account opening experience significantly better is virtual cards. Rather than get frustrated waiting for your new card and PIN number to arrive in the post, virtual cards allow users to load their card to Apple Wallet and spend immediately via Apple Pay. It’s easy to take this for granted in the UK, as many banks now offer virtual cards. Remarkable still is that we don’t have to wait for a PIN number to arrive in the post, as it can often be accessed within a bank app via another Apple innovation we now take for granted: FaceID.

In some cases, virtual cards can be used without Apple Pay — this is mainly seen in business-to-business payments, where virtual card details can be sent to a supplier via APIs. On the consumer side, Apple Pay has normalised the use of virtual cards. Tech that most consumers were unaware of less than ten years ago is now de rigueur in personal finance.

#8.

Apple Pay Accelerated Embedded Finance

In a world of APIs, companies can integrate financial services into their apps and wider product offerings even if fintech isn’t the mainstay of their business. The concept is known as embedded finance, and it’s a phenomenon that can be seen throughout the economy. Delivery companies offer loans through third-party lenders. In the US, Uber provides its drivers with a debit card and a digital bank account for instant access to their earnings. Starbucks is a coffee company, yet its well-known loyalty programme is one of the most notable examples of a stored-value payment system.

Even when a company isn’t a bank or fintech we can see financial services that sit within apps and ecosystems, sometimes on the consumer side, sometimes on the business side, or even both. Wherever we look, we can see embedded finance.

Even if many companies launch their embedded finance offering without Apple Pay, they usually add it later as they realise it’s essential — consumers and businesses expect it. Payments is a core facet of embedded finance and Apple Pay plays an essential role in how non-financial brands build financial products.

Lars Markull, Founder of Embedded Finance Review, told me that:

Non-financial brands have a crucial advantage: they can integrate financial products directly into their existing services, something standalone fintechs can’t do. But they still have to compete with fintechs, and some features [such as Apple Pay] are table stakes.

As a distribution model for financial services, embedded finance will only grow in importance. It’s expected to be worth more than $100 billion by 2030, and by then, according to McKinsey, it could be up to 15% of banking revenue.

Actually, the clear demarcation between embedded finance, fintech, and banking will erode, and consumers will notice less and care less who provides financial products, provided they function as expected. The model of delivering financial products is evolving to meet consumers where they want to spend their time.

#9.

How Apple Pay Accelerated BNPL

Apple has an advantage as a company that controls both hardware and software. Take AirPods. Once you’re used to them, it’s hard to go back to something else. AirPods connect multiple Apple devices and make switching between them effortless. The synergy of hardware and operating system (software) can also be seen in payments. Apple Pay takes advantage of this.

Apple Pay Later was the first BNPL-style offering facilitated by Apple. It allowed users to split purchases into instalments via the simplicity of an Apple Pay transaction. Users could choose “Pay Later” at eligible online checkouts to split a transaction into four payments over six weeks, with one payment upfront and three equal payments every two weeks. However, this strategy lasted barely more than a year. The solution launched in March 2023, but by June 2024, Apple had moved from a model of direct financing to a partner and bank-led model.

The change of strategy let Apple step away from the lending and regulatory requirements of BNPL. At the same time, the shift in approach enhanced Apple’s distribution both domestically and internationally. In the US Apple introduced a BNPL partnership with Affirm, and has since added Citi’s BNPL offering to Apple Pay. In Europe, Apple Pay instalments are live with Monzo in the UK and CaixaBank in Spain.

As a Monzo customer I’ve been able to experience Monzo’s BNPL offering first-hand. Known as Monzo Flex, after paying with Apple Pay, I can open the Monzo app, find any transaction from the past two weeks, and split it into three separate monthly instalments, interest-free, or extend it to six instalments with interest.

#10.

Tap to Pay on iPhone Marked the Next Phase of Apple Pay

Tap to Pay on iPhone is what Apple calls SoftPOS (Software Point of Sale). Turn your phone into a payment terminal. Apple didn’t invent this technology — it was available on Android for years before Apple decided to offer their own iPhone-based solution. Yet, as ever, once Apple got on board, it was only then that the technology truly took off.

This weekend I was at a craft market in Battersea Power Station in London.

Every seller was accepting payments either with Tap to Pay on iPhone or a small payment device from companies such as Zettle and SumUp. This made sense, as the original plan with SoftPOS was to tap into the “micro merchant” segment and remove the friction of buying and setting up a payment device. Market traders, DIY workers, and any business that can efficiently function with one man or one woman at the helm were prime candidates for SoftPOS.

But now, even large retailers utilise SoftPOS. With an iPhone, staff on the shop floor can both manage inventory and accept transactions without the need to send customers to queue at a centralised checkout area. This is the case in Lululemon stores in London. Staff can check inventory and bring the size you need, and check out there and then. Lowering friction means more sales, as it eliminates the risk of customers getting frustrated and leaving their goods behind due to a long queue at checkout.

Tap to Pay on iPhone is available via companies such as Stripe and Adyen, and small businesses can enable the solution directly in seconds when using neobanks such as Monzo and Revolut. With this technology, every bank can become a payments company and enable contactless card payment acceptance on the devices of freelancers and SMEs.

In countries such as Brazil, SoftPOS on Android phones quickly found its user base. It didn’t take long for the country to get over a million SoftPOS users, and this continues to grow, but in Western economies, the tech didn’t take off until Apple came on board.

Apple Pay lets users pay (send money) with their iPhone, and Tap to Pay on iPhone allows businesses to receive money. It was the natural and subsequent evolution of on-device NFC technology that powered Apple Pay, opening up to payment acceptance. SoftPOS, especially following Apple’s involvement, disrupted the payment terminal market and was part of a broader shift in payments — as in many industries — moving primarily from hardware to software.

#11.

Does Apple Pay Mean We Can Leave Our Wallets at Home?

When leaving home what’s the one thing that you absolutely have to take with you, that you can’t leave your house or apartment without? Something you have that is so important, if you notice you’ve forgotten it, even when halfway down the street, you’ll go back to get it.

Less than ten years ago, I might have said my wallet, but these days it’s definitely my iPhone. I always pay with Apple Pay. When riding the Tube, I use Apple Pay alongside the fast transit feature, so I don’t need to double-tap or use Face ID before each transaction. Additionally, I use my iPhone to listen to music, and sometimes I use it to read newspapers or Kindle books while traveling. In short, I can now leave my wallet at home, but I don’t dare leave home without my iPhone.

Last year The New York Times ran a piece titled The Youths Have Spoken: Wallets Are Uncool. Go Digital. The article explored the extent to which Gen Z primarily use digital devices, and often don’t carry a wallet. A survey of Gen Z in the US found that 80% regularly use mobile wallets such as Apple Pay, but this goes beyond payments:

Younger people are increasingly using their phones for purposes that older adults would use a traditional wallet for, like carrying documents such as a driver’s license, boarding passes and event tickets.

In fact, for boarding passes, airlines such as Ryanair have moved to digital as standard, and expect all travellers to present their boarding pass on a smartphone. So it’s not just our wallets; anything that could have once been paper-based is now ripe for adding to Apple Wallet.

Relying on our phones is both good and bad. Having everything in one place is convenient. But most adults — and many teenagers — are dealing with phone addiction on some level (even if we don’t want to admit it). Many of us wish we could stop picking up our phones as much as we do, and techniques and ideas to stop scrolling proliferate online.

Many bestselling books tackle this topic. Earlier this year, I read Smartphone Nation by Dr Kaitlyn Regehr. I didn’t learn too much from this one, probably because I’ve already read Digital Minimalism and other books by Cal Newport that address the topic in a way I could relate to better. Yet exploring how we can use our phones less becomes ever harder as tech means we need our phones for more and more aspects of our daily lives. Many of us are working on this balance. But one thing I would contend is that Apple Pay has allowed us to leave our wallets behind.

Note that views expressed on this Substack are my own and do not represent any other organisation. Also nothing I say should be taken as investment advice.

Why Subscribe to Payments Culture?

• Every week (or so), get one long-form email with my curated insights.

• Some weeks, I’ll add additional content including personal essays, case studies, and interviews with fintech leaders.

• Paid subscribers get at least 1x additional essay(s) per month, access to the full archive, and more features currently under development.

  Subscribe now

If you’d like to support this newsletter you can get a monthly membership for less than the cost of a beer (in London). An annual membership is more than 95% cheaper than attending a big fintech conference — and you may learn more by reading this!

Note: You can refer friends or colleagues to earn complimentary month(s) of paid membership.

Get in touch

I’m always interested to hear from those who read Payments Culture.

Feedback, collaboration opportunities, or anything else - it’s all welcome.

You can email me, message me here, or on LinkedIn.

Thanks for reading! Matt

No but that’s OK. Let me explain.

The world is changing fast, and careers are changing too

Let me take you back to 2020. I’d been working in payments for over a decade and my career was going well. But since then, I’ve experienced a redundancy, a company that I was about to join lost its funding and went under, and I had a job which didn’t work out at all.

When I first started writing this newsletter my original goal was to write a few posts, raise my profile, and help me find work. Once I got a job I’d stop writing. But it didn’t work out like that. I’ve kept going, and kept writing. The perfect job never happened.

So why did I keep writing when it didn’t work as a job-hunting strategy?

What I’ve come to realise is that my writing is actually me trying to make sense of the world.

In today’s world it’s easy to feel like you’re drowning in information. There’s always more to learn, and more that we could know about any given topic. No matter how much you know, it’s easy to feel like there’s more you should know. It’s an endless cycle which we can’t stop. And it’s exhausting.

If you’re working in payments and the wider fintech industry this barrage of information leads to a delicate balance. Keeping up with industry trends and the latest developments can be essential for progressing in one’s career, yet at the same time the amount of noise on any given day renders most information useless.

What makes understanding fintech harder than ever are the non-stop announcements and press releases. Every company wants to appear innovative (who can blame them). Each day there’s a new partnership or product launch, and the imperative is for each and every one to sound like a game changer, but a majority of announcements are really not that important.

With so much happening in this industry (and so much noise), the best approach to keep up with payments in 2025 is to find a few publications you like reading. Read them regularly, but consciously avoid keeping up with every announcement and every breaking news story. Because, quite frankly, it’s impossible. (There are reams of fintech newsletters out there and you won’t be able to read all of them.)

When I started writing Payments Culture my goal was not to comment on every one of the top breaking news stories, not to round-up the most notable announcements of the past week, and to not be a single source of payments news. If this is what you’re looking for then there’s much better publications out there. My goal is to go into the wider context and to understand stories beyond the headlines — why certain trends and technology shifts truly matter.

With this in mind, I challenged myself over the summer to distill what compels me to write into a few paragraphs. What follows is a summary explaining what’s behind Payments Culture. Consider this an informal re-launch of this newsletter.

What is Payments Culture?

In June 2007 I moved to Germany for an internship. I naively assumed that I could use my UK credit card until my 700 Euro intern “salary” came in at the end of the month.

I was wrong.

In Germany, back then, I could count on one hand the number of shops, restaurants, and cafés that allowed me to pay by credit card. I had money, yet couldn’t spend it.

That summer in Germany was my first lesson in how money moves differently around the world.

Over time I realised that these differences are everywhere:

• Japan is a hyper-modern society, but they still love cash.

• Chinese tourists struggle to pay in London because their mobile wallets don’t work the same way abroad.

• In parts of East Africa, consumers leapfrogged straight to mobile payments without ever using traditional banking.

Payments Culture is where I explore these differences and what they mean for anyone working in fintech, finance, or tech — or just curious about how money works.

Why Subscribe to Payments Culture?

Most of what I write falls into three main areas. This is my mini-framework:

Some recent posts highlight certain aspects of this framework:

• Can Revolut Compete With American Express

Regulation explains why on a like-for-like basis Revolut cannot compete with Amex.

• Germany’s Legacy Payments Tech and the Impact of AI

Culture explains why credit cards have never taken off in Germany.

• Crossing the Chasm With Payments (Part 1)

Innovation explains why some companies “cross the chasm” while others get stuck and never make the leap.

These examples highlight how the way we pay and get paid is changing.

But it’s deeper than that.

In fintech, we often focus on the latest big trends, gigantic funding rounds, and outsized personalities, while the gradual shifts in culture and technology — which really make the difference — are rarely covered to the extent that they should be.

Change is slow then suddenly quick.

And change doesn’t happen in a vacuum, it happens as a part of wider societal and cultural change. My focus is on these deeper shifts that often get missed.

Payments Culture comes with:

• Expert perspective from my 15+ years working in the industry

• Real-world stories that go beyond the headlines

• Market intelligence you won’t find in press releases

Who should read this:

Fintech strategists, investors, operators, founders, analysts, product managers, consultants, journalists, entrepreneurs, and anyone else interested in how money moves, around the world — and why it matters.

Here’s what my readers say:

Here’s what this looks like:

• Every week, get one long-form email with my curated insights on a specific topic.

• Some weeks, I’ll add additional content including personal essays, case studies, and interviews with fintech leaders.

• Paid subscribers get at least 1x additional essay(s) per month, access to the full archive, and more features currently under development.

Subscribe now

If you’d like to support this newsletter you can get a monthly membership for less than the cost of a beer (in London). An annual membership is more than 95% cheaper than attending a big fintech conference — and you may learn more by reading this!

Note: You can refer friends or colleagues to earn complimentary month(s) of paid membership.

Get in touch

I’m always interested to hear from those who read Payments Culture.

Feedback, collaboration opportunities, or anything else - it’s all welcome.

You can email me, message me here, or on LinkedIn.

Thanks for reading! Matt

This newsletter explores how money moves, around the world, and why it matters.

Apple Pay has been a huge success. The service launched in the US on October 20th 2014, and today, from Canada to Paraguay to Vietnam, thousands of banks support Apple Pay. The solution is available in around ninety countries so far, with more added every year.

Last year I wrote How Apple Pay Changed Payments. This was one of my most popular posts of the year and it was rated as one of the Best Deep Reads of 2024 by This Week in Fintech. But there was so much more I could have said. Over the next two posts I’m going to tell the story of Apple Pay through eleven changes that have impacted payments.

In this post, you’ll learn:

• How Apple succeeded with mobile payments, where earlier attempts failed

• How Apple Pay made fintech more accessible

• How Apple Pay generates more revenue than many standalone companies

• How transit payments became the ultimate testing ground for Apple Pay

• How Apple Pay cemented the global divide between cards and QR codes

Let me be clear: many of the things I’m going to discuss may have happened, and may have progressed without Apple Pay. Yet my argument is that Apple Pay ignited a seismic shift. The launch of Apple Pay was one of the most impactful events in the industry. It made so many things possible in a way that we take for granted today.

#1.

Apple Pay Succeeded Where Other Mobile Payments Failed

In an interview with the Wall Street Journal last year, Tim Cook, when quizzed about Apple’s perceived slowness in rolling out AI, stated “We’re perfectly fine with not being first. As it turns out, it takes a while to get it really great. It takes a lot of iteration.”

Apple’s instinct is to be the best, not the first, and Apple Pay was no exception.

Two examples from before the Apple Pay era help set the scene. One success1 and one failure can help illustrate the challenges Apple would face.

The Success of FeliCa (from 2004)

Japan got its first NFC-enabled phones2 way back in 2004.

Sony and NTT Docomo, Japan’s largest mobile operator, formed a joint venture called FeliCa Networks. FeliCa developed a standard which soon became the dominant NFC system not just in Japan but across East Asia.3 Major retailers such as FamilyMart accepted payments via FeliCa, and by 2011, mobile payments accounted for around 12 percent of Japan’s cashless transactions. However, with the rise of the iPhone, the share of mobile payments declined, and it wasn’t until 2016, with the launch of Apple Pay in Japan, that Apple added support for the FeliCa standard.4

Google Wallet Struggles (from 2011)

The first Android phone with NFC was Google’s Nexus S, which was manufactured by Samsung and released in December 2010. Google launched mobile payments with a solution known as Google Wallet in 2011 with the updated Nexus S 4G. The initial launch was with one carrier (Sprint), one card issuer (Citibank), and relied on merchants having contactless payment terminals supplied by Mastercard.5 Google struggled to scale the solution.6 This should be no surprise given that in 2011 less than 0.5% of all payment terminals had contactless acceptance capabilities! The solution was stuck in a chicken-and-egg scenario, which is incredibly common when trying to scale payment technology.

Back in 2014 Google didn’t yet make their own devices. They relied on device manufacturers such as Samsung, Motorola, and even Huawei to showcase Android. Conversely, Apple had both hardware and software in-house, with almost 42% of US smartphone market share, and as iPhone users tended to have higher incomes (this is still true today). It should be no surprise that Apple was the one player that could move the market.

Apple Pay Enters the Scene (from 2014)

It wasn’t until Apple came along with Apple Pay, and a model which brought together hardware, issuers, acquirers and merchants into a new ecosystem that the true potential of NFC was realised — at least outside of Japan. From a technical perspective, owning both hardware and software allowed Apple to innovate with on-device biometrics, tokenisation, and build an effortless user experience.

As with all innovation, timing is key, and Apple got the timing right. Many large retailers were planning on updating their payment terminals by late 2015 due to a change in regulations.7

The surge in contactless capable payment terminals in the US can be seen in these statistics:

• In 2014 at the time of Apple Pay’s launch only around 7% of payment terminals could accept contactless payments.

• By mid-2018, 70% of payment terminals were contactless ready.

• By the end of 2018 more than 95% of all payment terminals shipped were contactless capable.

In some respects Apple’s timing was fortuitous. But they built their own wave with a self-reinforcing ecosystem that consumers loved and merchants couldn’t afford to miss out on.

To quote How Apple Pay Changed Payments:

Users saw that it was fun to pay with Apple Pay, and retailers didn’t want to risk losing a sale if the cardholder couldn’t pay how they wanted to. Nothing changed overnight, but gradually, the market shifted.

In the US market the story of contactless payments became the story of Apple Pay.

Unlike FeliCa, which was only successful in Asia, Apple succeeded in making Apple Pay a global phenomenon. But success in Apple’s home market was the main factor which set the course for mobile payments to go from experimentation to exponential growth.8

Privacy has always been central to Apple’s philosophy. In the above interview from 2014 Tim Cook makes clear that Apple cannot see Apple Pay transactions.

#2.

Apple Pay Made Fintech Accessible

A few years back, after one of the COVID lockdowns my Mom was visiting me in London.

Due to the restrictions we hadn’t met for some months, and since our last meeting my Mom had got an Apple Watch.

When grabbing a couple of coffees at a Pret cafe my Mom paid with her Apple Watch!

It happened so quickly. I was surprised. I hadn’t shown her how to do this.

My Mom is from the Baby Boomer generation (born between 1946 and 1964), and the stereotype is that as we get older, our ability to use new technology worsens. As we get older we are more likely to use cash. There is some evidence to support this. A study by Age UK shows that those aged over 75 are twice as likely to have used cash for a purchase than the all-age average.

But adding cards to Apple Pay is straightforward and once set up, cards can be accessed across various devices. Using Apple Pay doesn’t require remembering a PIN, nor taking a card out of a purse or wallet. The user only has to double-tap on an iPhone or Apple Watch. It’s really easy to use.

Budgeting was often seen as one of the key benefits of cash, as you can only spend what you have in hand. Yet these days, many banks offer instant balance updates and easy-to-use apps — tracking spending is easier than ever.

In a world where so many fintech apps claim to be “democratising” something or other, I can’t help but feel that Apple Pay is a case where fintech innovation has actually made life easier and more accessible. And while not all merchants accept Apple Pay yet, its reach continues to expand.9

#3.

Apple Pay Shows How Non-Payments Companies Can Create Substantial Revenue From Payments

Back in 2014, the Financial Times reported that Apple gets 0.15% of every Apple Pay transaction.

This comes from interchange fees that card issuers receive, not from additional charges on businesses. As you would expect, Apple has never confirmed or denied this figure as their contractual arrangements with issuing banks are confidential. Outside of the US, the margin is thought to be lower than 0.15% and a global average in the region of 0.08%-0.10% is likely.

How much revenue does Apple Pay generate for Apple? Apple Pay sits within Apple’s services business area, which is set to generate over $100 billion this year. But Apple doesn’t break out Apple Pay numbers directly. Instead, it’s captured alongside services such as iCloud and Apple Care in the overall services numbers.

However, industry analysts estimate that Apple Pay generates around $2-4 billion in annual revenue.10 These estimates are based on data from 2022 and 2023, and the reality today could be much higher. Apple Pay is likely to be more than 1% of Apple’s total revenue. In addition to transaction fees, other revenue lines that may sit within Apple Pay’s business area, such as fees from Tap to Pay on iPhone and fees associated with other adjacent product lines.

Apple has demonstrated that payments can be a multi-billion dollar business even when it’s not a company’s main focus. Apple’s primary business is selling iPhones, MacBooks, and other hardware. Although the company aims to grow services to over 30% of total revenue by 2030, for the foreseeable future Apple’s main revenue driver will remain hardware.11

Other companies with extensive distribution reach and networks on both the consumer and business sides can benefit from incorporating payments into their offering. Last year I wrote about Meta’s Payments Potential, and Google has also successfully monetised payments with Google Pay.12 Expect more companies to lean into payments to diversify revenue in the years ahead.

Note: Based on industry estimates Apple Pay could be generating more revenue than Adyen.

#4. Apple Pay Made It Easier to Travel Across Cities

Transport for London introduced the Oyster card to the Tube in 2003. This contactless smart card required users to top up credit before travel. The system worked well, and passengers could travel until their balance ran low. Traveling with an Oyster card was more efficient than buying tickets for each journey, or each day.

However, locals and tourists often formed long queues at ticket machines every morning as they sought to add money to their cards. This improved when the Tube got contactless card readers at each station in 2014. These could accept Oyster cards, but also contactless payment cards. The Tube was a great use case for contactless payments as the tap of a card opened the ticket barrier, and unlike with Oyster, there was no need to regularly top up a balance.

When Apple Pay launched in the UK in 2015 the Tube immediately supported it. The London underground provided a perfect testing ground for Apple Pay in the UK. Consumers were already familiar with contactless payment cards, and they saw the move to Apple Pay as an evolution rather than a revolution. Transport for London quickly became the largest Apple Pay merchant in the UK, and likely still is today.

In 2019 London got Express Transit functionality. Users set one payment card as their preferred transit payment option, and when traveling on the Tube no authentication — such as Face ID — is needed.13 This enhancement made getting through ticket barriers even smoother.

But it’s not just in London that Apple Pay made transit easier.

Two other examples are Paris and Tokyo. Unlike London, which operates with the tap of standard credit and debit cards, Paris and Tokyo have specific local solutions. Based on user location, Apple Pay automatically prompts users to add local transit cards to their Apple Wallet. In Paris, users can add journeys to their Apple Wallet via a local transport app using Apple Pay. In Tokyo, users add Yen to an IC card, and funds are deducted based on the journey length once completed.14

These examples show the extent to which Apple goes in order to localise its solutions to each market. It makes total sense as transit payments are high volume and high footfall. Like what happened in London, once a consumer gets used to tapping to travel on local transit they’ll be more likely to use Apple Pay in other scenarios also.

What’s striking is the user experience. Imagine arriving in Tokyo after a long flight. Rather than having to work out the ticket machines for the Metro system and get a paper ticket, you’ll get a message on your iPhone to add the local transit card to your Apple Wallet and top up in local currency. That’s all you need to do. Simple. Now you can travel.

#5.

Apple Pay Has Cemented the Bifurcation of Payments

This section is about payments and fintech, but also geopolitics, trade, and competing regional power blocs. It’s a story of the modern era that is fast-moving and ever-evolving.

This summer I spoke of the bifurcation of payments.

The idea is straightforward.

When it comes to payment technology, the world has split into two camps.

Paradigm 1

In the first camp, you’ll predominantly find Western economies such as the US, UK, EU, Australia, and New Zealand. The main cashless payment option in these countries is card payments on the Visa and Mastercard rails. Other options exist, but the preponderance of cashless transactions flows through the card rails of the major card schemes.

Paradigm 2

The second camp sits across much of Asia, Latin America, and Africa. In these markets QR code payments linked to domestic mobile wallets or direct bank payments are the norm. Not only are local payment systems cheaper, but in many cases, a local ecosystem of integrations has built up around them. In some cases local or regional superapps lead the way. (Grab is one such example.)

Cards vs QR codes

In markets that follow the first paradigm, Apple Pay is so easy to use that QR code payments feel cumbersome and clunky. Additional services such as BNPL add depth to the core payments offering, and Apple Wallet can hold loyalty cards, making the whole checkout process super easy for consumers.

Many markets operating in the second paradigm bypassed card infrastructure entirely and went straight from cash to QR-based digital wallets. For developing economies, QR codes can be the fastest and most cost-effective way to start accepting payments. There’s virtually zero cost to getting started.

Payments Sovereignty is Digital Sovereignty

As Apple Pay made card payments better, there were fewer incentives for Western governments and regulators to explore alternatives to cards. However, for some countries, developing domestic payment infrastructure outside of the purview of Visa and Mastercard is a national imperative.

Domestic payments infrastructure, controlled and regulated locally, is a form of digital sovereignty. Rightly or wrongly Visa and Mastercard may be forced to cut a market from their network due to political decisions made in the US. This drives some countries to develop local systems alongside the card networks, as a back up — as a just-in-case-we-need-it kind of thing.

We often don’t think of payments tech as geopolitical, but in today’s world, almost everything is.

The BRICS countries, which mainly sit within the second paradigm, are working on various payments initiatives, and universal innovations such as Stablecoins and Agentic Commerce have implications beyond payments alone. Cashless payments once meant card payments, but in recent times an alternative model has accelerated. In our new world, payments sovereignty, geopolitical turbulence, and fintech innovation are relentlessly intersecting.

Apple Pay didn’t create the bifurcation of payments, but the success of Apple Pay has made the card-based system even more compelling than it once was. The success of Apple Pay has cemented the bifurcation of payments.

Thanks for reading Payments Culture!

Next week in part two: Did Apple Pay kill the physical wallet? How Tap to Pay on iPhone took SoftPOS to a new level — and how virtual cards might be one of the most underrated second-order consequences of Apple Pay.

Note that views expressed on this Substack are my own and do not represent any other organisation. Also nothing I say should be taken as investment advice.

Exploring the strategy, culture, and trends shaping the world of payments and fintech.

2025 is the year that every senior manager looked at AI and asked: How can this improve my business?

AI can improve processes and optimise outcomes. But enabling AI doesn’t always mean plain sailing. Earlier this year, Klarna replaced much of its customer service team with AI, yet they’ve since tempered ambitions to automate in favour of a more human-centred approach. The challenge is identifying where AI can deliver tangible business results.

S&P Global Market Intelligence report that 46% of AI proof-of-concepts were scrapped before they reached production. This isn’t a bad thing. AI is an inherently experimental technology, and culling underperforming pilots is part of the experimentation philosophy required to unlock genuine business impact.

For payments specifically, the difficulty is going from training models and implementing small pilot projects to scaling in a live environment, with all of the intricacies and challenges this can involve — especially when dealing with the need to process 100s of transactions a second.

As Europe’s largest Payment Services Provider (PSP) and one of the top five globally, Worldline operates across 170 countries. This scale matters. Scale should allow for experimentation. However, as many of us who’ve worked in large organisations will know, nurturing the right culture that allows for innovation, iteration, and launching products at the cutting edge is easier said than done.

Improving acceptance rates with machine learning

Transaction routing is one area where Worldline has seen AI deliver real world results. I sat down with Khalil Kammoun, Head of Shared Services at Worldline, and Julien Carme, Lead Data Scientist for AI Transaction Routing, to understand how they’ve turned AI-Routing from concept to reality, and the benefits this has delivered for businesses around the world.

The company connects multi-national businesses to a variety of acquirers and payment processors. In a process sometimes known as payment orchestration, Worldline can deliver transactions to providers based on agreed criteria. One core requirement is the transaction authorisation rate or success rate, put simply, will the acquirer accept or decline the transactions they receive? Cost is another important factor. One provider may process debit card transactions at a lower cost than another, but for the same provider, credit card transactions may be more expensive.

Usually optimising for payment success means using static rules. Based on set rules, providers route transactions to the best processor to maximise acceptance. Payment systems can route transactions based on factors such as BIN range, transaction currency, customer IP address, or even transaction value, to name just a few examples.

Julien told me, “Standard routing models take in large amounts of data but can’t capture changes in acquirer behaviour over time.” This is because traditional orchestration models depend on providers manually examining data and updating predefined rules. With an AI-based orchestration model the system receives feedback with every transaction and continuously adjusts its behaviour.

Worldline’s AI-Routing uses neural networks — machine learning models that analyse dozens of factors at once and capture patterns that humans can’t easily codify.

“The system can create its own rules and find efficiencies,” Julien noted. At times this approach delivered surprising results, “We’ve had cases where the platform routed transactions to an acquirer that was more expensive, but had a much better acceptance rate.” In this instance the merchant benefited from higher total revenue despite paying higher fees per transaction. Such a scenario would be hard to replicate in a model with static rules, showing how machine learning models have the potential to deliver unexpected upside in a live environment.

From training the model to proven results

When Worldline started the AI-Routing project it was unclear if the programme would be a success. Payments orchestration with static rules was long-established but there was no clear benchmark for what success looked like with an AI-based routing model.

The AI-Routing project was premised on the belief that transactions are more likely to be accepted by some acquirers than others. In the test environment the company simulated many different scenarios and saw positive potential with various experimental datasets. But there was no certainty of how this would translate into a production environment with live transactions and significant payment volumes.

“In a live environment the model has to decide which acquirer to route a transaction to within milliseconds,” Khalil said, emphasising that the solution must maintain end-to-end processing speed despite the multiple factors under evaluation in real-time.

When asked about the results of AI-Routing, Khalil explains, “At a baseline level, rule-based routing models deliver an uplift of up to 3% in payment acceptance rates. With AI-Routing capabilities, merchants have seen an average additional 2% uplift in acceptance rates. In some cases even a 0.3% increase in transaction success equated to over a million Euros in additional revenue, which shows how incremental improvements can lead to significant gains for our merchants.”

Analytics and new developments

Worldline has developed a suite of data analytics to allow merchants to better understand the performance of the AI-Routing solution. A team of consultants works directly with businesses to understand their metrics and provide valuable insights on the uplift in acceptance rates.

The consulting team can explain the trends and dynamics that businesses see in their transaction flows. This process helps not only merchants understand their metrics, but also within Worldline, these deep conversations with merchants help shape the product roadmap and feature development.

Share

On a monthly basis more merchants are utilising Worldline’s AI-Routing solution, and further enhancements are planned over time — it seems likely the popularity of this solution will only increase. This was one of the AI projects that worked out well.

Although there is, of course, competition. Mastercard has recently announced its own payment optimisation platform, and other providers are also considering how machine learning can help improve merchant outcomes. Worldline’s strength will be staying close to merchants and building on its success to date.

Thanks to the Worldline team for discussing this topic and sharing their story with me.

If you are a fintech company and want to share your story please reach out and let’s talk further. You can contact me via email, on LinkedIn, or on X.

Note that views expressed on this Substack are my own and do not represent any other organisation. Also nothing I say should be taken as investment advice.

Did you read?

This newsletter explores how money moves, around the world. In this weekend edition I cover three fintech stories that have caught my eye in the past week.

I’m currently looking for new opportunities. I’m open to short-term assignments as well as permanent positions. You can email me or contact me on LinkedIn to discuss further.

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Monzo and Nubank eye the US

Breaking into the US is the dream for many European fintechs. As many find out, it’s arduous work, and some spend millions of dollars only to walk away as they can’t make it work. (N26 tried to crack the US market for two-and-a-half years but then gave up.)

At a recent industry event, I heard Tom Oldham, Group CFO of Monzo, discuss the UK-based neobank’s international expansion plans. He mentioned that, for Monzo, US expansion is still very much a work in progress, but there was no commitment on any next steps.

In fact Monzo is live in the US, and has been for a number of years with Sutton Bank and Lead Bank as local partners, but marketing has been almost non-existent. You can say that they’re live, yet they haven’t properly launched. There’s been no marketing push, and the Product Market Fit (PMF) that Monzo wants to get right before pushing into the US market at scale is still evolving.

The Financial Times reported this week that Monzo is getting more serious about US expansion, and is seeking a US banking licence:

Monzo is considering a new application for a US banking licence four years after backing out of a previous attempt when it reached an impasse with regulators... Both the OCC and the other US bank regulator, the Federal Deposit Insurance Corporation, have rescinded guidance that had made deals harder to complete.

A US banking license would allow Monzo to operate without its partner banks. This means owning more of the infrastructure and capturing more of the revenue. Monzo’s last attempt to get a full banking license stalled due to the regulatory environment. However under the Trump administration Regulatory guidance has since changed, so this second push may prove to be more fruitful.

There is a belief inside Monzo that what they offer is genuinely different: a unique user experience and a customer engagement model unlike anything else seen in the US so far. Their evidence backs up their ambitions. Consider what Monzo has achieved recently in the UK:

• Monzo won the Marketing Society Brand of the Year 2024, becoming the first fintech or bank to win the prestigious award.

• Monzo has been consistently launching new product innovations. One which has gone under the radar, but is extremely valuable for users, is the ability to undo a payment. An outgoing bank transfer can be reversed within up to one minute of sending. Very useful when research shows that 1 in 10 UK users have accidentally sent money to the wrong person.

• If we go back ten years, Monzo’s customer base mainly used the bank as a secondary account — adding a few hundred pounds here and there to take advantage of the FX-free debit card when travelling. However, many newer customers of Monzo use the bank as their primary account from the get go. An estimated 30-40% of Monzo users now utilise the bank as their main account.

Monzo’s US strategy will be to take what has worked so well for them in the UK, yet localise and find the right PMF for the US market. This is no mean feat. Many have tried and failed. Success means understanding what US consumers expect from a bank while at the same time innovating to draw users in.

The graphic below chat Monzo’s basic US account, its pro account, and accounts from Bank of America and Capital One.

In the US certain things are expected as standard when launching a bank. For instance, Monzo offers FDIC-insured accounts via its partner banks. Whereas in the UK, Monzo’s had no deposit insurance for the first two years, and this was only present once they obtained their full banking license.

Low interchange rates mean that rewards are sparse on debit cards in the UK. In the US interchange is higher. Juicy rewards are the norm. Monzo’s pro account offers 5% cashback with selected merchants, however, it’s only available in two states at this time (Minnesota and Florida). What this illustrates is that Monzo’s US strategy is an iterative one. They are still testing and learning, figuring out what works and doesn’t, and fine-tuning their business model.

This focused approach isn’t new to Monzo, it’s how they started in the UK too. For the first few years of operating Monzo was a London-centric company. This was intentional as a way of staying close to early adopters in a very practical sense. Most users were in London, and the trademark hot coral cards were seen more in the bars of Shoreditch than the pubs of Liverpool.

As well as Monzo, another major neobank made the news this week with their US expansion plans. Nubank has over 110 million customers across Brazil, Colombia, and Mexico, and plans to enter the US market via a national banking charter.

Incidentally, there’s an interesting connection between these two US expansion stories. Monzo’s Group CFO Tom Oldham previously worked in a senior position at Nubank. Though unlike Monzo, Nubank is not looking to work with partner banks as a way to get started more quickly. Instead they plan to wait until they get full banking license approval before launching. They’ve already unveiled their US board of directors, which includes Roberto Campos Neto, former President of the Central Bank of Brazil.

Stripe’s reading obsession

Stripe has always been more than a payments company. Back in 2017, co-founder Patrick Collison told Kara Swisher that:

We’ve always viewed Stripe as a multi-decade undertaking. We measure our progress, we talk about this idea of increasing the GDP of the internet, and we measure our progress on that basis.

Patrick’s comment that Stripe is a multi-decade undertaking is notable, especially when we consider that many of Stripe’s competitors — particularly publicly listed companies — operate on a quarter-by-quarter basis (to meet shareholder expectations). I’ve rarely heard other CEOs talk in terms of decades. This can only happen in a founder-led organisation.

Stripe has a book publishing arm called Stripe Press that publishes books related to technological, economic, and scientific advancement. The remit runs quite broad, with books on the classic computer game Prince of Persia, a recent history of AI from Dwarkesh Patel, and a how to guide “Scaling People” from Stripe’s former COO Claire Hughes.

Stripe Press isn’t going to move the needle when it comes to revenue. But the books are gorgeous and look so great that it’d be easy to collect them all, even if you don’t want to read them. The reality is that the Collison brothers have always loved books, and reading shaped their thinking from an early age.

Thomas Yeddou is a ghostwriter for fintech CEOs, and he recently wrote about how books shaped the Collison brothers. He noted that reading was a daily ritual for Patrick and John Collison. Growing up in a small village in Ireland, reading books was a window to the wider world. This voracious reading habit led to their passion for computers, programming, and entrepreneurship.

The brothers’ love of reading shaped Stripe in many ways, as Thomas notes:

That reverence for reading translated into a distinctive writing culture inside Stripe. The brothers insisted on long-form memos and carefully argued proposals. “The first emails I saw from our CEO literally had footnotes,” recalled a former Head of Docs at Stripe in a blog post. “He structured his emails to be like research papers and put the peripheral information at the bottom so as not to detract from the core information.”

Rather than creating lengthy sequences of PowerPoint slides, in Stripe, managers are expected to express opinions in written form. The what and why of requests and decisions should be transparent and well-reasoned. Information is circulated widely, so team members can understand the thought process behind what’s been agreed.

Reading, thinking, and writing all go together in Stripe’s culture.

Further reading: Patrick Collison’s reading list on his personal homepage

Further reading: Ten reading suggestions from Thomas Yeddou

Is BNPL driving a new debt culture?

These days you can Klarna everything from burritos to Coachella tickets. Klarna was initially used for specific use cases — why not buy four t-shirts knowing you’ll send two or three of them back? Because you’ll only pay for what you keep and won’t get charged for all of them upfront. But as I noted in a previous post, BNPL has evolved since its early days, and now nothing is off limits.

A long read in the New York Times Magazine this weekend by Amy X. Wang explores how BNPL has trapped users in a “vortex of debt”. I love this writing style, which brings fintech into the real world, mixing stats and info with actual examples of how payment tech has helped or harmed users in the real world. The article profiles Elysia Berman, who experienced payments cascading across various BNPL purchases:

Each day, Berman woke up to notifications on her phone, announcing how much money was being automatically siphoned out of her bank account. The amounts seemed totally arbitrary — $17 first thing Monday, $250 later that night, $141 Tuesday — with no explanation of what items she was even paying for. She would learn $600 was leaving her account to Sephora or Saks, but she had a hard time finding any easy-to-read tallies of balances on the B.N.P.L. apps.

Many small purchases can soon add up leading to balances in the tens of thousands across different BNPL providers. There’s not just Klarna, but other providers such as Affirm, PayPal, Sezzle, and Zip.

One stat from the article is mind-blowing: BNPL was worth “$120 billion in 2023 in the United States, up from just $2 billion in 2019”, and while Berman had a credit card limit of $2,000, Klarna gave her $12,000 to spend. On one hand, the promise of BNPL is short-term credit at the point of sale for a specific purchase (in some cases, BNPL apps will tell you the maximum amount they will lend). This differs from getting a credit card with a set total limit in advance of shopping . Yet the BNPL model which provisions credit for each purchase, can lead to fragmentation as various providers, by default, collect payments for each purchase individually.

Regulation is tightening and in the US some BNPL providers will soon integrate credit scores into their decisioning, but it’s not mandatory. This is one big gap between BNPL and traditional credit. When a user applies for a credit card, lenders can see the outstanding balances across other providers in their credit history, whereas this isn’t the case for BNPL so far.

What I liked about the article was how it anchored a story about payments in the real world, and highlighted how BNPL has provided an artificial lifestyle boost to consumers who don’t feel they are taking on debt. It’s a couple of clicks or taps at checkout and BNPL providers do everything possible to make conversion from online shopping to payment as easy as possible.

BNPL isn’t going anywhere — consumers like the product. The momentum is such that banks like Citi, Chase, along with American Express, now offer products that resemble BNPL. These products typically split payments into equal instalments. Yet the story of BNPL is one that highlights how regulation needs to keep up and adapt. It shouldn’t be possible for consumers to ratchet up way more debt with BNPL than would be possible on a credit card.

It’s an irony that BNPL was supposed to make it easier to take on short-term debt at low risk, yet in this case, it led to much larger long-term debt, with Berman losing track of her various payments. Such cases suggest the BNPL model needs refinement. Do consumers need better tools to track how debt across multiple providers racks up?

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Note that views expressed on this Substack are my own and do not represent any other organisation. Also nothing I say should be taken as investment advice.

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I’m currently looking for new opportunities. I’m open to short-term assignments as well as permanent positions. You can email me or contact me on LinkedIn to discuss further.

Donuts. It’s probably not the first thing that comes to mind when you think of Poland.

But Polish donuts are delicious.

Pączki is their local name, yet most people know what you mean if you stick to saying Polish donuts.

Pączki are not gloopy like traditional British jam donuts and aren’t as sugar-coated and iced to the max like Krispy Kremes. I devoured one and a half of these tasty treats sitting in a park in Gdańsk at the end of August. (The first half I’d eaten walking from the store to the park. I couldn’t wait to taste it.)

My Ryanair flight — that I mentioned in my last post — had taken me to the north of Poland for a late summer vacation.

On my third day in Gdańsk, I found a branch of Dobra Pączkarnia. A specialist bakery that sells only one thing. Polish donuts. This branch was a mere small counter facing the street with no seating area. The line was relentless, snaking around the block with families, young couples, and dog walkers all waiting for their pączki. The donuts came out fresh from the oven and into customers’ hands within seconds. Yet despite how quickly each new batch of donuts was snapped up, the queue never seemed to shrink.

Dobra Pączkarnia describe their product as:

Fluffy, delicate dough, an excellent shape, and a richly filled interior

(puszyste, delikatne ciasto, doskonały kształt, jasna obrączka i bogato nadziane wnętrze)

If that doesn’t already sound tasty then how about the flavours to whet your appetite? Everything from apple & cinnamon, pistachio, and Nutella, to custard, salted caramel, and forest fruits. Of course, you can’t try all the flavours on one day, so if you’re ever in Gdańsk — or anywhere else in Poland — you’ll have to return to a Dobra Pączkarnia shop another time to try more flavours.

Polish donuts have existed in some form for more than five hundred years. Local food traditions remain, and even when history is turbulent, home comforts often survive into the modern day. As ever, with continuity, also comes change. Poland has been successful in balancing tradition with massive political and economic transformation.

A catalyst for this turning point was Poland’s membership of the European Union, which led to new opportunities, both at home and abroad for Polish citizens. Since joining in 2004, Poland’s GDP per capita has more than doubled. Economic growth has been the third-fastest in the union (behind only Malta and Ireland).

Joining the European Union meant newfound freedom of movement, and many Polish citizens moved to other countries, mainly for better job opportunities. By 2016, over one million Poles were living in the UK. In the nine years that followed much has changed.

In today’s Poland you rarely see litter on the streets, and crime — or at least the perception of crime — is low. Poland has garnered a reputation as a nice place to live, and while many in the UK feel like living standards have stalled, in Poland there’s optimism and the feeling that things are ever improving. Many Polish citizens have moved back home in the years since 2016.

This is not said to talk down the UK, but the newspaper headlines of England being inundated by Polish plumbers are long gone. Some British nationals — even those without family ties — are now trying their luck living in central Europe. The tables have turned somewhat.

Gdańsk is the largest city in Northern Poland. Walking around the city centre you can’t miss the recently built sleek glass-fronted apartments that line the walkway along the river. The area bustled with crowds of both tourists and locals, and boats meandering downstream. Vibrant cafés with crowded outdoor seating completed the scene — all clear signs of economic dynamism.

This was my first trip to Poland since 2017. Back then, even though I could use my credit card in most places, I had to use złoty cash on some occasions. But on this trip, cashless payments were everywhere. There was only one occasion on my week-long trip when I needed to go to an ATM for cash, and that was to pay at a market stall. Other than that, cards could be used everywhere. More importantly, BLIK was everywhere.

BLIK is Poland’s leading non-card payment method. It emerged from a collaboration between Polish banks in 2015 and is one of the best examples of branded A2A payments. BLIK was on every POS device I saw in Poland, and can even be used to withdraw cash from an ATM — in lieu of inserting a debit card.

Other comparable models to BLIK in other markets include Swish (Sweden), Vipps (Norway), and Twint (Switzerland). Each of these mobile payment systems operate on instant payment rails, which means payments settle within seconds, whereas card payments usually settle the next day.

BLIK has some specific elements that make it unique. Each transaction at an ATM or in-store purchase needs a 6-digit BLIK code — the code is generated on the user’s mobile device within the banking app and entered on the POS. When it comes to ecommerce payments, trusted stores do not require a BLIK code, making checkout fast and seamless.

Since launching in 2015, BLIK’s growth and development have been remarkable:

• As early as 2018 BLIK was available as a payment method in two of Poland’s largest supermarket chains — Biedronka and LIDL.

• International payments firms such as Stripe, Adyen and PPRO all support BLIK as an ecommerce payment method, showing that when selling to Polish businesses offering BLIK is absolutely essential.

• The most important sign of BLIK’s success is the sheer volume of transactions processed. By the end of 2023, BLIK was the largest branded A2A payments system in Europe. BLIK saw more transactions (1763 million) than both Swish (977 million) and Vipps (531 million) combined, which are near ubiquitous payment methods in Sweden and Norway respectively.

As I don’t have a Polish bank account, I was unable to use BLIK to pay for my donuts. But seeing so many locals use BLIK got me thinking, why has it succeeded, and what can we learn from it?

Co-operation between banks in establishing BLIK was key. This allowed for a shared goal in building a domestic mobile payment system. The banks who didn’t join initially came on board later once they saw BLIK’s success.

Timing matters when bringing banks together. BLIK emerged when Poland’s economy was surging and on its path to becoming a cashless economy. By contrast, in the UK, banks collaborated on a similar scheme called Paym, but it emerged when cards were already entrenched and banks saw competition, rather than collaboration, as the main imperative. Paym was shut down in 2023 after ten years of largely unsuccessful operation.

BLIK benefited from instant payments from day 1 — via a payment rail known as Express Elixir. Compare this to the Eurozone where some banks still do not provide instant payments as standard for Euro transactions. Sitting outside the Eurozone has given Poland more autonomy and more flexibility. Having instant payments from the get-go meant banks could deliver the best possible user experience.

At the same time, BLIK, much like modern Poland, found its own path. The 6-digit BLIK code must be entered on a physical POS and is valid for only two minutes, after which the code changes. This is a unique solution. Most similar mobile wallets require in-app authentication or scanning a QR code.

My thoughts upon leaving Poland were of a country balancing tradition and modernity, and looking to the future with confidence. BLIK emerged from Poland’s transformation and is now a clear leader in European mobile payments. Other countries and payment systems can learn a lot from its success. In the blik of an eye, it’s grown to become one of Europe’s most intriguing fintech success stories.

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Note that views expressed on this Substack are my own and do not represent any other organisation. Also nothing I say should be taken as investment advice.

This newsletter explores how money moves, around the world.

In this week’s edition I cover:

• Ryanair’s move to save £3m+ in payments acceptance costs

• The economics of Open Banking payments vs cards

• Additional advantages of Pay by Bank

• Consumer expectations and adoption challenges

• The default effect in payment choice

• My future outlook and recommendations

I hope you had a great summer! As we are now coming near to the end of September, the hot days of summer feel like a long time ago. In the UK we’re strapping in for more than six months of dreary rain and grey skies. The one advantage of living in a country with such sh*tty weather is that we have no excuse but to get our heads down and work hard for the next few months.

My August highlight was a late summer vacation. I’ll write more about my travels next week. But this post is about Pay by Bank and how it’s seeping into more and more online checkouts. What’s the significance of this? And could companies like Ryanair save £3m+ a year through Pay by Bank? Let’s get into the details.

Pay by Bank is powered by Open Banking technology. In the text below, I use both terms interchangeably to refer to the same bank account-based payment method.

Payments as cost control

Ryanair is Europe’s largest airline.1 They carried over 200m passengers last year (the first European airline to do so). The service is no-frills but always punctual and usually good value. If you want to fly to some locations in Europe, Ryanair may be your only option - their network is much bigger than legacy carriers such as British Airways and Lufthansa. In the early days, Ryanair’s business model was to fly to second-tier airports that traditional airlines often avoided, but over time, in many locations, they now compete directly with legacy carriers.2

Ryanair’s growth has been premised on exceptional and unwavering cost control.

This discipline extends across their entire business, including into payments. When I recently opened their checkout page I wasn’t surprised to see that they now offer Pay by Bank as their default payment method.

Pay by Bank is a term widely used for payments directly from a bank account (instead of from a credit or debit card). The main benefit to Ryanair is cost. For some businesses, it’s much cheaper to accept payments directly from a bank account than card payments. When transaction values are high — such as booking a ticket for several travellers in one payment — then the cost difference really shines through.

Let’s look at some of the economics:

• The average payment transaction for Ryanair is around £803

• Ryanair will pay merchant service fees to their card acquirer, PSP, or payment processor on every card transaction

• The total fees paid will range from circa 0.45% for debit cards and 0.55% for credit cards4

• On a £80 transaction this will equate to £0.36 (debit) and £0.44 (credit)

The cost base of card payments is fixed due to interchange and scheme fees that are paid to Visa and Mastercard and the issuing bank. But with Pay by Bank, the cost of payments are based on what the third party payment initiator – known as a PISP – sees as a fair price. True Layer, one of Europe’s largest Open Banking providers is the PISP for Ryanair, and while the exact pricing that Ryanair pays for Pay by Bank is confidential, usually Open Banking payments are priced as a per-item fee (pence per transaction) rather than as a percentage (ad valorem). In the case of a large airline like Ryanair a fee of around £0.20 per transaction would be possible.5 This equates to just 0.25% on a £80 average transaction.

Therefore, on average, with Pay by Bank, Ryanair would save £0.16 on every debit card transaction and £0.22 on every credit card transaction. A credit card transaction is likely to cost twice as much as a Pay by Bank transaction! And this is just the start.

Note: The above example assumes that these transactions are consumer domestic transactions. Card fees differ depending on the type of card used. I wrote more about the nuances of interchange fees in my recent post titled Can Revolut compete with American Express?

Business and commercial cards — unlike consumer cards — are unregulated and incur a fee of over 2%. If a business or a commercial card is used to pay at Ryanair, the total cost will be close to £2 per transaction, a world away from the possible 20p per transaction for an Open Banking payment.

Additionally, if Ryanair's merchant domicile for card payments is based in Ireland rather than the UK, due to a post-Brexit quirk, even consumer cards will attract fees of over 1%. Taken together these nuances mean that the potential cost savings highlighted above the minimum savings, and the average may be much higher.

It’s not just lower transaction fees

With Open Banking payments, businesses benefit from6:

• Lower fees

• Instant settlement

• No chargebacks7

Lower fees are discussed above and will be covered further later in this post.

Looking at the other two points.

Instant settlement means that the merchant receives money from each payment instantly into their bank account. Businesses usually have to wait until the next day to receive funds, or in the case of some airlines, due to risk considerations, they have to wait days or even weeks.

Yet other than the lower fees, the most significant factor, and to be clear, the biggest positive of Open Banking payments for many merchants is lack of a chargeback mechanism.

The chargeback rate for the travel sector overall is often quoted as somewhere in the region of 0.5%-1% globally. This contains a large degree of variability depending on region and each specific merchant, but even a chargeback rate of 0.2% is highly disruptive and costly. This means that for every 1,000 transactions, two transactions are successfully disputed by a cardholder. For those two transactions, not only will an airline be debited for the original payment, but they'll also be hit with a £20 fee by their payment provider.8

Chargebacks drive up the total cost of payments, and it’s not surprising that many large merchants employ teams, and pay for tools, to specifically stop chargebacks from recurring. When chargebacks do occur, merchants usually try and win each case. The whole process is costly and time-consuming so for merchants, using Open Banking payments to say sayonara to chargebacks is a great!

Whether it’s lower fees, faster settlement, or no chargebacks, all of the benefits of Open Banking payments accrue to merchants and not to end users.

Last year I quoted a blog from Chris Skinner:

The thing is I always come back to: does anyone want Open Banking or Open Finance or Open Payments?

The industry does, yes, but the customer doesn’t.

Consumers are largely ambivalent.

They don’t benefit from lower fees.

They don’t benefit from faster settlements.

And consumers definitely lose out from the lack of a chargeback mechanism. Chargebacks are especially valuable in the travel sector. If an airline goes out of business before a customer takes their flight, then they can utilise the chargeback mechanism to get their money back.

It’s not Ryanair that we should worry about. From a financial perspective, Ryanair is one of the safest airlines in Europe. But if Pay by Bank proliferates there’s a risk that an airline insolvency of a smaller airline will lead to consumers not getting their money back.

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In such a scenario the financial media will soon make clear that if a card had been used users would have been covered. In that event there’s reputational risk for Pay by Bank as a payment method. Even though companies who offer Pay by Bank — such as True Layer — will not make a financial loss in an airline insolvency scenario (as there’s no chargebacks), merchant-level risk should be part of the consideration when offering Pay by Bank as a payment option.

Consumer expectations

While the merchant-focused benefits are clear, consumer adoption of Pay by Bank remains a challenge — especially when card payments work so well in the UK.

One positive aspect of Open Banking payments from a consumer perspective is that the UX (User Experience) is seamless. The UX is particularly good if a transaction is initiated and completed on a mobile device (although the UX isn’t quite as smooth as an Apple Pay transaction). The user is directed from the merchant checkout to their banking app to approve the transaction along with Face ID for verification, and no card number needs to be entered. In most cases, neobanks such as Monzo, Starling and Revolut have the best user experience for Pay by Bank, and Barclays works well too, with the others are catching up.

A strong UX alone won’t drive adoption. However, some consumers will prefer the experience of Open Banking payments over cards. Some users will choose the option to authenticate with their bank rather than entering a card number.

This preference for choice reflects a broader shift in customer behaviour. We are not in an era where one payment method will win over all others. There’s room for Open Banking and cards to co-exist side by side.

Even if cards account for 95% of all payments, consumer choice is a good thing and consumer habits will always differ, even within the same country. That's why in some markets, especially in Asia, many mobile wallets exist side-by-side9 and it’s normal to see many payment options at the Point of Sale. It’s not a battle of cards vs Open Banking. Rather, as cashless payments grow in aggregate, we should, at least in some use cases, expect Pay by Bank to take a small but growing share of the pie.

The challenge for merchants: how to change consumer habits. Cash-based incentives sound like the easiest option. Offering a discount on the purchase price for those who opt for Pay by Bank over cards may change consumer behaviour, or at least lead consumers to take that first step. However, the cost differential between cards and Open Banking isn’t big enough in the UK for merchants to offer a big enough discount to make a real difference. It’s tough to make the numbers work.

When considering an airline ticket, what level of cash-based incentive would make a consumer switch from cards to Pay by Bank? I’d say £5, yet the actual cost differential is pence, not pounds, and any incentive would require a large marketing spend. In short, it’s only a short-term promotional strategy, and not something which can be maintained in the long-term without very deep pockets.10

The default effect

As mentioned earlier, when booking my flights, I noted that Pay by Bank was the default payment option on Ryanair’s checkout.

The checkout was nudging me to Pay by Bank.

This is status quo bias, or what is known as the default effect. It’s a psychological phenomenon, as explained in this paper by Hu et al:

The default effect refers to the phenomenon where individuals naturally pay more attention to the default option than alternatives. Numerical empirical studies demonstrate the existence of the default effect in various real-life scenarios.

We encounter the default effect in various aspects of life.

In the UK, since 2012, legislation has mandated that employees are automatically enrolled into a defined contribution pension scheme by their employer. In the ten years following this change, employee participation in employer-based defined contribution pension schemes increased from under 50% to almost 90%.

Another example of the default effect in action is organ donation. Most countries in Europe assume consent for organ donation. This has increased organ donation rates and ultimately saved lives,11 but each country has its own nuances, and some are more successful than others. From medical journal The Lancet:

Spain operates a soft opt-out system: everyone is an organ donor by default, but families of the deceased have the final say. Other countries have introduced opt-out systems, but this has not necessarily resulted in a more positive donation attitude (for example, while eight out of ten families in Spain consent to donate, the rate in the UK is six out of ten).

Therefore while the default effect is a strong predictor of success, other factors also play a part. In this case, Spain leads the way due to additional support and education offered in the healthcare system.

In the case of Pay by Bank, offering it as the default option won’t convert the majority of consumers any time soon. Cards will remain dominant. Yet by having Pay by Bank as the pre-selected default option and at the top of the checkout page, Ryanair can try to capture a meaningful share of payment transactions. Even take up of 5% or 10% will make a big difference to the total cost of payments.

True Layer’s own recommendations for increasing the adoption of Pay by Bank are in line with what Ryanair has implemented. Pay by Bank is placed at the top of the checkout as the default option; security and ease of use (no card needed) are both clearly emphasised. Minimising friction is key. Many consumers will be using Pay by Bank for the first time — Ryanair will be hoping it won’t be the last time.

Final thoughts

My calculation is that Ryanair could more than £3m per annum in card fees if they can move just 5% of their payments from cards to Open Banking.12

This estimates that both cardholder and merchant location are in the UK. If the merchant location is in Ireland, then this saving could more than double (due to the difference in cross-border fees post-Brexit).

This scale of potential cost saving explains why we're seeing interest in Pay by Bank.

So what’s coming next? I’ll leave you with some expectations and recommendations in terms of Pay by Bank going forward:

I anticipate:

• More large brands, including those in the travel sector, will offer Pay by Bank in the coming months and years. The cost differential makes it worthwhile. Even if take-up is small, it can make a big difference in terms of total payment acceptance fees.

• There is a real risk that consumers who use Pay by Bank may get caught out by an airline insolvency. In such a scenario, with no ability to initiate a chargeback, consumers are unlikely to get their money back. Up until now cards and their chargeback mechanism have provided security for consumers. With Open Banking payments this security ceases to exist.13

I recommend:

• Consumers should be given choice at the checkout. Pay by Bank won’t dethrone cards, but we need to embrace the fact that offering non-card payment options (alongside cards) is now the norm. Consumers should be able to choose which payment method they prefer.

• As Open Banking payments expand across a wide variety of sectors — including travel and airlines — Open Banking providers will need to consider merchant-level risk. Understanding merchant risk is something that card processors are experts in, and they have had to be as they take on the respective chargeback risk. However, while Open Banking providers don’t assume the risk of incoming chargebacks, they will suffer reputational damage and face regulatory scrutiny if an airline fails, and consumers are unable to recover their money. In short, offering Pay by Bank to Ryanair or British Airways will be at minimal risk, but smaller or newer airlines will come with a much greater risk.

As more merchants opt for Pay by Bank at the checkout, getting the balance right will be key. Some consumers will welcome the choice but others may think twice. Would you be happy to use Pay by Bank for your next airline ticket?

Thanks for reading Payments Culture!

Please leave a comment or share with a friend or colleague if you enjoyed reading this edition. It’s much appreciated and helps grow the audience of this newsletter.

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Note that views expressed on this Substack are my own and do not represent any other organisation. Also nothing I say should be taken as investment advice.

This newsletter explores how money moves, around the world.

This week: my experience at Monzo’s book pop-up, and what it tells us about fintech marketing.

In prestigious MBA courses around the world, one of the key things you learn is that giving away free chocolate is the best way to ensure customer loyalty.

Actually, I made that up… BUT Most fintech marketing is boring, and Monzo has a particular marketing nous that was unheard of in banking. Monzo’s marketing genius deserves further exploration, not just because of how revolutionary it was, and still is, but because of something fun that happened in the past days.

Until Monzo, banking was so serious

Prior to Monzo, banks in the UK were serious. Of course, this does make sense. Money is a serious business, and keeping your money safe is just about the most important thing a bank can do. There was a certain reputation that banks have sought to develop and maintain. For decades, or even centuries, banks had consciously leaned on the side of seriousness over playfulness.

• HSBC “The world’s local bank” (emphasising their global reach)

• Lloyds Bank “By your side”

• And a US example, Bank of America “Higher standards” (corporate and emphasising reliability)

The clearest example of this reliance on heritage is Barclays.

In 2015, when Monzo was first emerging, Barclays celebrated their 325th anniversary. This makes Barclays older than the Bank of England, and also the United States of America itself! Heritage and trust go hand-in-hand, and if a bank survived two World Wars and everything else since, then they’ll surely be a safe place to keep your money.

But banks got complacent. Monzo and their fellow cohort of neobanks that emerged in the mid-2010s flipped the script. There was a new style emerging and the old style banks were missing a trick. The neobanks lacked the deep pockets and marketing budgets of the big banks, so they had to be innovative.

Building the Monzo community

Monzo has always had a playfulness, a conversational tone, and something which often goes unremarked upon: a sense of community, even from day one. Until this point in time, the idea of a bank developing an online community seemed frivolous. This wasn’t needed in a world of banks with branches, but for a neobank operating via a mobile app, the sense of online community was essential.

The community build started from day one. During the early days of Monzo there was a waiting list. The company didn’t hide the fact that its earliest users were testers as well as users. People could jump the queue by getting a “golden ticket” from an existing user. At times, these golden tickets were hard to come by.

This golden ticket showed in-app to existing users, and the whole process made referring a friend feel fun. The Charlie and the Chocolate Factory reference was clear. It was the beginning of making banking exciting. Financial services had long been stuffy and stale, but Monzo would change that.

Monzo originally started as Mondo. But in 2016, due to a legal dispute, the bank was forced to change their name. Suggestions were sourced from the user community. Users were asked for suggestions beginning with M. Over 12,000 suggestions were submitted by early users and Monzo won the day.

This community involvement has continued ever since.

Monzo is the only UK bank that has a community forum where users can read the latest product news, post comments, and even interact with members of staff directly. Starling Bank and Revolut previously had community forums but they closed them some years back. No public rationale was given for the closure, yet most speculation suggests that these banks didn’t want to put the effort into moderating their communities. Monzo didn’t see their community as a burden — they saw it as a powerful tool for building engagement.

Monzo’s forum is less active today than it once was, and in reality, in the early years, the community was listened to a bit too much.

I joined Monzo in 2017, but it wasn’t until 2019 that I felt like more than a customer.

Back then, they tried — and failed — to launch Plus accounts, a set of packaged accounts with monthly fees. The first iteration flopped and the feedback from the user community was negative. Rather than giving up, Monzo invited users to their office for a feedback session. I was fortunate enough to secure a spot. Around 100 or so users attended and for a couple of hours, we were treated to presentations and Q&A sessions with product managers and senior leaders. There was delicious free food and drink, and I got a goody bag with a Monzo t-shirt.

I walked away thinking “I can’t believe a bank treats its customers like this!”

I was a fan for life, and have used Monzo as my main bank account since then. But in a world where every marketing dollar has to be justified, holding customer events like the one I attended in 2019 are hard to get signed off. Post-pandemic the community events dried up or were done online in smaller focus groups.

The reality is that since TS Anil became the Monzo CEO, the focus has shifted more to profitability over community, yet the past week shows that the community aspect of Monzo is alive and kicking.

Getting the book of money

Last week, Monzo held a two-day pop-up in Soho, central London, which served as a book launch. Monzo’s the book of money came out on Thursday, 4th September.

I can’t call it a pop-up store as there was nothing to buy. Instead, those who waited patiently and got to the front of the queue were welcomed into the venue by Monzo staff. Once inside, customers could get a free customised copy of the book of money.

Here’s how it worked:

• Three money-related questions on a touchscreen generated a personalised title from 800 possibilities.

• After browsing through different options, I selected the one I liked and waited a few minutes for printing.

• Along with the book, I got a tote bag with a bookmark, a notebook, and a Monzo themed bar of chocolate (which was Tony’s Chocolonely on the inside).

• In a nod to Monzo’s earlier days, some customers got a golden ticket inside their customised book, which contained a gift voucher for a UK-based bookstore chain.

I had only found out about the pop-up from Monzo’s Instagram account earlier in the week, but I’m glad I went along. The event captured some of the magic of Monzo’s early years and shows that, despite the focus on revenue and profit in recent years, the community marketing ethos is alive and well.

The genius of Monzo’s fintech marketing is that it’s never felt like marketing at all.

They’ve not followed the traditional playbook of SEO-optimised content and TV ads, instead they’ve grown primarily through word of mouth and a social media presence that’s conversational rather than salesy.

While Monzo’s marketing strategy would struggle to get approved by most banks, and indeed most other fintechs, it’s been an undoubted success. The bank has over 13 million customers in the UK — which is 1 in 4 UK adults — and while only a few thousand lined up to get their free book and chocolate bar last week, countless more saw and shared the campaign on social media.

To end this post here’s the first paragraph of the foreword to the book of money, by Monzo CEO, TS Anil:

This is a book about money. Not the history of money, or money as some abstract concept, but money as it exists in your life. How you spend it, what it means you can do in the future and, most importantly, how it makes you feel.

That’s exactly what’s been in Monzo’s DNA since the start, and that traditional banks broadly still don’t get. How people feel about money, and feel about banking in the 2020s is more than interest rates and fees. Feeling part of something is just as important. This should be a key part of any MBA. Community and connection as much as metrics and models.

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Note that views expressed on this Substack are my own and do not represent any other organisation. Also nothing I say should be taken as investment advice.

This newsletter explores how money moves, around the world.

This week I’m pulling together payments, geopolitics and trade to look at how tariffs are butting heads with mobile wallets.

On April 2nd, Trump unleashed a tariff storm for the ages. Trump dubbed it “Liberation Day”, and the tariffs have had sweeping consequences for the world.

Since that day, we’ve had non-stop talk of tariffs. Countries have spent months working to improve their starting position and secure the best deal possible. It’s been a hokey-cokey, a back-and-forth, a set of negotiations and recriminations.

When it comes to the discussions on tariffs and trade, it’s not only import taxes on Scotch whiskey, Chanel handbags, and Porsche supercars that countries have to worry about. Payments infrastructure has also entered the arena. How so? Consider the role that mobile payments play in this battle.

Taking a side

In the past months, the Trump administration has targeted Brazil and Indonesia, claiming their domestic mobile wallets, Pix (Brazil) and QRIS (Indonesia), constitute non-tariff barriers to trade. This is important to understand.

There’s now a bifurcation of payments. The global payments market is divided into two, and where you live determines which side you’re on. How money moves is ever-changing, yet exactly how you’re impacted depends on your geography.

On one side, you’ve got the American payment giants such as Visa, Mastercard, and American Express. They’ve permeated our financial lives in the West. We see their brands on our cards and mobile wallets every time we shop.

On the other side, we have national payment systems without shareholders, operating mainly with QR codes rather than cards. These are mobile payment systems that prioritise sovereignty and financial inclusion over profit.

(As well as Brazil and Indonesia, another success story can be found in India, where the UPI payment system is responsible for more than 80% of all digital payments.)

Mapping the dispute(s)

Earlier this year, the Office of the United States Trade Representative (USTR) released its annual report. As the federal agency that reports directly to the White House on trade matters, USTR’s assessments carry significant heft. In the report, Indonesia’s QRIS payment system is flagged:

Under BI Regulation No. 21/2019, Indonesia established national standards (termed QRIS, or Quick Response Code Indonesian Standard) for all payments using QR codes in Indonesia.

BI stands for Bank Indonesia, which is Indonesia’s central bank and regulator for payment systems. The report went on to say that:

U.S. companies, including payment providers and banks, noted concern that during BI’s QR code policy-making process, international stakeholders were neither informed of the nature of the potential changes nor given an opportunity to explain their views on such a system, including how it might be designed to interact most seamlessly with existing payment systems.

Sure, some US banks operate in Indonesia. But that’s not the real issue. The trade office is likely frustrated because Visa and Mastercard, two of America’s corporate juggernauts, were excluded from the policy-making process.

Indonesia isn’t the only one stuck playing this game. Take Brazil. The Financial Times reported that the US government would:

Probe whether the South American giant [Brazil] was discriminating against US companies in favour of its government-developed electronic payment system.

Brazil’s president, known as Lula, fired back, “We will not accept attacks on Pix”, and many suspect the US probe is likely because American payments companies can’t compete with Pix’s success.

It’s easy to say why Pix is seen as a challenge to Visa and Mastercard in Brazil.

By the end of 2024, Pix was processing more payments than all credit and debit cards combined (in Brazil). On December 20th, 2024, Pix processed over 252 million transactions — its biggest day so far. Pix will add instalment payments and recurring payments in 2025 to make itself even more integral to local needs.

Visa and Mastercard saw Brazil, with its population of over 200 million, as a massive growth opportunity. But while the card giants do have a foothold, Pix has smashed its way to the top of most users’ wallets, leaving the card brands to rethink their Brazil strategy.

In terms of trade negotiations, Indonesia reached a deal with the US on July 22nd. The deal focuses on tariffs, non‑tariff barriers to goods, and digital data flows. QRIS wasn’t part of the recent trade deal in any way. However, it’s likely not off the table for good.

Brazil’s situation is heating up. The US has implemented tariffs of 50% on much of Brazil’s imports, and the USTR has opened a Section 301 investigation into Brazil, of which electronic payment services are one component. A public hearing is scheduled for September 3rd, and Brazil has until August 18th to submit evidence.

The US needs to prove that Brazil’s practices are “unjustifiable, discriminatory, or burdensome”. Essentially, they’ll argue Pix gives domestic companies an unfair advantage and makes it nearly impossible for international firms to compete.

Brazilian legal expert Fernando Canutto commented:

Brazil may argue that Pix is a domestically regulated financial service, covered by the general exception clause (Article XIV of the GATS), which allows for national regulation for the security, stability, and integrity of the financial system.

Note: GATS stands for the General Agreement on Trade in Services (a WTO treaty)

How the Brazil case unfolds could have wider ramifications for mobile wallets, fintechs, and banks far beyond Brazil, especially for other countries that have built their own national mobile payment systems similar to Pix.

Following their own path

I remember conversations over a decade ago about how Visa and Mastercard were going to make inroads into China. Every Western company was trying to land their China strategy. The world’s second-largest economy was expected to be a goldmine for the card behemoths.

But it never happened. Visa and Mastercard struggled to gain a foothold in China. Mobile wallets took off way faster than cards. Alipay and WeChat Pay captured nearly all the payments market, and they built integrated ecosystems that we now commonly call super apps.

The market leapfrogged cards almost entirely. The card payments, which still do occur, are usually via China Union Pay1 - a domestic payment system. Despite its potential on paper, China is not in the top 10 largest markets by revenue for either Visa or Mastercard.2

The card companies, perhaps naively, expected not only China but other emerging economies to follow the same playbook as Western markets. The usual progress looks like this:

1. Cash (including checks/cheques)

2. Credit and debit cards (in markets like the UK, this meant progressing from magnetic stripe cards to EMV “Chip and PIN” cards, which require PIN rather than signature for authorisation)

3. Contactless (often referred to as tap-to-pay, this includes card-based mobile wallets such as Apple Pay and Google Pay)3

Many of the world’s most populous countries are taking a different path. Instead of moving from cash to card, they jumped straight from cash to digital wallets, bypassing cards altogether.4

Redrawing the map

Visa and Mastercard have seen the emergence of digital wallets scramble their growth plans in emerging markets. This happened quickly – QRIS in Indonesia and Pix in Brazil launched in 2020. It only took five years to cement them their dominance, and in this context, the bifurcation of payments acts as a growth brake on Visa and Mastercard.

China, India, Indonesia, and Brazil will generate less cash than once expected. It’s shown the card giants that owning payment rails alone isn’t enough.

In the past two decades, Visa and Mastercard have been wildly successful. A $1,000 investment in Mastercard at the time of their IPO in 2006 would be worth around $29,300 today.

The next 19 years will be more of a challenge.

The companies will need to expand and transform to cope with the new geography of digital money. We’ll see more M&A, new partnerships, and a move into areas far beyond card payments.

The challenges of Visa and Mastercard in emerging markets show that the worlds of fintech, global trade and geopolitics have fused. The tussle for digital payments is now a feature of our world, and of how nations compete.

Recent reading

• 📚 I finally read the Almanack of Naval Ravikant. This had been in my kindle library for over a year waiting for me to get stuck into. It’s one of those books you can breeze through in a weekend. It’s full of passages to highlight and return to.

• 📚 On a similar note I got through Cal Newport’s Slow Productivity. It could have been 30% shorter, but it left me with myriad of ideas and actions to improve my productivity. Recommended.

• 🔗 On Working Theorys there’s a thought provoking post about human-machine interaction titled Doomprompting Is the New Doomscrolling.

• 🔗 Gurwinder’s How Social Media Shortens Your Life has been one of the must-reads articles across Substack over the past couple of weeks and for good reason!

• 🔗 I enjoyed this recent long-read in the Economist titled What if AI made the world’s economic growth explode? The article discusses the prospect that annual economic growth could exceed 20% if AI is able to handle 30% of human tasks.

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Note that views expressed on this Substack are my own and do not represent any other organisation. Also nothing I say should be taken as investment advice.

Often referred to as an E-Money licence, becoming an EMI will give Finmo the ability to issue accounts, offer domestic and international transfers, and integrate directly with clearing systems such as Faster Payments.

After the interview you’ll find a selection of weekend reading links.

If you missed last week’s look at augmented reality (AR) payments, then make sure to check it out via the link below.

The multi-bank reality

It's common for UK start-ups to have not just one bank account, but often at least two. Usually, this consists of an account with a traditional bank such as Barclays, Lloyds, or HSBC, and then another account with a neobank such as Revolut or Wise.

With traditional banks, companies can benefit from credit facilities, business loans and a named relationship manager. The business banking offerings from neobanks tend to lack the personal touch, but they offer better Foreign Exchange (FX) rates, integrated virtual cards, and other tech-first options. 

This approach isn’t too dissimilar to the approach that many consumers take with their finances. Even the most hardcore Revolut fan, who pays £650 a year for their Ultra account, will need another account with a legacy bank, at least for their mortgage.

By the way, the term legacy bank isn’t meant negatively. These banks have a long history and represent stability. Neobanks don’t have physical branches, which can seem strange to some people, and legacy banks are still more trusted to handle large deposits.

Just like consumers, companies want the best of both worlds. 

Companies want the best CFO stack possible. But wherever you look, there’s complexity that needs to be managed. This is only accentuated with global companies.

For global companies, complexity is more than managing two or three bank accounts.

These organisations have to deal with accounts payables and receivables, in multiple currencies from various countries. Quickly, complexity can mount, and that’s before you get into invoicing requirements, integrations into accounting software such as QuickBooks, and any other platforms that a business might use.

Finmo was founded to help organisations manage this complexity.

Building the Treasury Operating System

Historically, CFOs have been asking their finance controllers to print off balances each day from various accounts, enter figures into Excel, and consolidate data manually. Yet in 2025, there must be a better way to do things. I spoke to David Hanna, CEO of Finmo, to find out more.

Finmo describes itself as a next-generation Treasury Operating System. What does this mean in practice?

Treasury is one of the most fragmented areas in finance. At month end, or even day-to-day, it’s not unusual to see 20+ Excel tabs open, as well as various other applications. Teams need to move between bank portals and other systems as seamlessly as possible, but this has largely been done manually up until now. 

Finmo represents a step change in how companies can run their Treasury operations. I’ve seen CFOs and Treasurers pull their hair out - if there’s an important event on the horizon, such as a board meeting, or a strategic review, it can be so hard to bring everything together. 

At Finmo, we want to make the CFO’s life easier by bringing everything together, and this is what we mean when we talk about a Treasury Operating System. Minimising the day-to-day effort needed, optimising processes, and improving the data for global finance teams, in a way which is compliant and meets the high standards of global organisations.

We’ve built four core modules that address the most critical needs of modern treasury teams: Cash Visibility; Money Movement; FX Risk Management; Unified Integrations. Together, these modules give CFOs and their teams the control, speed, and insights they need to move from reactive tasks to strategic decision-making

You talk about moving from reactive to strategic - can you give me a real example of what reactive treasury management actually looks like?

I was once talking to a mid-sized FMCG company that was operating across seven markets in Asia. Their treasury set-up included 14 different bank relationships, each with their own portals, approval workflows, and reporting formats. They had one person solely dedicated to logging into each system every morning, pulling balance reports, and manually updating a master Excel sheet before 10 AM each day.

It wasn’t just inefficient, it was risky. If that person was out sick or made a mistake, the CFO had zero visibility. It made me aware that treasury complexity wasn’t just an issue for large enterprises, but companies of all sizes.

How does Finmo replace Excel workflows and enable real-time decision-making?

Finmo connects directly to banks, either through direct integrations or via open banking partners to pull live balances and transaction data into a single dashboard. This eliminates the need for manual downloads and Excel consolidation. CFOs get real-time visibility across accounts, currencies, and entities, so they can make faster, more informed decisions without jumping between bank portals.

Leadership and launching in Asia first

Your background has been in senior leadership roles, mainly in the compliance and risk domains, working in organisations such as Rapyd, PayPal, and Ernst and Young. How have you found the transition from these roles to founding and being the CEO of Finmo?

I’ve always believed that everyone has a treasury problem - even at an individual level.

Personally, I’ve always found it frustrating to keep track of my own finances across multiple bank accounts, credit cards, mortgage payments, rent - it’s fragmented and time-consuming. Scale that problem to a mid-market company operating in multiple countries with different banking systems, currencies, regulations, and you start to see just how overwhelming treasury management becomes.

Businesses today are born global. You can spin up entities, teams, and operations across markets far more easily than before, but the financial infrastructure hasn’t kept pace. You still need visibility, control, and coordination across everything: cash, payments, FX, risk. That’s why treasury is no longer a back-office function - it’s foundational. That's the insight behind Finmo. We started with payments and cross-border flows, but the bigger vision was always to solve treasury end-to-end.

Many fintechs start in the UK or US and then expand out to other regions. Starting in Asia seems more challenging, especially as there’s a lack of open banking infrastructure in these markets. What’s the thinking behind starting in Asia?

It may seem like a harder path, but our solution is well-suited to this region, so it’s actually a strategic advantage. Let’s take an example of a mid-market company, headquartered in Singapore but with financial operations in Thailand, Malaysia, the Philippines, and so on. Each country has different banking infrastructure, different regulations, and different payment rails. What Finmo does is stitch together the complexity of a complex setup. 

There's no real concept of open banking like you see in Europe. Therefore we’ve taken the approach of integrating directly with banks to pull balances into one platform, giving CFOs that aggregated view they need. You can't manage FX risk or make strategic decisions if you don’t know where your money is sitting, so this integration is vital.

In any case, with open banking, you can read transaction data through APIs, but typically you can't write - you can't initiate payments or move money. We've acquired licenses across the region, which means we can be in the actual funds flow. We can move money between accounts in different markets and in real-time. Our ability to send payments and provide a wider suite of functions, on top of the dashboard functionality, is what makes Finmo a full-scale Treasury Operating platform.

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AI-Powered Treasury

When we met at Money20/20 Amsterdam, you had just unveiled MO AI to significant interest. What are some of the key challenges and efficiencies that you expect MO to solve for?

We see AI as an important component of how we work with our clients. MO AI is all about enabling CFOs and their teams to work proactively to achieve better outcomes.

Think about the CFO who is settling down on a Monday morning with their coffee and looking at their aggregated account view. Mo can provide information regarding cashflow, and recommend actions to help optimise the company’s position. This could be flagging an upcoming cash crunch in a specific currency or recommending an FX hedging approach based on exposure patterns.

The key thing is that MO AI is a custom-built architecture that goes beyond traditional AI assistants. It combines real-time data integration, contextual financial understanding, and action execution via Finmo’s proprietary Model Context Protocol (MCP). The goal was not to use AI only to automate, but to create an intelligent treasury partner that can help teams enhance their workflows. Additionally, MO AI can help with more mundane tasks, such as creating invoices, but rather than clicking through pages of screens and forms, enabling actions in a conversational way.

Future plans

What do you have planned for the rest of 2025? Where are you focusing your resources?

Recently we announced that we have obtained our EMI (E-Money) license in the UK. This is exciting for us as it represents the next step of our hub-and-spoke expansion strategy, meaning that we can serve clients across multiple regions from key jurisdictions.

As part of this expansion, we will be expanding our UK-based compliance and operations teams. Additionally, we will be scaling our embedded finance solutions and deepening our partnerships with capital market providers for liquidity and FX management in the region. 

Why did you choose the UK market for the EMI license?

The UK is a global financial epicentre with a mature regulatory environment, giving Finmo the credibility and infrastructure to anchor our EMI operations.

Direct participation in Faster Payments and CHAPS allows us to deliver real-time GBP clearing, settlement, and treasury flows - removing reliance on third-party intermediaries and enabling end-to-end control.

Also the UK’s time zone overlap with Asia and North America makes it the ideal hub for 24/7 treasury orchestration and payment routing across global markets.

Does this tie into a broader licensing strategy?

Absolutely, the UK EMI licence is a key spoke in Finmo’s global regulatory architecture, and complements our existing approvals in Singapore, Australia, New Zealand, Canada, the United States, and soon in Dubai and Hong Kong.

Clients can operate across jurisdictions with unified compliance and consistent infrastructure. With each regulated entity integrated into our treasury platform, clients benefit from a single source of truth for balances, flows, and FX exposure across the UK, Asia Pacific, and North America.

Thanks David for your time

Weekend Reading

Global crypto assets reach $4 trillion

The past week was deemed “crypto week” by republicans in the US House of Representatives, with two major pieces of digital asset legislation advancing through Congress. As the Financial Times' Nikou Asgari reported:

The value of the global cryptocurrency market has reached $4tn for the first time, as investors anticipate billions of Wall Street dollars flooding into the sector after the passage of landmark US digital asset legislation.

The GENIUS Act, which regulates and clarifies various aspects of stablecoins - including requirements for reserve backing and licensing - was passed by Congress on Thursday, providing the framework that stablecoin issuers have long sought.

Additionally, the Clarity Act was passed by the House of Representatives this week, but still needs to be voted on by the Senate. One of the main aspects of the Clarity Act is to provide a set of tests that determine whether a crypto asset should be regulated as a security or a commodity - a topic that has been a much-discussed regulatory grey area.

The Trump administration’s crypto assets

Meanwhile, in the Washington Post, an investigation looks at the extent to which Trump administration officials and nominees hold crypto assets:

Trump officials and nominees reported a minimum of $193 million in crypto assets, including both cryptocurrency holdings and investments in crypto or blockchain companies. The disclosure forms report holdings in ranges, rather than specific figures, so the full amount is almost certainly higher…

Trump was a skeptic of crypto in his first term, but now digital assets make up a significant share of his own portfolio. World Liberty Financial, a crypto venture that is majority-owned by his family business is one of his top sources of income, according to his disclosure form.

The softening of the regulatory environment in recent months has certainly improved the returns on crypto assets. The administration refutes any conflict of interest, instead noting the broader push for clarity as a necessary step to support innovation and provide certainty for market participants.

Crypto’s UX problem and Ziglu

The one thing I find hard to believe is that after so much time and effort, the UX in most crypto apps is still so poor. I’ve tried a wide variety of wallets and exchanges recently. Now and again I review some of the leading crypto apps to see how they are evolving, and most have become more complex over time.

The average user doesn’t want to be presented with hundreds of coins to buy, and lists of trending tokens. Most want to buy Bitcoin or other core assets in an easy to understand way. Perhaps Cash App in the US does a good job of keeping crypto purchases simple, but I can’t access this in the UK to see it myself.

Ziglu set out to offer a user friendly crypto experience in the UK. The app offered a limited range of cryptocurrencies alongside a “boost” product which took advantage of the high yield available in crypto markets. Robinhood sought to buy Ziglu in 2022, but the deal never went through - Robinhood walked away from the deal in 2023.

It always felt like the potential acquisition by Robinhood was a make or break moment for Ziglu. Despite raising money earlier this year, Ziglu entered special administration on the 7th July.

What humans do next

Moving away from crypto, the Working Theorys Substack looks at the five types of work humans will do in the coming AI future. Specifically the essay looks at what the world will be like in a so-called “gentle singularity”, an idea that Sam Altman espoused in an essay last month. This section of Altman’s essay stood out when it comes to the future of work:

The rate of technological progress will keep accelerating, and it will continue to be the case that people are capable of adapting to almost anything. There will be very hard parts like whole classes of jobs going away, but on the other hand the world will be getting so much richer so quickly that we’ll be able to seriously entertain new policy ideas we never could before. We probably won’t adopt a new social contract all at once, but when we look back in a few decades, the gradual changes will have amounted to something big.

In the Working Theorys essay, Anu Atluru goes further, and explores the various skills humans will need in the “gentle singularity”, and elucidating in a few short paragraphs what each of these skills will mean. It’s compelling reading. For instance:

We've invented superintelligence of some kind, but I'm skeptical about how fast it replaces human-centered systems. Machines become the "core" of operations, but we'll still need a "human layer" in every domain. The digital singularity arrives before the physical one, both with humans in the loop.

The question isn't whether humans will work, but what kind of work humans do in the ‘gentle singularity.’ It's not just art, and creativity isn't the only skill we'll need. Human work will live in Trades, Research, Art, Community, and Stewardship.

Lastly, another Sam Altman themed read this week is a Wall Street Journal article titled “How Sam Altman Outfoxed Elon Musk to Become Trump’s AI Buddy”, which takes us into the world of lobbying, global politics, and AI policy. Well worth a read.

Note that views expressed on this Substack are my own and do not represent any other organisation. Also nothing I say should be taken as investment advice.

Finally, it happened. Meta has bought a 3% stake in Ray-Ban's parent company, EssilorLuxottica. This transaction had been mentioned as a possibility by the Financial Times almost a year ago. The Verge followed on from the FT's report by hinting that Meta was looking to buy a stake of approximately 5%. As it turned out, Meta’s initial stake is 3%, but may rise to 5%. According to Bloomberg:

Facebook parent Meta acquired just under 3% of Ray-Ban maker EssilorLuxottica, a stake worth around €3 billion ($3.5 billion) at the current market price, said the people, who asked not to be identified because deliberations are private. Menlo Park, California-based Meta is considering further investment that could build the stake to around 5% over time, the people added, though those plans could still change.

The investment is part of the long-term partnership that the two companies announced last year. The announcement spoke of wanting to “write history of wearables together,” and Mark Zuckerberg commented “We have the opportunity to turn glasses into the next major technology platform, and make it fashionable in the process,”. The momentum is clear. Smart glasses are gaining in popularity and new collaborations are on the way.

In addition to the Ray-Ban Meta Glasses (to give them their official name), a collaboration with Oakley was recently announced. The product will be called the Oakley Meta HSTN and comes with essentially the same functionality as the most recent Ray-Ban smart glasses. Pre-orders for the Oakley Meta HSTN start tomorrow, Friday, July 11th, in some markets.

The Oakley smart glasses are positioned for athletes. The new line forms part of Meta’s wearables strategy to sell 10 million pairs of what it calls “AI glasses” each year, starting from 2026. Such a sales target will be a big leap, given that only 2 million pairs have been sold to date.

However, the product line has garnered good reviews, with the second generation Meta Ray-Bans, launched in late 2023, seen as a substantial improvement over the first effort. A third generation of Meta Ray-Bans is expected towards the end of this year, and a collaboration with Prada is also in the works. The Prada collaboration is made possible by EssilorLuxottica’s licensing agreement to manufacture Prada eyewear, which was recently renewed.

Meanwhile in China

In the West, Augmented Reality (AR) glasses are, at this stage, dominated by Meta’s RayBans. Google have recently demoed their Android XR smart glasses, but they’ve not yet launched. While the Apple Vision Pro was released last year, this is not AR but MR (Mixed Reality). It’s mainly intended for use at home for short periods, and not as a fashion accessory like a pair of Ray-Bans. However, Apple is reportedly working on Ray-Ban-like smart glasses, but we won’t see them for another year or so.

On the other side of the world, in China, as ever, there’s a lot of technical innovation happening, including in the wearables space. The China Talk newsletter recently featured a fascinating piece on this topic.

The five leading companies operating in this area have become known as the Five Little Dragons of the AR industry. They are XREAL (优奈柯恩), RayNeo (雷鸟创新), Rokid (灵伴科技), INMO (影目科技), and the Xi-endorsed Meizu (星纪魅族). The China Talk post goes into more detail on each of these companies, and it’s well worth reading to gain more insight into the specific strengths and focus of these businesses.

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Recently, two of the Five Little Dragons have made interesting moves in the payments space. Meizu, with their StarV Snap smart glasses, have partnered with Alipay+ for payments. The first transaction was completed in Hong Kong, but the solution will also launch in other markets where the Alipay+ wallet is available. Payment involves scanning a QR code with the smart glasses and then confirming the payment amount via voice recognition.

In mainland China, Alipay’s mobile wallet is one of the two most-common means of payment (alongside WeChat Pay, another mobile wallet). Almost all businesses feature an Alipay QR code at the point of sale that users scan to pay. Rokid Glasses, similar to the Meizu example above, also feature a combination of scanning a QR code alongside voice recognition as the means to enable and authenticate payment. Over 250,000 Rokid Glasses have been pre-ordered so far with deliveries to begin imminently.

Given China’s willingness to adopt new form factors, it will be interesting to see how successful these collaborations turn out to be. Yet, one distinguishing factor between Meta’s Ray-Bans and the Five Little Dragons is that Meta’s collaborations with EssilorLuxottica are actual sunglasses. The Chinese brands are AR glasses first and foremost. Some do offer tinted or shaded lenses, and in some cases, basic UV protection, but unlike Ray-Bans they are not designed primarily for sun protection.

Meta’s payments opportunity

Almost a year ago, on this Substack, I wrote about Meta’s underdeveloped potential to grow in the payments space. I asked whether the company was well-placed to develop a payments wallet and payments ecosystem akin to Apple Pay. This consideration was due to Meta’s unique position in the Western tech ecosystem.

From purchasing Oculus in 2014 to the EssilorLuxottica investment, Meta has been growing its presence in the hardware domain. The demo of Meta’s Orion prototype at the end of last year shows how powerful AR glasses will become. The challenge is cost of production. For Orion, it’s estimated to be in the range of $ 10,000.

The most expensive of the Chinese AR glasses sells for approximately $799, so $1,000 is potentially the upper price range for AR glasses. Additionally, on the software side, whatever you think about their methods, Meta has a strong position. As I explained, “most people in the world have an account on at least one of Meta’s flagship products”, whether that’s Facebook, WhatsApp, or Instagram - in many cases people have an account on all three.

My Social Media Habits

Incidentally, the only Meta app I’m using regularly these days is WhatsApp, it's essential for communication with friends and family. Many millions of people in Europe and other parts of the world have been using WhatsApp daily since before Meta acquired the company in 2014. But it’s getting worse. Now we have to put up with Meta AI in WhatsApp, Avatars, and other features that, I’m pretty sure, no one asked for.

I got rid of Facebook. Now and again, I’ll dip into Instagram, but the algorithmic-isation of my feed for street interviews, dog videos, and the push of short-form videos AKA Reels, has made the app no longer enjoyable. (Meta’s share price strongly disagrees with me though.)

Over time Meta has integrated and connected its apps. You can now share your status and stories to varying extents across Meta’s three main apps. Meta implicitly prefers its users to have a single identity across all its apps. The reason for this is to make it easier to track user behaviour and deliver more personalised ads. The ability to maintain a distinctive identity, say on Instagram versus Facebook, as many people initially did, has now been lost.

Yet the cross-platform approach puts Meta in a unique position. They are one of the few companies to have such a widely-used software stack, plus a small but growing hardware set. These factors could be tied together into a unique payments proposition.

From a business perspective, Apple Pay has shown the way for big tech in payments.

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While Apple does not break out Apple Pay revenue directly, previous estimates suggest that Apple Pay accounts for approximately 1% of Apple’s total revenue. This may sound small, but 1% of Apple’s revenue is still in the mid-single-digit billions of dollars. Meta’s revenue is highly concentrated in ads, with around 97% of revenue linked to ads. Any move towards non-ad revenue will help diversify Meta’s income, which is also one of the reasons they are so keen on growing their hardware line.

That said, there are some challenges and considerations to bear in mind:

• China and other markets in Asia have an existing network of QR codes that users are used to using. In Western markets, the predominance of card payments means that QR codes are rarely seen. Without a QR code network, it’s hard to integrate a system for smart glasses to pay at the Point of Sale (POS).

• Apple Vision Pro features Optic ID, which utilises iris scanning for payment authentication (instead of Face ID), demonstrating that authentication can be completed within a headset without removing the device. However such technology is bulky and expensive (Apple Vision Pro costs $3,500). When similar technology gets small enough to fit into smart glasses, this would be ideal for e-commerce payments. But we are a long way from this.

• Meta’s previous attempt at payments (Diem/Libra) undoubtedly failed. Regulators were unsupportive. Despite early backing from the likes of Visa, Mastercard, and PayPal, the project never really took off. Meta may prefer to steer away from payments for now, given the time, effort, and regulatory noise that Diem/Libra generated.

• While Meta has a strong consumer software stack and a small but growing hardware capability, some products, such as the Meta Quest, haven’t taken off as expected. My Meta Quest 3 has been gathering dust for some time. Apple Pay succeeded because consumers take their phones everywhere. Until Meta has a device with similar ubiquity, their path into payments may be limited - at least in the current paradigm.

AI and stablecoins as the preferred path?

Yet despite Meta having the potential to bring together a payments ecosystem across their apps and hardware, so far this doesn’t seem to be on the agenda. AI is a much greater focus. In recent days, it emerged that Meta has offered packages of more than $100 million to attract the best AI talent, including a reported $200 million package for Ruoming Pang from Apple.

In addition to Meta’s heavy focus on AI, the company has reportedly been exploring the use of stablecoins for cross-border payments. With reference to Meta’s previous foray into payments with Diem/Libra, a letter jointly authored by U.S. Senators Elizabeth Warren and Richard Blumenthal - key members of the Senate Banking Committee - recently addressed Meta CEO, Mark Zuckerberg:

Meta’s pursuit of a stablecoin project raises serious concerns. The company tried to issue its own private currency in 2019 — as part of the so-called Libra stablecoin project — and was met with overwhelming bipartisan and international opposition. If Meta controlled its own stablecoin, the company could further pry into consumers’ transactions and commercial activity. The massive amounts of consumer data it would ingest could help Meta fuel surveillance pricing schemes on its platform, more intrusive targeted advertising, or otherwise help the company monetize sensitive private information through sales to third party data brokers.

This letter highlights the regulatory challenges that Meta faces when getting more into payments. But at the same time, the regulatory environment is more sanguine than it was back when Meta tried to launch Diem/Libra. This Trump administration is more pro-crypto than anything that came before, and there are other tailwinds. The GENIUS Act recently passed in the Senate, and companies such as PayPal and Stripe have successfully launched stablecoin products.

If Meta does launch a stablecoin offering, it would be easier today than it was some years back. But Elizabeth Warren is warning Meta not to repeat the same mistakes as before. Any new stablecoin offering should be built on open infrastructure, such as Solana, to alleviate privacy concerns. Additionally, zero-knowledge proofs (ZKPs) can verify payments without revealing transaction details. There has to be a limit to data collection across apps, devices, and payments.

As technology progresses, Meta's payments potential will remain.

With rapid advances in agentic payments, we could, in the next decade, be in a world where Meta can realise its potential via:

• AI-native payments, for instance, "Hey Meta, pay for this coffee", using voice to authenticate.

• Stablecoin infrastructure for payments across platforms, across borders, and to creators' wallets.

• A solution that doesn't require QR codes and functions across all devices.

This would sidestep the hardware adoption challenge entirely. Unlike Apple Pay, which requires Apple hardware, stablecoin payments can work across any device. Pair this with a wider range of Meta AR devices, alongside AI and voice recognition, for a glimpse of the future.

Last year, I asked the question “when can I pay with my RayBans?”. A year later, the answer is still “not yet,” but one day, Ray-Bans and other related AR form factors will be open for payments.

Further Reading

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PS. I’m currently looking for new opportunities in fintech and payments, such as consulting, writing, and advising. Message me for a conversation.

Note that views expressed on this Substack are my own and do not represent any other organisation. Also nothing I say should be taken as investment advice.

In 1958, Bank of America launched BankAmericard by sending thousands of cards to consumers in Fresno, California. A selection of local merchants, including grocery stores, restaurants, pharmacies, and dry cleaners, had been manually enrolled to accept the card.

In the early days, there were issues with fraud and missed payments, but this was the first general-purpose card. Eventually, BankAmericard evolved into what we know today as Visa. In 1966, Mastercard was created as a competitor to Visa by banks excluded from Visa’s network.

Over the following decades, payment cards became ubiquitous as both card supply and merchant acceptance increased. Not offering card payments could mean losing sales. But a big change was on its way. The rise of the internet would soon require new business models.

With the emergence of platforms like eBay in the dot.com boom of the late 1990s, customers found that card infrastructure wasn’t up to scratch. A new system was needed. Visa and Mastercard were only set up for consumers to pay businesses, but not for person-to-person payments. PayPal allowed users to securely pay each other directly and soon became the payment method of choice on eBay. Eventually, PayPal developed as an online checkout solution and is still among the most popular e-commerce payment options in many countries.

New payment methods in emerging markets are speed-running a process which took PayPal many years. Going from person-to-person use cases to person-to-business use cases in a short time frame is now standard. What can we learn from this process, and why does it matter?

Understanding the shift

To understand how this acceleration is happening and shaping global payments, I spoke with Daniel Kornitzer, Global Head of Partnerships at EBANX, at Money20/20 in Amsterdam.

EBANX started in Curitiba, Brazil, in 2012. The mission was to connect consumers in Brazil to global brands wanting to enter the Brazilian market. At that time, Brazil was a market with low card usage, especially among middle and lower income users. Back then the main local payment method was Boleto Bancário (Boleto), a voucher-based system which bridged e-commerce and cash.

EBANX helped international companies integrate and accept payments in Boleto. Which was no mean feat. The way Boleto operated was, looking back, and from my Western lens, somewhat absurd, generating a voucher online, printing it out, then queuing to pay in cash at a store or bank. International companies needed a hand, not just in terms of technical integration but in understanding how this wildly-different-to-cards payment mechanism functioned in the real world.

Today EBANX operates in 29 countries and supports more than 200 payment methods. Clients include global brands such as Canva, Ubisoft, Uber, Shein, Shopee, TikTok and Coinbase. Daniel explained that:

EBANX helps global companies reach consumers in emerging markets by connecting to the payment methods people actually use.

This is key because international companies can’t assume that everyone uses cards like in the US or Europe. He emphasised that:

By working with local payment preferences, we can expand market access while supporting financial inclusion.

Why P2P Becomes P2B

There’s a pattern of person-to-person (P2P) payment methods evolving into person-to-business (P2B) solutions. This transformation is driven by key factors affecting both users and merchants.

For users, these payment methods become trusted through daily P2P transactions. Take Pix in Brazil, where people grew comfortable using it for transfers to friends and family, or sending money between accounts. Merchants benefit from this user familiarity, plus several key advantages:

• Instant payments - funds are usually sent and received instantly

• Lower cost than card payments - in some cases there’s more than a 50% difference

• Lower fraud - user authentication, in some cases via biometrics for more security

This is not to say that there is no fraud at all. There can still be scams. Fake QR codes and social engineering have been seen on plentiful occasions. Consumer protections are still evolving. But overall, the level of fraud is much less than that of card payments.

In every case where a payment method has gone from P2P to P2B in a short time period, it’s been because the market is mobile-first. According to World Bank data, 83% of people in developing countries have a mobile phone, a much higher penetration than bank accounts (71%) or cards (46%). Mobile penetration allows economies to leap straight from predominantly cash usage to mobile-based payment methods, with many users bypassing card payments entirely.

Markets leading the way

Brazil’s Pix has become one of the best-known non-card payment methods in the world. Its success has been both its speed of growth and the extent to which it’s completely saturated the market. Purely in terms of scale and reach, it’s the best example of moving from P2P to P2B.

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Pix started very much as a P2P payment method, but Q1 2025 data shows that 41% of Pix transactions are now P2B. At the same time, in Q1 2025, Pix’s total volume was more than double that of card payments, with approximately 18.6 billion Pix transactions compared to 9 billion card transactions (credit and debit combined). Pix launched on November 16th, 2020, so astonishingly, this transformation happened in just over four and a half years.

One of the lesser known examples of a move from P2P to P2B, at least outside of Latin America, is Colombia’s Nequi.

• What began as a mobile wallet for peer-to-peer transactions, Nequi evolved into the leading payment method for online purchases.

• As of early 2025, Nequi serves 21 million users, around 50% of Colombia's adult population. Users can make online and offline purchases via QR codes, while the Visa-branded Nequi card extends acceptance to anywhere Visa is accepted.

• EBANX reports that global merchants offering Nequi as a payment option have seen 33% monthly growth in transaction volume since September 2024.

• Nequi is expanding its use cases, including into bill payments and in-person purchases at retail stores. This signals a decisive shift into P2B usability.

Another example of a mobile-first payment option growing from P2P into P2B is mobile money in Kenya:

• While still nascent in e-commerce compared to its widespread P2P usage, mobile money (especially M-Pesa) is beginning to see measurable growth in P2B transactions.

• The latest available data (2023) shows the average value of online merchant payments via mobile money increased by nearly one-third compared to prior year, and the number of active merchants rose by 20%.

• EBANX notes that mobile money represents 48% of all online transactions in Kenya, though most are paid upon delivery, not at checkout. This signals a potential tipping point. Once infrastructure improves, mobile money could dominate the P2B space.

According to EBANX’s Beyond Borders 2025, such innovation isn’t about technological change for its own sake, it's about expanding financial inclusion.

Merchants adapt to meet consumer demand. As Daniel Kornitzer explained:

When payment methods evolve from being used primarily for person-to-person transfers to enabling payments to businesses, it signals a convergence of consumer demand and merchant acceptance.

As per Pix and other examples, systems which begin as tools for informal person-to-person exchanges mature into foundational infrastructure. These foundations allow for business payments, subscriptions, and wider commerce including B2B transactions to flourish once acceptance is widespread.

What can we learn from this shift?

With cards entrenched in the US, and UK, it would be easy to view this evolution from P2P to P2B as an emerging markets phenomenon.

But this is wrong.

Block’s Square platform will allow all merchants to accept Bitcoin by 2026. Thirty million Bitcoin wallets hold more than $100, while Square serves over 4 million merchants globally. This convergence could be valuable for expanding Bitcoin as a payment option. However, given its rising price, the question remains whether users will actually want to spend their Bitcoin.

But the most telling example is Wero.

In simple terms, Wero is a digital wallet that has been adopted by many banks, including a majority of the largest banks in Germany, France, and Belgium, with the Netherlands and Luxembourg to follow. Wero is replacing many existing, and some very successful, payment schemes/wallets across these countries, including Giropay, iDEAL, Payconiq, and Paylib.

Wero has explicitly set out a road map to go from P2P to P2B and then further to other use cases:

1. P2P (live from launch in July 2024).

2. P2B (live from late 2025)

3. Subscriptions (during 2026)

4. Cross-border (post 2026)

What’s fascinating is that Wero is running the same playbook as Pix, Nequi, and other payment types from emerging markets. Wero’s path highlights that this progression is universal rather than rooted in specific geographies. Wero sees starting with P2P as a great way to build user familiarity. Adding P2B at a later stage, once there’s a mass of users in place, will help businesses adopt the solution.

Incidentally, having implemented P2P and P2B, Pix is now implementing subscription payments. Pix Automático, as the subscription solution is known, went live on June 16th, just ten days ago. This opens up recurring service payments to the roughly 60 million Brazilians without credit card access.

An additional, much anticipated product will follow in September this year. Pix Parcelado will allow users to pay in instalments, a solution that has long been popular for card transactions in Brazil. While some banks are already offering a similar product, Pix Parcelado will see Brazil’s central bank, Banco Central do Brasil, standardise and simplify the implementation at a national level.

EBANX will be on hand to help their clients understand and make the most of these enhancements to Pix. As a company that originated in Brazil but now operates across tens of countries, Daniel told me:

One of the keys to our success is having deep local knowledge, and feet on the ground in all markets so we can truly understand the needs of consumers

EBANX has helped its clients implement a wide array of payment methods, and the shift we’ve seen from Brazil to Colombia to Kenya, is now taking place in Western economies too. Next time you see a P2P app, don’t write it off, it could be dominating the economy within a few years whatever market you’re in.

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If you enjoyed reading this post, you can connect with me on LinkedIn, X, and BlueSky.

PS. I’m currently looking for new opportunities in fintech and payments, such as consulting, writing, and advising. Message me for a conversation.

Note that views expressed on this Substack are my own and do not represent any other organisation. Also nothing I say should be taken as investment advice.