January 2, 2020
Before the turn of the new year, you were probably bombarded with a myriad of predictions for 2020, and perhaps you indulged in some prognostications yourself. We did too, and in classic MEDICI fashion, we took a rather clinical approach to this crystal ball exercise, but with a twist.
We decided to share our learnings in six FinTech areas for each of the last six years of the company’s existence, and for the first time, this article is being co-authored by the founders, Amit Goel and Aditya Khurjekar. One of us built the research foundation of this article, and the other weaved together the narrative, so here we go:
The year 2014 was our first full calendar year as a company, and what a year that was! It can be summed up in two words: Apple Pay.
Despite our frustrations with how long it has taken for contactless payments to take off (we do think it is finally getting traction), let’s first tip our hats to the announcement on September 9, 2014. For the first time, an Apple CEO keynote had dozens of other major brand logos as a backdrop, underscoring the importance of working with the multi-sided payments ecosystem to make this complex product actually work. Note that the complexity was and continues to be from the business model of payments and not NFC or security any other technology. Apple Pay was also the driving force for tokenization, another online payments innovation that was available with the incumbents for a while but was waiting to be deployed with brute force by Apple and its partners.
In the early days, we watched all the adoption metrics for Apple Pay very closely: the supported cards, merchant acceptance, transactions/usage, etc. For those of us who had worked on building out the giant jig-saw puzzle of mobile contactless payments over the prior decade, it was truly heartwarming to finally see Tier 1 banks devote billboards and national advertising to Apple Pay. Mobile payments had come of age, still young and devoid of any growth spurts, but it was there. Of course, there were the die-hard supporters (one of us was and still is an Apple fanboy), and some others were super skeptical; after all, Apple Wallet still doesn’t do much more than let you digitally aggregate payment cards. But, at least it works. The contactless convenience that was promised is now being delivered, and the intangible impetus it provided to all other wallet plays and mobile payment implementations is there for everyone to see. Google Wallet came before Apple Pay, but we would probably never have seen Samsung Pay, Android Pay, Chase Pay, ‘pick-your-big-retailer’ Pay, as well as other mobile wallet innovations without Apple Pay as a catalyst.
Now if you are not an Apple fanatic, you might not give them so much credit, but that launch rejuvenated mobile payments and put the entire space on a trajectory of optimism and growth, (especially refreshing after the telcos’ grand plans were stuck in a funk after a decade of trying). Just look around today, and you will see people tapping phones or watches or even plastic cards on POS terminals and quietly using TouchID or FaceID to pay online or in-app. You might hear an occasional wonder, “Oh, I didn’t know I could just tap it!” and also some small frustrations – “This chip thing is always problematic.” But overall, we seem to be on an irreversible path to contactless/mobile/cashless payments. And if this might be a Western view of the space, the East has been marching ahead at an even faster pace with even less fuss.
Mobile payments in the East, specifically India, have certainly benefited from top-down interventions in the form of IndiaStack, UPI, and demonetization. Much credit goes to the indigenous ecosystem of entrepreneurs, technocrats, and progressive government and regulatory leaders. The results have been phenomenal, and MEDICI is proud to have been part of the journey in a variety of ways – from hosting the country’s first payments hackathon in July 2014 to publishing the first India FinTech Report, and all the research coverage of o ...