Articles & Notes

Predicting the Future of Worker Payouts

TL;DRReview 15 years of payout innovation at Hyperwallet and a few bold predictions concerning the future of payments innovation.

I was recently asked by an on-demand marketplace executive to brief his senior team on what I thought were the most significant payment developments in the last three years. I reacted immediately: “Three years? That’s not a large enough window for comment!” Fundamental changes in payments move slower than that. We’re an industry that takes a decade to absorb new ideas and turn them into generally-adopted services. There are several reasons for this high latency payments innovation—notably regulatory oversight and the fact that, historically, only banks have been afforded access to clearing and settlement networks.

Hyperwallet has long been a frontrunner in the race toward better global payouts. We’ve learned to navigate the regulatory landscape, and grown to accept that proper innovation takes time. After all, this is a marathon, not a sprint.

Breaking Down Borders

Looking back over the past 15 years, the most fundamental service that Hyperwallet has pioneered is cross-border ACH. What’s that? It’s an industry name for a way of conducting bank transfers from one country to another. When people mention wire transfers, or SWIFTs, they’re sort of talking about the same thing. Of course, businesses and consumers don’t care (and shouldn’t need to care) about the distinction between cross-border ACH and SWIFT transfers—at the end of the day, they only care that their money gets from point A to point B quickly, securely, and cost-effectively. Today, the approach of interlinking local, low-cost ACH transfers with a single technology platform to create cost-effective and trackable regional and global money movement services is widely recognized. We’re proud to be leaders of this key industry evolution.

#Payments is an industry that takes a decade to absorb new ideas and turn them into services. Click To Tweet

Fast forward to roughly five years ago. At this time, Hyperwallet shifted its focus into yet uncharted territory by pioneering the power of payment choice. Bank-to-bank transfers are great for a lot of transactions, and cross-border ACH is an incredibly efficient way to move money—but oranges are not the only fruit, and direct-deposit is not the only payment type. Many people love the convenience of getting paid directly onto a prepaid card, while other folks prefer cash. Some even want (gasp!) checks. Suspending our own bias as to what’s ‘best’ for the payee/worker, and instead listening to what the end user actually wants, has helped us build what we believe is the most flexible and adaptable global payout platform on the market today.

Getting Granular with Metadata

Looking forward, we’re incredibly excited about helping modern global marketplaces, on-demand economy platforms (and the independent workers they pay) become even more successful. We think the future of global outbound payment innovation will grow beyond interlinking more local payout types and extend to interlinking metadata-driven ancillary services (check our Gina’s recent post on the Ripple Protocol for a sneak peek at some of the technologies we’re considering). These support services stretch beyond the act of receiving a payment and digs into the actual reason for the payment. At Hyperwallet, we already have visibility into the payment’s first mile and last mile, but on top of that, our technology collects granular payment metadata or the transactional details as part of our regulatory process. When analyzed and displayed properly, this wealth of information can be used to facilitate taxation reporting, regulatory reporting, and introduce value-added services like expense management to payers and payees.

Additionally, Hyperwallet is excited about helping financial institutions and financial services providers navigate the changing waters of technology, regulatory practices, and demographic expectations. One of the most interesting developments I predict to happen over the next decade is a gradual shift towards technology acceptance at major banks as younger executives take the helm. This tilt in perspective will manifest itself in two ways: firstly, today’s internally-hosted, internally-managed payments platforms will be recognized as inhibitors to service innovation. This realization will lead banks to develop internal practices such that they can manage more Software As A Service (SAAS) technology services effectively, unified by the bank’s brand and its core authentication/regulatory services. On the back end, the direct correspondent settlement relationships of today’s banks will evolve into a new hybrid set of clearing arrangements—arrangements that will finally embrace non-bank partners.

Internally-hosted, internally-managed payments platforms will be recognized as inhibitors. Click To Tweet

The rate of payment innovation (both inbound and outbound) has increased rapidly over the past few years, but if you ask me, it’s just the beginning. The rapidly evolving field of Fintech is creating a groundswell of unprecedented change and experimentation. Where it takes us? There’s no telling. But one thing remains clear—Hyperwallet will be leading the charge towards fast, flexible, affordable worker payouts.

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