In this Global Platform video, Simoun Ung, CEO of OmniPay, Inc., unpacks the opportunities and challenges facing both regulators and financial technology (fintech) players as societies around the world accelerate the shift towards digital payments. With fintechs looking to expand their service offering beyond the upper echelons of society, successfully managing cybersecurity risk and promoting consumer awareness will be crucial for sustainable and equitable growth, ensuring that the benefits of cashless payments can be shared more broadly.
Cashless payments have a huge impact on society.
If you think of the example, let’s say, of a bill payment. Somebody clicks a few buttons on their mobile phone or their laptop and pays the bill in a few seconds. But if you don’t have access to those services, you may have to take time off work, you may have to commute, line up, pay, and then commute back.
All of those are costs associated with paying that one bill, whereas on digital, that might not have cost you anything beyond a few seconds of your time.
Unfortunately, today the ones that are enjoying the benefits of digital payments tend to be the upper class. I think that’s the challenge to society in general in terms of the digital divide. Part of the response from the central bank and industry is to make micropayments free.
The challenge then, to fintechs, is, for the few that are operationally profitable now, what will you look like when all the fee-based income disappears.
For the ones that aren’t profitable, then it’s going to be even harder to cross that line to break even on an operational basis.
The evolution of technology increases your cybersecurity concerns, but these are the same concerns you would have even in a cash-based society.
Typically, the weakest link is always the human.
The central bank will look at the financial institutions that they regulate, and measure and gain a sense of their cybersecurity posture.
There has to be a greater effort made to ensure that consumers understand the risks associated with the different payment transactions.
It has to go hand in glove in terms of both the literacy efforts, in terms of channels available, but also in terms of the risks that are inherent or attendant to those transactions, in terms of the consumer unwittingly making choices, uninformed choices or underinformed choices, I think that’s the big danger for us as a society.
In the Philippines, the e-money operators are going to have that reach into the currently unbanked.
We’ll have that same opportunity to teach our consumers, our users, the cybersecurity risks associated with those, and as an industry, I think that’s what we need to do better at.
It’s always the weakest link in the ecosystem that’s going to be compromised.
