The future of payments in Aotearoa, Worldline

Summary

The speaker outlines the future of digital payments, emphasizing blockchain technology and digital currencies like CBDCs. With a focus on creating a multi-currency, stable digital wallet, the speaker envisions eliminating cross-border fees and offering instant transactions. The presentation highlights New Zealand's success in open banking and the evolution of digital wallets. The goal is to integrate various assets—like loyalty points, age verification, and subsidies—into one platform. The speaker calls for collaboration among banks, regulators, fintech companies, and consumers to make this vision a global reality through a pilot program in New Zealand.

Takeaways

• 😀 Digital currencies can offer stability by being backed by a basket of fiat currencies like Euros, Pounds, and Dollars, which helps avoid devaluation and cross-border fees.
• 😀 The Central Bank Digital Currency (CBDC) system enables instant payments and settlement, allowing merchants to quickly receive funds and enabling faster transactions.
• 😀 A private, permissioned blockchain can be used to create digital tokens backed by real-world assets, enabling seamless payments, loyalty miles, and dual-payment systems.
• 😀 Tokenized identity verification, like proving age (e.g., over 21), can be integrated directly into transactions, providing an easier and more secure experience for both merchants and consumers.
• 😀 The ability to manage digital vouchers and subsidies, ensuring funds are only spent for their intended purpose, can greatly benefit government programs and specific merchants.
• 😀 New Zealand has made significant progress in open banking, transitioning from traditional banking systems to a mobile phone number-based identification system for seamless online payments.
• 😀 The future vision involves creating a universal digital wallet that can store various digital assets, including currencies, IDs, and loyalty points, streamlining everyday transactions.
• 😀 The adoption of digital wallets and open banking in New Zealand is a step toward a broader payment ecosystem where various assets and currencies can be integrated into one platform.
• 😀 New Zealand has been identified as a pilot market for this cutting-edge payment technology, aiming to take the learnings and innovations to the global stage.
• 😀 Collaboration across banks, regulators, fintech companies, merchants, and consumers is essential for the success of digital payment innovations and the future of finance.

Q & A

What is the purpose of using a basket of currencies in the digital payment system?

The basket of currencies (such as Euros, Pounds, and Dollars) is used to ensure stability in the value of digital assets. This method helps protect users' savings from inflation and allows for efficient cross-border transactions without incurring high fees.

How does the concept of CBDC (Central Bank Digital Currency) relate to the digital payments vision?

CBDC is a central element in the vision of a fully integrated digital payments system. It enables instantaneous and secure settlement of transactions, allowing users to make payments that are immediately processed, with no delays or payment processing fees.

What role do loyalty miles and dual payment options play in the payment system described?

Loyalty miles and dual payment options (such as splitting payments between digital dollars and loyalty points) enhance the flexibility and customer experience. These features allow consumers to combine different assets for payments and make use of rewards, adding value to the digital currency ecosystem.

How does integrating age verification through digital tokens benefit both consumers and merchants?

The integration of age verification tokens into transactions ensures that merchants can easily confirm whether a customer is over a specific age (e.g., 21 years old) without additional paperwork or checks. This simplifies compliance with regulations and enhances the overall shopping experience for consumers.

Why is a mutualized infrastructure important for digital payments?

A mutualized infrastructure allows different participants (such as banks, fintechs, merchants, and regulators) to trust and share resources. This is essential for streamlining processes, reducing operational costs, and enabling a seamless experience for users across various sectors like payments, identity verification, and subsidies.

How has New Zealand advanced in open banking compared to other countries?

New Zealand has made significant progress in open banking by adopting modern API-driven infrastructures that allow for secure, mobile-based transactions. Unlike other countries that require redirection to bank sites for logins, New Zealand enables users to complete payments using only their phone numbers, providing a much smoother user experience.

What are the potential applications for digital wallets in the future?

Digital wallets in the future could digitize various assets that users traditionally carry in their physical wallets, such as loyalty points, IDs, and even government-issued tokens like CBDCs. This move towards digitalization aims to simplify transactions and make them more secure and accessible.

How does the technology being developed in New Zealand fit into the broader global payment landscape?

The technology being developed in New Zealand is designed to pilot digital asset integration for a global market. By starting with a strong base in New Zealand's innovative financial ecosystem, the goal is to roll out these advancements worldwide, offering a unified platform for digital currencies, IDs, and other assets.

What challenges are mentioned in the transcript regarding the transition to a fully digital payment system?

One of the key challenges mentioned is the need for collaboration across various sectors, including banks, regulators, fintech companies, and consumers. Additionally, the complexity of integrating digital identity, loyalty, and payment systems in a seamless way poses a significant challenge.

What is the significance of the digital Euro prototype in relation to the ECB and the future of payments?

The digital Euro prototype, developed in collaboration with the European Central Bank (ECB), is a significant step towards a future where central bank-backed digital currencies become mainstream. This development aims to improve the efficiency of cross-border transactions, reduce fees, and enhance security in payments systems.