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Free Content Digitalisation in payments: From interoperability to centralised models?

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‘Digitalisation’ seems to be the current buzz word, and it is used to discuss various things from 3D printers via always-on health sensors powered by smartphones to challenges in financial services by new ‘non-bank’ players (so-called FinTechs), which track relationships with the clients. Payments, as an electronic product offered by banks for decades, are taken here as the subject of study to analyse the impact of digitalisation and future developments in payments. This is based on three examples representing three antagonistic concepts: interoperability, centralisation, and distributed systems. The examples highlighted here are: first, the implementation of the Single Euro Payments Area in Europe and a comparison between some original objectives with the current status of realisation; second, the development of so-called business platforms, such as Google or Facebook, which facilitate exchange between the agents in a multi-sided market; third, the emergence of digital currencies such as Bitcoins with decentralised ledgers and decentralised consensus systems used as means of payment. For all three examples, the form of digitalisation, the current implementation, potential limitations and future development paths are compared. Finally, the question of what a future payments ecosystem will look like and whether there will be a shift from interoperability to centralised models are discussed with the clients.
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Keywords: business platforms; decentralised public ledgers; digitalisation; intermediation; interoperability; taxonomy of payment systems

Document Type: Original Article

Publication date: September 1, 2015

More about this publication?
  • Journal of Payments Strategy & Systems publishes peer-reviewed articles and case studies analysing best practice, emerging issues and new thinking in how to develop a profitable, customer-focused payments strategy. It examines major issues facing the corporate, wholesale and retail payments industry from a business, risk and operational perspective.

    Edited by renowned payments expert Alec Nacamuli and guided by an eminent Editorial Board, each quarterly 100-page issue provides practical, detailed analysis of developments and trends in the payments business, regulation, new entrants and technologies and how to bring them all together to define your payments strategy, as well as actionable advice and ‘lessons learned’ from fellow professionals on how payment processing systems can be leveraged to maximise profitability, security and efficiency and minimise risk. It contains no advertising and no advertorial.

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