Introduction to Fintech Innovations in the Payment Sector

Welcome to PayTech. In this course, we’ll explore how Fintech is changing the way that we transfer money and capital. In this video, will have a brief overview of the structure of this course and our plan of Learning. Lets first do a quick mental exercise. Think about the last time you paid somebody or getting paid. That will most likely be a pretty recent experience. How did you do that? If you didn’t use one of the new Fintech platforms, chances are that you either use to cash, you wrote or received a check, you use online BillPay or received a paycheck electronically, or you used your credit card or debit card.

It turns out that Fintech in the payment space or PayTech wouldn’t usually reinvent these wheels. Instead, PayTech innovations would build upon these existing payment infrastructure. The goal is not to replace them altogether, but to evolve these, “Legacy systems” Built new layers on top of them to make these system easier to use, faster and more efficient, and cheaper for both payers and receivers. Innovations in the space really come in two flavors. One is the more centralized version. Think about the digital wallets like PayPal, [inaudible] or Apple Pay, which use more established technologies. In this type, the innovators usually aimed to take on some of the financial intermediation roles, such as authentication or user interface from the incumbents like the banks.

The other type is more radical, and these are the cryptocurrencies and new marketplaces that rely on the decentralized blockchain technology. In this type, the network itself, consisting of all participants is the intermediating party. Our PayTech course will focus on the first type and we’ll discuss the de-centralized type in our crypto finance course. Our course on PayTech has three main modules that focus on different types of payment. In the first module, digital wallets and the move to cashless transactions. We’ll start with the existing practices of writing checks and doing electronic money transfers, and see how the introduction of digital wallets is making these legacy practices significantly easier to use.

We’ll first deep dive into the simplest form of a pure digital wallet and analyze it’s technical aspects and it’s business model in the example of PayPal. We’ll then move to a more hybrid form of digital wallet that incorporate additional functions beyond just paying and getting paid. Using the example of Alipay, we’ll look at how a payment ecosystem could be built to be a unified front end for many types of financial transactions. Finally, we’ll examine the emerging trend of social media based payment platforms and look at the business implications of both using payment as a social communication, in the case of [inaudible] and using a social network to facilitate new marketplaces, in the case of Facebook and WeChat.

In the second module, we turn our attention to innovations in the credit card market. As usual, we first review the current practices and identify the key stakeholders in the relatively complex network of credit card transaction. We’re going to pinpoint the key pinpoints of the system, and look at two streams of Fintech improvements. In the first stream, we’ll looking at the series of innovations that make credit card transactions more secure for both users and merchants, and that includes the EMV technology, tokenization, and client side security innovations such as Apple and Android Pay. In the second stream, we’ll examined the innovations that expand a customer base of credit cards.

Using square and stripe as an example, we’ll see how the payment gateway technology is enabling the credit card networks access to its untappd users, namely smaller brick and mortar, and online merchants. In the third module, we’ll look at how to build an entire PayTech ecosystem from scratch. What if you’re expanding into a market that doesn’t have a good payment infrastructure? What if you don’t have the tech at all? In this module, we’ll use the examples in Kenya and India to look at how solid business principles could make up for the initial shortcomings, and really tap into the large potential of the emerging markets.

At the end of this comprehensive analysis of PayTech, you’ll have a solid understanding of how key existing payment systems work, identify their key inefficiencies, and precisely connect these inefficiencies to the technical advantages of the new PayTech innovations. Using this knowledge, you’ll be able to understand how new technologies that are emerging or yet to emerge in the PayTech space and be able to build concrete value propositions for these frontier technologies.