Recently I spoke with Vatsa Narasimha, CEO of Oanda, the leading FX rates and trading platform. He believes money can be made in international payments.
A day earlier, Jeremy Allaire, CEO of Goldman Sachs backed Circle payments (who we spoke to in January) came out and said "We don't think there is any money to be made in payments anymore.”
So which is it?
Previously in this letter, we have discussed the competitive pressures that come from private equity and VC ownership, the large financial services companies buying into the space and the constant pricing pressure. So anytime a sophisticated player such as Oanda still chooses to enter the money transfer space it has to be worth analyzing.
Oanda provides a unique perspective on the sector given their 21 year history and product mix. Their FX trading platform allows them to see vast flows of FX (mostly from retail customers and SMEs) and this allows them to sell highly accurate FX rate feeds. It is from this market position that they chose to enter the international payment space.
We covered a range of topics in the discussion:
- Oanda's journey from an FX rate provider to payments provider
- What led them to choose Western Union as their white-label partner
- What the future looks like for Oanda (think data and analytics here)
- Why SMEs are the sweetspot in the market
- Oanda’s customer acquisition strategy
Vatsa's background in both consulting and engineering and his former role as CFO of Oanda added to this fresh perspective of FX markets and the international payments world.
PayPal's Latest Feature? "Instant" Payments
Last week, we looked in depth at how PayPal has emerged as a dominate player in the money transfer space. This week, they launched their latest feature - “instant” payments to your bank. It’s not quite instant - it can take up to 30 minutes, it’s only available to a small number of US users initially and it costs $0.25.
This shows how aware PayPal are of speed as a user demand and the premium (however small) people are willing to pay for this. Evidently, PayPal thinks there’s money to be made in payments too.
Fast Mobile Payments - Anywhere in the World
It’s not only PayPal focusing on speed. If we had to sum up the core focus of the many payments-related sessions happening at Money20/20 Europe, that would be it. From Transferwise's session on making finance "borderless", to Visa's keynote about opening up their network to startups, to HSBC and ING's panel on their work to make cross-border transfers happen "instantly" - it's clear the payments space is undergoing significant transformation (we expect to hear the word "disruption" more than a few times).
We'll be at all the key events, gauging how incumbent players are grappling with the growing expectations of consumers and SMEs for faster, cheaper, and easier payment solutions.