How modern payments drive growth and resilience

Max Neukirchen · J.P. Morgan

Payments is becoming a revenue driver for merchants, not just a cost, because checkout friction changes revenue.

Max argues payments has shifted from an expense item to a revenue enabler. His example is e-commerce checkout: a one-click checkout versus a five-click checkout materially changes revenue, because the higher-conversion flow raises revenue lines. He ties this to clients building ecosystems in which embedded payments drive revenue and customer engagement. The argument is illustrated with a concrete example but no quantified uplift.

“it matters big time if it's a one click checkout as you described or a five click checkout. Because with the one click checkout, their revenue lines are just so much higher. So payments is no longer just an expense item, but a true revenue enabler.”at 2:28

Umar Farooq · J.P. Morgan

Rapid digitisation of cash-heavy economies is a major tailwind for payments providers.

Umar notes that several countries have moved from cash-heavy to highly digital money systems, citing China as an early pioneer and India, Brazil and Mexico as later examples. He argues this shift is a major tailwind for payments providers because the business is not a coin-and-cash operator in these markets, so digitisation expands its addressable flows.

“We see increasing digitization that's been one of the huge tailwinds for our business because we are not a sort of coin and cash operator in many of these countries.”at 3:52

Max Neukirchen · J.P. Morgan

Cross-border payment flows are growing strongly despite talk of the end of globalisation.

Max says that although there has been a lot of discussion about the end of globalisation over the last decade, the business sees tremendous growth in cross-border flows and new trade flows developing. He presents this as a key foundation for JPMorgan's investment to broaden its footprint into more countries.

“we see tremendous growth even in cross border flows, in, you know, new trade flows developing, which is exciting and is also a key foundation for some of the investments we are making”at 6:15

Max Neukirchen · J.P. Morgan

Real-time payment schemes now exist in almost every economy and are reshaping global payments.

Max argues real-time and instant money movement has been a key global payments trend over the last decade, with instant money schemes now in almost every economy. He cites Brazil's PIX, which pioneered QR-code payments and grew strongly, and India's UPI, which spawned a wave of adjacent industries. He describes this as a global trend that has reshaped the payments industry.

“Real time payments and instant money movement has definitely been a key trend in payments around the world for the last ten years. We now have instant money schemes basically in almost every economy”at 11:42

Umar Farooq · J.P. Morgan

Faster, more digital, real-time payments are also making payment fraud faster and more digital.

Umar argues that as payments have become faster, more digitised and more real time, fraud has followed the same path. Real-time payment rails let fraudsters move money out just as quickly, so speed raises the risk. He presents this as the key negative side of the payments trend that providers with strong fraud infrastructure can address.

“payments have become faster, more digitized, more real time, fraud has also become faster, more digitized, more real time.”at 5:21

Max Neukirchen · J.P. Morgan

Fraud attempts on clients' money this year already exceed all of last year, and the trend continues.

Max cites a concrete data point: JPMorgan's payments business has already seen more fraud attempts on clients' money this year than in all of last year. He says the trend is continuing. He draws on the broad network of a few hundred million accounts a month, through which fraud information can be shared with clients to help them avoid attacks.

“We already saw this year more fraud attempts on our clients' money than all of last year, and, that is a trend that continues.”at 7:26

Umar Farooq · J.P. Morgan

Tokenised securities can settle both legs simultaneously on blockchain rails, though the capability is still nascent.

Umar explains that every securities transaction has a payments leg. Blockchain infrastructure can execute the payment and the security transfer at the same time, which allows tokenised securities to be traded atomically. He describes these capabilities as still nascent compared with existing rails, though they have been scaled significantly, and he says he is excited about the technology's future.

“what blockchain allows you to do with the infrastructure we have built is you can actually transact in securities that are tokenized because the two legs get executed at the same time. So there's... These new capabilities that I think are still nascent.”at 16:16