Understanding the Evolution of Payments in the Digital Age

In the traditional economic model, when you make a purchase, the end goal for the seller is singular: they want money in their bank account. Whether you're handing over crisp bills or swiping a credit card, the journey of your money varies, but the destination remains the same.

Consider cash. Simple, tangible, it's handed over and then deposited into the seller's account. With credit or debit cards, however, your money takes a more intricate route, navigating through a complex system before eventually reaching the merchant's account. But despite the complexity, the end game is the same: money securely transferred.

Now, reflect on our digital era. Instant messages zip across the globe in seconds via platforms like WhatsApp, Twitter, Instagram, and Facebook. If communication can be that streamlined, why can't our payments?

Enter A2A (Account-to-Account) payments, poised to revolutionize digital transactions. The relevance of credit card tokenization, for instance, is tethered to the existence of credit card numbers. If the system were simplified, there would be no need for such a tokenization process.

Moreover, the current system has built-in delays, leading to the need for collaterals – safeguards for merchants who might have to wait for their payments, or face the risk of a payer declaring bankruptcy. But imagine if payments were settled almost instantly. The need for such precautions would become obsolete.

Picture a system where payment settlement occurs in seconds and integrates various funds sources – from credit limits to crypto balances and even loyalty points. Anything that holds value could be smoothly transitioned into a merchant's account, perhaps at a nominal fee. Such a streamlined process would benefit both merchants and consumers, simplifying the world of transactions.

It's a call to action for current payment networks: evolve, simplify, and reduce costs, or make way for innovators who will. Pioneers like Amazon, Apple, Google, and Meta are already at the forefront of such transformations. Take Amazon, for instance. It seamlessly connects buyers and sellers, or more broadly, those who pay and those who get paid. Why shouldn't it, or any of the giants, bridge bank credit directly to merchants? There's potential there, perhaps enough to significantly boost market capitalization, waiting to be tapped.

The digital era beckons for a payment revolution, and it's only a matter of time before someone leads the charge. Will existing networks rise to the challenge, or will fresh disruptors pave the new path? Only time will tell.