The CEO of Wadzpay believes blockchain technology and CBDC is the answer to making payments more efficient, faster, and cheaper for users.
CBDC – the acronym for Central Bank Digital Currencies – is the buzzword for every country’s financial regulator nowadays; what was once a whitepaper concept is fast becoming a reality in the heated CBDC race. Anish Jain, CEO and founder of blockchain-based payments system Wadzpay, believes that CBDC and blockchain technology is the way forward in the payments industry.
With over 15 years of experience in the payments industry, Anish has been in senior positions at Mastercard and American Express, and he conceptualised WadzPay as an interoperability layer for all payment systems.
CoinPasar had the pleasure of speaking with Anish about his stance on CBDC, what impact will it have on the current financial system in Singapore, and what does the digital money mean for the common Singaporean.
How do you envision Wadzpay’s journey to being a hybrid payments model?
There are a couple of important things from a payments perspective, and one of them is consumer experience. At the end of the day, your end touchpoint is the consumer who is using it. In Singapore, the consumer experience and technology already available is very good. When it comes to front-end applications most Singaporeans know how to use NETs or scan a QR code, but with hybrid technology we are talking about using the same front-end applications and enabling it with a lot more functions.
And that’s where the blockchain back-end functions come in. Through Application Programming Interfaces (API) and Software Development Kits (SDK) in the same front-end applications, the consumer experience remains unchanged, but now you have access to digital assets and CBDCs in the future. So that is how we plan to deliver hybrid technology and enable the payments ecosystem, that is the objective of Wadzpay.
Anish speaking at the Blockchain Industrial Impact event in 2019. Image Credit: Wadzpay
Blockchain payments are decentralised with no intermediary. Would a hybrid system have an intermediary, and will Wadzpay play that role?
The answer is yes, and no. The whole idea of using blockchain is to reduce intermediaries from the payments ecosystem. There are different kinds of intermediaries – intermediaries who validate payments, and intermediaries who enable payments. What we are trying to do is remove them because that makes the payment slow; it makes the payment expensive, and it also creates additional steps for consumer experiences.
However from a validation standpoint we work very closely with central banks and financial institutions. We truly believe in the validation of payment transactions and movements.
From an anti-money laundering (AML) and fraud management perspective, there should still be some form of management. We are an infrastructure company, so we do not play the part of the validator. Instead, we let banks or treasuries manage the validation based on regulations that are in place. That’s how we manage the network.
Do you see Singaporeans becoming more concerned with payment privacy, or would they choose convenience over concern?
From a payments standpoint, I do not think we are compromising our privacy which is unique and very personal to the individual. The whole idea around blockchain is security and privacy, and with the evolution of digital assets and CBDC payments we would have a better idea of how payments are utilised, rather than what the individual is purchasing.
These are 2 different things – knowing information about me buying a bottle of water is very different from understanding that there is a higher demand for bottled water during a certain period. There will be more smart data available due to digitisation, but it will not, and should not, compromise your privacy.
The idea here is to create more value from purchase patterns, because people could then derive greater value in terms of discounts and experience. It is not to know what you as an individual is spending money on because that is your personal right. So even with the evolution of digital payments, I do not think there should be concern that anyone’s privacy will be encroached.
Blockchain payments have been around awhile. What is the critical push that will lead to greater uptake amongst merchants and consumers?
Yes they have existed, but in a very raw format. Merchants or consumers can create a wallet, but there are challenges around how to load or unload that wallet. There are no rules, no pricing, no settlement, and there are a lot of challenges to them.
What we are trying to do is build an actual use case with local regulations and how merchant accounts should be set up, while taking into account settlement, pricing guidelines, and guidelines set up by central monetary authorities. At the same time, we want to remove the steps between getting the wallet and loading funds, like the settlement guidelines and authorisation process.
So you currently do not see an adoption because of these challenges. But as the programme is rolled out in the backend, nothing will change from a consumer experience; you will still use the same super-app and make payments in the same manner. That will ultimately drive adoption and uptake of blockchain-based payments.
With Singapore’s small size and robust digital finance system, do you think blockchain payments are necessary?
Singapore has a robust economy, and the government and banks have done a fabulous job bringing payments to everyone. But blockchain is not a luxury; it is a necessity as payments evolves. The ecosystem currently present have existed since 1970s when the payments revolution started, so if you go to countries which developed earlier like the United States, Europe, and Japan, the payments ecosystem are more primitive than what we have in this part of the world now. So there is a need to overhaul the global payments system due to the different ecosystems that exist.
Today, Southeast Asia and South Asia are the fastest growing economies in the world. They are growing faster than anybody else, and so are the payments needs – it needs to catch up. Even though Singapore today has a very robust economy, it will need to adopt blockchain payments as it continues to move forward and wants to retain its leadership position.
In a sense, blockchain technology levels the playing field for all countries. Would you say that?
It would. It would create a global standard because current standards are marked against the US dollar, which creates a challenge for countries like India or Indonesia where the currency is a lot more devalued, and the cost of taxation becomes considerably higher especially when making cross-border payments.
So the idea with blockchain now is to create that global harmony where there is consistency, and that consistency could be related to local practices and laws in each country.
Wadzpay’s services and applications.
With Wadzpay’s global presence, can local SMEs bank on Wadzpay to tap on overseas customers and skip high costs?
The current payments ecosystem does not reveal who is on the sending side and who is on the receiving side, and that’s how the ecosystem was developed at that time as requirements around Know Your Customer (KYC) and AML were in the nascent stage.
These have changed over time, and with the evolution of social media, it is a lot more open right now and you know who is on the other side. Likewise, the Wadzpay ecosystem allow users or partners the choice of disclosing themselves or keeping themselves behind the scenes.
If they do want to be part of the ecosystem as an active user, they have the option to tap into opportunities in the Middle East, Africa, Japan, or China. At the same time, exchange of information will become easier as regulations align with the relevant technology in the market. So yes, that will happen not just for Singapore but for all countries, especially developing ones.
Let’s talk about CBDC. With Asian countries jumping on the bandwagon, what do you think is the future for centralised bank digital currencies?
There has been a lot of chatter recently although CBDC has been in the works since blockchain started. But CBDC is still in its early stage, and there is a lot which still needs to happen. Yes, the good news is Singapore has done testing with France, and China is working on the digital yuan with India and the Middle East following closely as well.
But then there are lots of things which needs to be addressed – interoperability, how settlements will happen, and how currency exchanges from one hand to another. Does it happen over an application? Does it happen over an automated network? Does it still use nostro accounts? Do you still use settlement banks?
We have an opportunity of re-looking or re-imagining the entire payments ecosystem and making it more efficient, faster, and cheaper from a remittance standpoint, and that’s where I think CBDC is an amazing feat. We at Wadzpay are trying to support regulators in different parts of the world, and we are sandboxing a couple of programmes as well. In years to come, payments will look a lot neater and become more enjoyable as we move along.
How will CBDC be rolled out without disrupting daily functions, and how will Wadzpay play a part?
It is about integrating new technology with existing options, and that’s where hybrid technology comes in. Nobody carries cash only anymore in Singapore, and with CBDC it will continue to be the same thing. You will see a lesser number of automated teller machines (ATM), and you would see reduced use of cash.
That change will happen. But from a consumer experience, the idea is to maintain the current standard right now. You will have a lot more control over your spend, you will know where you are spending, and there is a lot more data available to support your spend.
If Wadzpay payments is implemented nationwide, how would a typical consumer payment journey look like?
As an infrastructure company, you will never see us because we pretty much operate behind the curtains, so we kind of orchestrate the orchestra. From a user perspective, you will continue to use the applications you are used to, with more data available for you to see your purchase patterns, and it can recommend your next purchase as well.
There will be a lot more real-time data that you can see while making your purchase, and it can alert you to better deals down the road or if there a better deal coming your way. There will be a lot of pre-emptive data rather than reactive data, and I think that is a big plus as it will be a lot more fun making payments in times to come.