Building customer-centric purpose bound money

Here's how Amazon is delivering a real-world application for PBM, developed and executed from the merchant’s perspective.

Rapid growth in digital payments has ushered in a transformation in how customers and businesses access goods and services. This progress has also been made possible by the considerable diversity and high bar of customer needs and expectations that help drive innovation and collaboration, enabling modern, fast, and inexpensive payments. Among these is purpose bound money (PBM) – at its core, a way for senders to specify conditions when making transfers in digital money across different systems. When developed to serve a particular purpose for customers and merchants, PBM can take hold as an efficient, effective and fast transaction method.

Our goal at Amazon is to develop innovative solutions to make options like these a reality for our customers.

Customer focus

Ultimately, payment systems need to be more inclusive, efficient, and cost-effective, for merchants, sellers, developers and customers. If infrastructure for PBM isn’t developed based on these principles, then the mass adoption needed to make this viable will not be achieved.

Though not specific to PBM, we’ve already seen customers increasingly prioritize these values when it comes to preferred payment methods. As new options like instant payments and buy now, pay later have increased in popularity, we’ve taken note of our customers’ evolving preferences and forged new partnerships to provide accessible financing alternatives to traditional credit. For example, customers in Singapore can use PayNow, an instant funds transfer service launched by the Association of Banks in Singapore. PayNow enables 95 per cent of local banked customers to make a payment on the store simply by using a QR code scanned via their bank or non-financial institution’s mobile application.

In addition to being a service that is available to businesses of all sizes, PayNow does not require customers to have a linked credit or debit card. This ensures that even those new to online commerce or with underserved financial needs can shop on the store.

We know small businesses have similar priorities as customers in terms of inclusivity, efficiency and cost-effectiveness, which is why providing tools that meet these needs and allow them to succeed is critical to our retail business. We offer a range of secure and flexible ways to receive sales proceeds, such as currency conversion for sellers who operate internationally, which in turn increases choice and selection for buyers.

In India alone, Amazon has provided resources to help over 8.5 million offline small business owners and entrepreneurs transition to digital payments. How did we achieve this? By leveraging the reach of our business offerings and prioritizing an experience that is safe, secure, earns trust, and, most importantly of all, meets the needs of customers.

Industry influence  

PBM can foster an era of new technologies that enable modern, fast, and inexpensive payments. Programmability can facilitate both increased automation and accelerated innovation -- it already has the capability to automate manual processes, speed up funds settlement, and eliminate reconciliations. Over time, it could result in lower costs and hence lower prices for consumers. To the extent it sparks innovation, it makes possible entirely new user experiences and merchant workflows. Right now, PBM is at a stage where merchants can play a decisive role in designing features that promote adoption and an overall customer journey that fosters trust and confidence in the programmable money system.

Unified Payments Interface (UPI), for example, underlines what can be achieved when you marry innovation with collaboration -- payments interoperability. When India’s fast-growing fintech firms began launching digital wallets and mobile money, it made it cheap and simple to store and transfer money digitally—even for those without a bank account. This prompted additional innovation by the authorities and ultimately they introduced a new layer to the retail payment system, the Unified Payments Interface (UPI), so that banks could exchange messages and payment orders with nonbank firms, forming the second layer of the India Stack.

UPI’s success is a function of the effectiveness of the India Stack, a comprehensive digital identity, payment, and data management system, in creating strong foundations for digital financial services to reach all segments of society.

Driving adoption through public-private collaboration

As we can see from the UPI example, public and private sectors play important roles in enabling financial inclusion, and collaboration between the two is integral to progress. Project Orchid, a multi-year, multi-phase exploratory project examining the various design and technical aspects pertinent to the digital Singapore dollar, is an example of this partnership between the public and private sectors. Born out of engagements with MAS, Amazon provided a conceptual use case for PBM in the exploration of a Central Bank Digital Currency (CBDC) for Singapore.

This serves as a good starting point, but partnership efforts must go beyond experimentation on pilots and move towards real-world implementation supported by initiatives that build customer awareness and confidence.

What’s next

Looking towards our exciting participation at the Singapore Fintech Festival and the next evolution of Project Orchid, it is worth reflecting on what we are trying to achieve. We aim to deliver a real-world application for PBM, developed and executed from the merchant’s perspective – providing a strong foundation upon which future innovations can be built. We continue to be guided by three core pillars in our payment products and service offerings; access and affordability, security and trust, and finally – customer experience and innovation.

At Amazon, we believe that through collaboration and innovation, public and private stakeholders can collectively build new payment infrastructures that go beyond simple payments and towards options that offer greater efficiency and choice for end-users.

Sujit Misra is the head of Amazon Payments for Apac

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