Payments Needs an Email Address
It’s time to bring payments to the Internet
Disclaimer: I work at RippleX, a contributor to the PayID open source protocol and reference implementation
Author’s Note: I normally try to separate my work life from my blog, but I couldn’t resist spread the word about an awesome initiative that my team is a part of and its mission
How many times have you heard this conversation:
“Hey! Can I Venmo you for dinner?”
“No, sorry — I don’t have Venmo 😅”
“All good. How about Cash App?”
“Don’t have it — sorry 😬”
“Yeah, that works!”
“Okay great! What’s your PayID email?”
It’s a familiar ritual that everyone finds themselves doing.
Some friends have Venmo, while others prefer Cash App. Some landlords are cool with Zelle, while others strictly prefer checks. Some contractors can be paid through PayPal, while others need a direct deposit through ACH.
It’s crazy to think that, even decades after the inception of digital payments with PayPal in 1998, we still struggle to find the best way to pay one another.
That’s because payment networks are siloed.
PayPal doesn’t care that you can’t send money to your friend’s Cash App wallet from your PayPal account. PayPal only wants you to stay on their network — their proverbial walled garden.
You can’t send money to anyone that is not on PayPal, not even to someone on Venmo — even though Venmo is literally owned by PayPal.
Digital wallets promise that we can “send money to anyone” — but it’s a lie. I can’t use Venmo to send money to my friends in Indonesia.
Because all the residents there are using Grab Pay.
Payments today are fragmented across hundreds of siloed networks around the world. This makes it an incredibly painful experience to pay someone that isn’t on your preferred network.
Beyond a terrible UX, this status quo also rewards large payment companies that have built moats through decades of costly customer acquisition.
In the U.S., there will never be another large credit card network outside of the big four (Visa, Mastercard, Amex, and Discover) — because these companies spent billions of dollars convincing customers and merchants to accept them.
Solving this fragmentation is the next big horizon for payments — for a vision we call “interoperability”.
While huge strides have been made in bringing payments online, interoperability is the next big hurdle to traverse in order to make payments accessible to everyone.
Today’s payments are built for machines, not people
How many of you have memorized your credit card number?
No? How about your bank account and routing number?
Sometimes I can’t bring myself to buy something because I’m literally too lazy to dig up my credit card from my wallet, flip it over, and manually type my 16-digit code into the shopping cart checkout UX.
Or I’m literally too lazy to input my bank account number into Mercari, so I just let my sales balance sit on the app for months on end.
Or I fat finger my credit number and the payment fails, so I have to redo my entire shopping cart order (thanks for nothing, Uniqlo).
Today’s payments induces an anxiety that doesn’t need to happen — because it was built for machines and databases, and not for people to share with one another.
Payments looks a lot like computer networks in the 80s
The 1980s in the U.S. was a nascent time for computers.
Large computer networks like AOL and CompuServe battled for market share. Each company spend countless marketing dollars to convince the American population to join their computer network — each claiming that they were the “biggest” network as a differentiated value prop.
Because if you were on AOL, you couldn’t view content on CompuServe.
And if you were using Prodigy, you couldn’t send an email to someone with AOL.
How computer networks solved this issue was by essentially creating what we know as the Internet.
Protocols like TCP/IP formed a set of standards that different computers use be able to talk to each. So for the first time ever, people would send and view content across different computer networks.
However, people quickly realized that using IP addresses as identifiers for websites was a painful experience. No one wanted to remember that their favorite website was 184.108.40.206 (or maybe they misremembered that it was actually 220.127.116.11?)
So DNS was created, so that 18.104.22.168 could be mapped to www.google.com, something that was human-readable and easier to memorize than an IP address.
Similarly, emails were transformed as well. Protocols like SMTP/POP — alongside IP — allowed different email clients to send messages to one another.
DNS allowed people to have email addresses like email@example.com instead of a long IP address.
Bringing payments to the Internet
It’s long overdue for payments networks to finally join the Internet. More than just being “digitized”, payments can drastically benefit from open-source protocols that allow for interoperability and human readability — analogous to TCP/IP, DNS, and SMTP/POP for computer networks.
Imagine how many fewer emails we would send if we could only send to a gmail.com address.
Imagine how many fewer YouTube videos we’d watch if we had to memorize the however-many-digits IP address of each video.
How many fewer iMessages we’d send.
How many fewer video calls we’d share.
How much less connected we’d be to our friends and family.
Now think about all the times we couldn’t buy something we needed. Or couldn’t send money to a loved one. Or couldn’t get paid in a timely manner.
An open, global payment network
The Internet connected us by being an open network — built on open standards and open source software.
PayID is the same exact concept for payments.
PayID is an open standard for payment identifiers, whose naming convention — jimmy$wallet.com — works like an email address for payments.
Just as you can email a yahoo.com user from a gmail.com address, PayID is connects to any payment identifier on any network. When you need to send or receive money, you can use your PayID for all your payments.
In other words, PayID offers true interoperability for payment networks — just like the Internet did for computer networks.
Instead of a monolithic, siloed network (like CompuServe in the 80s), PayID offers an open global payment network that anyone can participate in.
“In the near future, a single, global payment network will enable anyone to easily pay any other person or business instantly… Payments won’t run over fragmented networks using proprietary standards to complicated account numbers, but rather, will use a united network in which all payment companies participate” — PayID website
Moreover, PayID was created to help people stay connected to one another. Its naming convention is human readable— just like what DNS provided for IP addresses — and mirrors an email address.
Unlocking the next wave of economic growth
The Internet gave us so much more than connectivity between previously siloed computer networks.
The Internet democratized content — anyone around the world could learn new things and stay up-to-date on current events. A company can connect to the Internet and instantly get access to billions of potential customers.
By connecting us, the Internet unlocked an unprecedented amount of economic value for the world, accounting for 21% of GDP growth from 2006–2011 in developed nations.
I believe that PayID can do the same thing for payments: democratize sending and receiving money, as well as unlocking even economic growth for the world.
On democratizing payments, with PayID anyone can send and receive money throughout the world. There’s no need to work within the confines of existing payment networks.
In addition, companies also gain unprecedented access to global payments. Instead of painstaking connecting to every single payment network, companies can now offer PayID with one integration and be able to receive money from around the globe.
On economic growth, experts have projected that a 1% increase in digital payments volume can drive, on average, an annual increase of $104 billion in GDP.
With a truly frictionless payment experience, PayID makes moving money more accessible and will create new customers, boost demand and increase transaction volumes for all payment apps and services. This in turn will lead to another wave of explosive growth for the world’s economies.
PayID’s vision is for an open network to accelerate growth for payments and beyond. The alternative is to continue with multiple small closed systems that value walled gardens and customer LTV over customer experience.
That is, until Apple, Facebook, Google, Ant Financial or WeChat decide to resolve this fragmented user experience with their multi-billion person closed networks and monopolize the entire sector.
I’d prefer an open system that benefits the everyone, instead of a select few.
Interested in learning how PayID can impact the world, and how PayID actually solves the interoperability problem? Check out payid.org for the high-level story and docs.payid.org for more technical details.