Rethinking Payments: Square and Waave on Competition, Cost, and Choice

Speaker A: Thank you for tuning in to the FinTech Australia podcast. Sponsored by Vanta. Today's episode explores the evolution of Australia's payments landscape with Marco Lamantia, Executive Director at Square Australia, Ben Zill, co founder and CEO of Wave, hosted by David Adams, senior business journalist at Smart Company. Before we get into today's episode, we are weeks away from Intersect and tickets are selling fast. As many of you know, Intersect is Australia's largest fintech conference. It brings together fintechs, investors, financial services, policymakers, regulators, government, international delegates, and more. For our 10th anniversary this year, we're expanding on Intersect to bring you FinTech Week Australia. A week full of events, thought leadership, and the opportunity to network with the industry. To grab your tickets before they sell out, head to intersect festival.com or fintechweekaustralia.com

Speaker B: hello, and welcome to this FinTech Australia podcast. My name's David Adams. I'm a senior business journalist at Smart Company and I'm joined today by, uh, two really impressive figures in the fintech space. I'm joined by Marco Lamantia, who's the executive director Australia at Square, and Ben Zill, the co founder and CEO at Wave. We're gathered here today at a really fascinating time in the payment sector in Australia. As we're recording this, uh, the Reserve bank of Australia is looking into merchant search, uh, merchant fees and surcharging for payments acceptance. There's a lot of moving parts, uh, going around at the moment. A lot of proposals on the table for what the future of payments in Australia could look like. So it's really, it's really great to be able to sit down with both of you to have a chat about, uh, the payment sector in Australia, how we got here, and take a look to the future. Before we do that, though, I'm keen to look back at the payments space in Australia to get a bit of an a recap on how we got here. So, Marco, I might start with you. Um, well, before we dig in, would you mind introducing yourself to our audience and, uh, give a little bit of background, um, of your experience in the payment space and, uh, how you came to, uh, your position at Square.

Speaker C: Absolutely. Firstly, thank you, David, for having us here today. Uh, my name is Marco Lamantia. Uh, I'm the executive director of Square Australia and Japan. Um, I've been working in the payments industry now, I would say almost 20 years. And so started my career in banking, went through a grad program, um, moved across to Visa, worked here in Australia, so was part of the team that Launched, uh, Contactless or PayWave both on the cards and on the terminal side and spent a bit of time in Singapore, uh, working across the region, across Asia. So it's incredibly exciting. Decided to come home and uh, here I am. Now I've been with Square for two and a half years and by far, and I don't say this in a biased way but by far my favorite, my favourite job.

Speaker B: Fantastic. And Ben, uh, while I've got you, could you introduce yourself, uh, what you do at Wave and uh, your experience in the payment sector.

Speaker D: So Ben Zill, uh, a payment veteran so to speak, uh, being 15 years in the uh, payment industry, starting at PayPal, followed by Adyen, starting up uh, with uh, my other co founders Wave and um, now Wave, uh, has been sold to Banked as a company. So continuing on that journey but effectively looking at real time payments and open banking with um, Pay two.

Speaker B: Yeah. Fantastic. Now Pay two is a fascinating development and I'm very keen to delve into that. But the story of how we got to pay to, how we got to this next generation of payment rails and infrastructure in Australia really begins decades ago when we saw the introduction of uh, card schemes like Visa and then the development of eftpos and that era of payments technology. So Marco, I'm curious to hear from you. Uh, let's cast our mind back to let's say the early 2000s. Just as a recap. What sort of payment options did Australians have? What, what sort of payment options did Australian consumers and merchants and banks have at their disposal at that time?

Speaker C: It was incredibly different payments landscape as you can imagine, both on the consumer and the business side. You know, if you cast your mind back to sort of the early 2000s, that the iPhone hadn't even been launched at that point. And so, you know, you think about today where I can't live or breathe without my phone, uh, next to me and being able to engage with, with the world from a payments point of view, consumers were primarily swiping and dipping their card. Um, for those of you who remember, you would then be prompted to select your account, enter a PIN or actually sign a piece of paper for credit. Uh, on the business side, uh, I guess the best way to sum it up was, uh, there wasn't a lot of choice. Uh, there was really no competition. It was the big four banks who provided merchant uh, terminals. They all sort of uh, looked and behaved the same way. Um, but importantly it really shut out quite a large sector of the business community. Um, if you think about small businesses in particular, the process to apply for a payment acceptance product at one of the big four major banks back then was uh, incredibly cumbersome. So um, you know, tens and tens of pages, uh, information and details such as sort of wanting to understand uh, what their business history was, whether you know, whether they're successful or not. And as a business just starting up, they obviously don't have that type of information. And as a result what you saw was a lot of businesses actually couldn't accept card. Um, they couldn't accept card because it was too difficult. They couldn't accept card payments because uh, the pricing wasn't very clear. And they couldn't accept card payments because there really was no choice outside of the big four banks. Mhm.

Speaker B: Could you talk about the sort of market share that the big four banks would have had on the card payment acceptance market at that particular point in time? Were there any alternatives on the market or was it really just what you see is what you get from the big four?

Speaker C: Apart from Tyro being in the market at that point in time, it was really by and large uh, owned by the big four banks. And so uh, whilst Tyro was making some inroads at that point in time and certainly focusing on parts of the business, it was very much controlled by the big four banking institutions in Australia.

Speaker B: Sure, sure. Well let's fast forward a little bit to 2016 and the launch of Square in Australia. Can you give us a recap, uh, at that time of what Square's pitch was to businesses which wanted to accept carrd, but potentially were looking at alternatives to the traditional merchant acquiring offerings from the big four?

Speaker C: Yeah, and I think, you know, our observation of businesses, and certainly not just here in Australia but globally, is that they have a right to get access to digital payments. And so we entered the market and were incredibly focused on um, being able to open up access, access that hadn't been historically provided to these types of businesses. And we wanted to focus on speed, transparency and convenience. In and around the same time you had the peripheralization of iPhones. Again going back to the four majors, it was really just hardware on a countertop. We know that commerce is conducted in lots of different places and so uh, launched in Australia with the uh, ability for anyone to actually start taking a payment from their iPhone at that point in time and the uh, the little dongle which I'm sure you're all aware of, of that. And so yeah, really hyper focused on the experience providing that access, providing speed and convenience, uh, which has certainly resonated quite A bit with the community here in Australia.

Speaker B: And could you talk about the response from the Big four to the, the proliferation of digitally enabled platforms like Square in the Australian market after that period of having such strong reach in the merchant sector in terms of that, in terms of providing those services? What was their response to these new developments coming in and encroaching on their turf, so to speak?

Speaker C: As you can imagine, uh, they didn't roll out the red carpet for Square in Australia. And, and we had some really big hills to climb and battles to make with regards to being able to, you, uh, know, represent the small business community. Again. These are businesses that have gone historically completely unserved. And so, um, it wasn't easy, but we were committed. We had incredible partners. So Kuskal being one of them. Um, you know, part with us enabled the ability for us to be able to accept payments here in Australia. Um, but yeah, definitely wasn't something that was a walk in the park from a competitive perspective.

Speaker B: Yeah, sure. And Ben, I'll turn to you now. Um, before Wave, we know you had this experience at PayPal and Adyen. Uh, can you talk a little bit about your experience watching Australia and Australian consumers change their relationship to digital payments and uh, card payments? I mean, uh, obviously working at PayPal and uh, that sort of digital payment innovation coming in really ushered in uh, an era of people becoming more comfortable sharing payment information online. But uh, how did you see that rollout in Australia and Australians become more comfortable with, of uh, things beyond just using a check, using cash, and actually, uh, adopting more advanced payments technology.

Speaker D: You could put it as. Over the past 15 years we've gone from being very comfortable to carry cash in our wallets, uh, with a card, um, because we knew that not everywhere would have that card acceptance to now everywhere, uh, accepts cards, in fact, is seeing places that don't accept cash. Overcoming the issues of speed and security as well was a big one. PayPal did that by having an easy way to check out online with the safety and security of their network. Um, when you look at install today and accepting payments, the story rings true again that uh, you want to be able to uh, either tap your mobile phone or uh, tap your card, but you want it to be secure, uh, in a payment form and uh, be convenient, uh, for you as well. So we've seen a rapid adoption, um, given the decline in cash acceptance and now new payment methods. So wallets and the way that we're being conditioned now to even make an order at our fast food, um, stores were no longer Going up to the counter and handing over cash. But it would be rather that payment experience is either I'm ordering ahead on my app, um, and making payment from the app itself, or I'm going to a kiosk. Uh, so we are seeing a change in consumer behavior, ah, for the better, huh? But we still need to remember that cash still plays a part in everyday, uh, services. It's just how we actually, ah, viewing, uh, that importance of cash. Ah, the other thing to take into account is what businesses want and where are we, um, today. Like we're in a time where everything needs to be instant and fast. So the NPP and real time payments has become top of mind for merchants and consumers. How can I move my money to pay for something fast?

Speaker B: Well, you touched on something there about the need and desire to move money very quickly and securely. But I'm curious to hear from you why you think Australia was such a strong adopter of those forms of payment. I mean, it wasn't that long ago that the idea of having a mobile wallet on your phone and uh, tapping on something to transfer money, it wasn't that long ago that that sort of thing was science fiction. Why do you think Australia and Australian consumers were so ready to adopt those technologies, accept that there is security around them that's going to keep their money safe, to keep them safe from fraud, when there were options like cash, which are relatively simple, you know what it is, where it's going. Are there any factors about the Australian consumer landscape or the merchant landscape that you think contributed to such a widespread adoption of this new wave of payment types?

Speaker D: I think it starts with the infrastructure and the availability of the infrastructure. When Square entered the market, um, it was giving that infrastructure or that access point to everyone. Um, all they needed to have was a mobile phone and pair it with the dongle and then you can start accepting cards as an option. So once that adoption rate, uh, hit, hit a critical, uh, point, then people felt more comfortable and it got to the point where actually withdrawing cash at a time became an inconvenience in comparison to, um, just tapping your phone or tapping your card.

Speaker C: It's interesting just listening to you sort of talk there, Ben. Uh, it reminds me of something that I observed when I was actually still working at Visa and working, uh, on the rollout of contactless hardware and cards with the partners. I was in line at Woolies and there was a father there with his son and the father pulled out a contactless card and said to his son, oh, watch this. And he waved to Pay. And the son was like, oh wow, that was pretty cool. And the dad was like, how cool was that? Right? And so it was at that moment that I just thought, wow, this is really going to take off. It's because it really was convenient. I think uh, the system has trust as well. There's a ton of trust in the payment system which is important. You know, brands like Wave, brands like Square, um, bringing innovation but making sure that security and trust is always at the forefront as well.

Speaker B: Yeah, absolutely. A lot of this conversation so far has actually focused on the card, the contactless card, uh, the new, relatively new things we can do with that, and even the mobile wallet which largely operates on uh, established card systems. But Ben, I'm interested in hearing from you about what WAVE is doing differently and the payment Rails it is built on. Can you tell us a little bit about what WAVE is doing and the new developments in payments infrastructure that is allowing fintechs like WAVE to do what they do.

Speaker D: So Wave or now Banked is really actually giving access to like Square did for those merchants, is giving merchants access to those real time payment uh, Rails or the infrastructure which is called Pay to or PayID, uh, and the ability to receive or move money um, in real time and the benefits that it brings is that you know, when you want to complete a transaction today, um, if I was using the old infrastructure to send money across, it would take between one and two days for the money to be deposited into a bank account. So we're really talking about fast movement of money between two accounts. And that infrastructure exists and has for the last five years, but now it's at a point where merchants can actually access it. And what we're doing at Banked is actually giving that access point so that everyone can um, accept uh, pay by bank, uh, payments today.

Speaker B: Mhm. And what are your feelings about the uh, general acceptance and awareness of the consumer data, Right, which is the uh, the information sharing technology which allows banks to do what it does. Do you feel like uh, enough is happening, uh, uh, in terms of uh, institutional support, government support, to uh, really uh, throw open the floodgates to allow this technology to uh, really proliferate in the, in the Australian market? Because we know that uh, fintechs like your own are making serious inroads with, with major uh, merchants and consumers. But we do know that the traditional card networks and those uh, established platform, uh, those particular forms of payment infrastructure are still very widespread.

Speaker D: Edifintech will tell you they would love more support from governments and infrastructure providers, uh we need to spread the word, we need to educate about the different use cases. But we're in the very early days of it. Um, core to everything is trust. So, and money is very personal for everybody. So, uh, the last thing that we want is to feel victim, um, to a scam or not knowing where that money has, uh, gone from your bank account to who. So it's actually up to the governments to sort of support the fintechs, uh, and the infrastructure providers who have built this infrastructure to help educate the public on how this can become an everyday, uh, way of making payments. Sure, sure.

Speaker B: Now Marco, uh, we were talking a little bit earlier about Square entering the Australian market and that, that classic image of the dongle and the contactless payment with a card. I'm interested to hear from you about how Square is adapting to players like Banked and uh, that form of payment acceptance. Uh, is that something that Square is devoting more resources to in terms of building that kind of payment acceptance infrastructure into its merchant, acquiring technology?

Speaker C: Absolutely. And we offer services today, which I'll touch on in a minute. I just wanted to, you know, massive shout out to yourself, Ben, and founders like yourself that have got an idea, uh, that do have an uphill battle, whether it's with access or, you know, with funding, uh, I think it's certainly something that I know I never would have had the courage to do so. Huge shout out on that front, mate. I, um, think, you know, when you look at what you're doing from an NPP perspective, um, these are incredibly important. Uh, it's essentially providing choice.

Speaker D: Right?

Speaker C: Being able to give more businesses, more sellers the ability to get paid a different way, specifically to Square, how we're enabling that. So, um, I think what we realized when we came into the market, and I'm sure it's quite common knowledge, but certainly not often spoken about, is that just how important cash flow is to a lot of small businesses. And uh, at best, businesses needed to wait, uh, until the end of the day, uh, many times the following day in order to get paid. And so we developed a feature which uses npp, uh, that essentially allows any of our sellers at the tap of a button, to be able to deposit their takings up to that point in time directly into their bank account. And so, you know, if they had a supplier come in the door and they needed to pay them and needed access to that cash flow, that was, uh, exactly what we've enabled via mpp. Um, do we see sort of use cases broadening? Absolutely right. I think that's going to be really dependent on guys like, like Ben and Wave and sort of the inroads that we can make with regards to not just the ability to accept but the ability to drive demand on the consumer side. How do we actually get people to prefer to pay with different methods other than card?

Speaker B: Mhm. Yeah, that's, it's a massive, massive topic and I almost think it's something that's kicked uh, up by the current RBA review which does touch on things like interchange fees which are transferred between merchant acquirer and issuer every time a payment takes place through a card network. And um, trying to understand the, the right settings in terms of those fees, in terms of how those, how the payment rails operate and if there's enough room for alternative uh, providers to sort of come in and stake uh, their claim there like with that. I am interested to talk to both of you about the RBA review that's happening at the moment. We know that there's a, at M the moment, the paper that's out at the moment has a large number of recommendations that would significantly change the payment landscape in Australia if they were enacted. The Reserve Bank's preferred reform would be to ban surcharging on debit and credit transactions which would flow through to uh, platforms like your own. Uh, Marco, it uh, says surcharging is not acting ah as intended. It's not sending the right price signals. At the same time it's talking about introducing interchange caps uh, to address some of those fees and to make sure that merchants don't, aren't lumped with the cost of payments acceptance and have to fully swallow that themselves. So given the state of play that we have at the moment with the RBA and most recent statement that it has put out. Marco, I'm curious to hear what, what is Square's take? If you could give me a broad scale take of what the RBA's preferred reform would mean for Square and other platforms like Square.

Speaker C: We're supportive of the RBA's agenda to lower the cost of payments in Australia. And so anything that results in uh, a lower cost for a small business to take a payment we're certainly supportive. It's important to also though be aware that there is a subset of the Small Business Committee, uh, albeit small, it's circa 10% according to the RBA paper that are surcharging that won't have the ability to do so in the future. And we're not talking about multinational corporates here, we're talking about small businesses and have been doing it really tough cost, uh, of living, inflation. And so I think it's really important we don't lose sight of the small business in this. However, from a surcharging perspective, when you think about what is the cleanest and most appropriate approach to remove it from the ecosystem, it's certainly a full ban.

Speaker B: Sure, sure. And when we talk about that 10% of small businesses, how does Square think about supporting them should a, uh, surcharge ban actually take effect? What do you think of the right could be the right settings to ensure that small businesses still have access to this new recent wave of payments technology at a reasonable price that doesn't price them out of the market and uh, reduce the options that they have.

Speaker C: It's exactly the reason the RBA is at the same time proposing to lower Interchange from a card issuance perspective. And therefore what we're expecting to see is broadly, as surcharging is removed, there should be a, uh, cost reduction in the ability to take uh, a payment because Interchange has been reduced. And we're hoping to be able to work with our sellers to pass that on. Now ultimately it's still very early in the consultation period and no decisions have been finally made. But our intent is to be able to lower the cost of a small business to take a payment, I think secondary to that. And if you take a step back and we sit with our sellers obviously regularly to understand what's important to them. And price is one aspect, and I know the conversation is generally always anchored in on price and really goes there quite quickly. However, uh, businesses by and large, uh, are looking for partners that are going to help them run and grow their business. Right. And so when you talk to entrepreneurs and small business owners, what they love about Square is, you know, the hardware is iconic, the experience to get set up and take a payment is amazing. But it's all those different other services that we provide them and help them with in order to grow their business. We've got some customers of ours that have gone from, uh, one location, uh, out in Sydney and started with us and have gone out to 20 or 30 locations across the country. We've helped them move over and launch their product in the US as well. And so they're the types of things that businesses are really looking for. And certainly what excites me as part of working at Square.

Speaker B: Sure, sure. Can you give us a bit of a rundown on how much of the fee that uh, a seller using Square pays to Square, how much of that is made up of Interchange versus what Square would spend on fraud prevention and security and making sure that those back end systems are up to scratch. What does that like fee breakdown look

Speaker C: like for anyone that's ever worked in payments before and had to work through, uh, global card network billings? Uh, what they'll know is that it's incredibly complex to understand, uh, the cost of taking a payment from a card network. And so the interchange is one component. Uh, there are a whole heap of other fees that are levied on by the network in addition to the interchange. And there are also fees that are incurred, uh, for fraud protection, chargebacks. Uh, what we'll say is that we're always looking at how we can provide the best service to our sellers. Um, we don't charge monthly fees, we don't provide contracts. Uh, the seller essentially has the hardware themselves. It's outright purchased by them. Um, they can leave and choose whenever they want. But then importantly, uh, you know, whenever something does go wrong, we're there to support them. We don't charge them additional fees for chargebacks. And so I guess the answer to that question is it's quite nuanced, complex. There's a lot of costs associated to, as you can imagine, taking a payment. Our role is to make sure that we're giving the best service and the best product to our sellers at the best price.

Speaker B: Mhm. And one other element of the RBA proposal is to provide more transparency to sellers to make it easier for them to understand or get a peek behind the curtain of those costs. What do you think is the right balance to um, providing that transparency to sellers while also giving them the simplicity that is inherent in the set percentage rate that like a square transaction, um, incurs? What do you think is the right mix of giving sellers information that they need to potentially, uh, have a bit more nuance to find out if the plan's right for them versus giving them something that's really simple and easy to use and easy to understand. Even if it is, uh, I'll let you take that one away.

Speaker C: It needs to be balanced. Uh, certainly understand and appreciate the intent of the RBA with regards to wanting to introduce more transparency into the ecosystem and then by and large being able to demonstrate that transparency to sellers. It's important to note though that, you know, again, sitting down with sellers and speaking to them, 85% of our seller base tells us they want simplicity. They prefer simplicity and a single rate over complex, uh, billing, over the ability to understand whether it was one card that was used over the other. And so I think there's no perfect solution. It's going to depend on the size of the business but certainly the small business community, what they've said by and large to us is keep it simple. And so that would be the advice to the RBA with regards to any uh, reporting reforms that would likely be provided.

Speaker B: Sure, sure. Now Ben, I'm curious to hear from you as well. What was your response to the latest uh RBA paper which is calling for a surcharging ban, is calling for interchange caps and some of those transparency measures uh from your perspective, ah, as a fintech which is operating without reliance on those card networks, what was your response to those particular recommendations?

Speaker D: Uh, it's a positive one I think we look at, you know, how do you drive competition and there needs to be a catalyst for change. Uh, you can't operate in the status quo um, without something and that's something that's been the RBA prompting uh, merchants to reassess their current situation um, and look at, at what other um, alternatives are there. Not to say that um, this card schemes don't play a role, they play a vital role. It's just what other uh, options are there, uh and particularly if you're looking for speed or another type of transaction that may not be in store, uh, it might be a subscription or a billing uh transaction. Those uh options are not commonly seen because consumers, as we said at the beginning of the segment, um, they're looking for convenience and um, consumers are slow to adopt new technologies. So this is a great prompt for businesses to um, put forward those pay by banks ah to the consumer and give them the option to make the payment.

Speaker B: Given the recommendations of the RBA report which is calling for a surcharging band, what is your pitch to consumers and merchants who A might currently be on be subjected to those surcharges as a consumer or B, who might soon lose the ability to pass on those costs to consumers. I'm curious to hear about how you market and pitch those technologies to those two sides uh of the equation.

Speaker D: So it needs to be broken down, you look at the consumer side, um, that comfort and those consumer protections need to be developed further and it needs to have the right use case. Um, at the moment I find convenience, speed, I've got the protections when I use my Apple wallet to tap my card. So am I going to get a huge benefit from changing over to scanning a QR code? Probably not. It's probably going to be still that friction um, in the current day. But uh, for a merchant um, We've also got to develop the access points uh to that. You don't want to be implementing new systems um, to accept a fringe payment method at the same time. But given the um, options and costs you might like to control, you've brought up uh, airline points and, and incentives. Loyalty is a big part of where that interchange um, actually goes to. So if we fast forward and we assume that the RBA uh recommendations are implemented um, are ah, those points going to be the same? And could that merchant have greater controls over implementing their own loyalty uh system at a lower cost? And that's where I think these newer technologies like pay by bank will get merchant adoption. Today we're seeing some of the big retailers like Amazon uh, adopt uh, Pay two as an alternative form of payment to cards and that's getting a lot of great traction as well. But these are ah, the very early days and consumers do get to that point where they feel more comfortable um, using the technology and that's where we'll see that, that uplift.

Speaker B: So it'll be a case where, where we might see more merchants offer discounts uh, to pay by bank users to entice, repeat, repeat usage and more in house offerings to encourage use of that payment type compared to the loyalty points that you know like a card provider.

Speaker D: Absolutely. I mean we are all looking at the same point of how can we increase consumer conversion uh, and we want growth for businesses.

Speaker C: Couldn't agree more Ben. And I think we often overlook the fact that there has been uh, innovation certainly within the, what I'd call consumer credit space. You uh, just need to look at afterpay and the success that that's had and it's really anchored in, around providing value to consumers. Ah, and so how are they taking something incredibly complex and made it simple so that as a consumer I know when I buy something it's essentially going to be split evenly over four and I know what my repayments are and I don't need to be worrying about these complicated ah, algorithms of trying to work out what the uh, what the interest rate is. And so I think you know, to Ben's point it's about providing that convenience. It's about making sure that there is value being added to not just the, the person who's paying but also importantly the merchant on the merchant side. That can come in various different sections and sizes. But certainly I think if we lo side of value uh, it's going to be really difficult to get people to transition away from, from their point zones.

Speaker B: And you raised just then Afterpay another, uh, major success story in the Australian fintech space today. How is the integration of Afterpay and Square, uh, operating for Australian merchants, obviously under the same uh, block umbrella. But can you talk a little bit about the importance of afterpay being built into that system, how it's built in and uh, what implications you can see for the broader fintech system of accepting more of those alternative payment types outside of the traditional credit card and EFTPOS systems.

Speaker A: You're listening to the FinTech Australia podcast. This season is sponsored by Vanta. Vanta is the leading trust management platform helping fintech businesses get compliant fast for frameworks like CPS234, SoC2, ISO 27001 and more. Vanta's AI and automation power everything from evidence collection and continuous monitoring to security reviews and vendor risk. Whether you're starting up or scaling.

Speaker C: Not many people may be aware that uh, any seller that starts up with Square and purchases, uh, one of our hardware devices has got the ability to take uh, an after pay payment on day one. And so uh, from an integration perspective, that's been the initial focus, which is really making sure that we can provide that value that afterpay has been driving in the Australian market and in other markets for merchants. How do we actually provide that to the Square small business community? Um, where does it go to from here? I think there's certainly, uh, you know, many different ideas that we could work on, not just with Afterpay and Square, but certainly across block more broadly and even uh, folks like Wave and Ben, um, more to come, but certainly it's, it's very exciting space.

Speaker B: Yeah, well, let's talk about block more broadly actually. Uh, can we expect or how are you thinking about integrating things like cryptocurrency payments into the payment acceptance space for, for merchants in Australia? Are we nearing a point, do you think that that's becoming truly mainstream? I know we saw 2020, 2021, um, some early signs that those crypto rails were going to become quite mainstream for high, uh, street shops. But where are we now, do you think, in terms of everyday merchants accepting that with no muss, no fuss?

Speaker C: Ultimately, from a block point of view, we believe in, uh, crypto in cryptocurrency. Ah, we believe in being able to provide again access to a financial system that is by and large heavily limited and restricted by financial institutions. Recently in the United States, uh, Square launched the capability for all of our sellers to be able to accept crypto payments in store. And we're looking forward to being able to bring that same capability here to Australia. And so we're all in. We think it's going to form a part of the ecosystem moving forward. I'm sure there'll be other things as innovation and technology changes and shifts as it does that come up but uh, certainly we're a big believer in cryptocurrency.

Speaker B: Sure, sure. And Ben, I'll turn to you now. We just heard about the American market and cryptocurrency payments but I'm curious to hear from you about what the Australian market can learn from international markets in terms of pay by bank and this kind of payments technology. Where does the Australian market sit in comparison to some European markets which I know have experimented with or adopted this kind of technology a little bit earlier than Australia has?

Speaker D: We're on that same journey and that path, uh, the UK and Europe are a little bit more advanced but those markets are seeing a great uptake now in really comes down to uh, access uh, and the getting the right use case as well and combining those protections and security around. So we look at open banking doing more than just money movement but it's actually data validation um, so bank account validation being able to take control uh, of more than just the payment. That's the journey that Australia is just starting up. And those services are being implemented today through AP plus and we will see them come to light where we will have a much more secure uh, framework to build different services for consumers and merchants on uh the US probably more heavily on the data side rather than their real time payment rails um have come to market and um, no doubt the US would be looking at then Australia as to how do we adopt those products and services uh through payment Rails and how can then they carry that on uh into their market?

Speaker B: I m know that Square and other payment services in that realm ah are building back end technology to help things like hospitality restaurants understand their stock levels and um, there's more technology there to touch on things like payroll and accounting and that's a really developing space for you and the pay by bank sector. What sort of technologies and integrations with that data would you like to see and do you think are possible? So if I'm a consumer using this technology how bluesky thinking will I be able to look, uh, use that to delve into my bank data to get next level insights about my spending habits or uh, you know where I could cut back? What implementations haven't we touched on yet that you think could be quite powerful to take that form of payments technology to that next level of usefulness.

Speaker D: Yeah, ubiquity is a word that sort of comes to mind, consistency across the different experiences. We're still very early on, uh every bank has a different experience uh to go by so ah, it's very hard to educate the market as to what are they actually going to see. If we're looking at spend trackers, um, the data needs to be uh, properly presented in a way but I look to even the merchant services that can be offered um, you know through um Square. I mean they're important when you talk about payroll and being ah able to have that ability for an employee to receive their money faster because there's an instant payout which means that they could um, pay for something straight uh away rather than waiting. So there's a convenience aspect to it um but the data does help um create for a better ah, uh security authentication ah layer that um, stops the fraudsters.

Speaker B: Now looking to the future, what sort of settings do you think in terms of policy, regulation or easing of regulation would allow the next generation of fintech development and innovation in Australia? What do you think are the key issues that need to change or need to be reinforced to allow consumers, allow businesses to get more choice, more efficiency? I'm keen to hear what you think is the correct way to go about allowing the next wave of innovation to come through in Australia.

Speaker D: Regulation is a good thing. It provides guidelines uh, by which uh fintechs can operate and have those consumer controls in place so that uh, there's a comfort level. I think that the support from governments and larger uh fintechs is critical. A startup in the fintech sector cannot do it alone. There's a lot of regulation that uh, needs to go through and rightly so because you're protecting money um, whereas with the support of fintechs and the government to lower uh, particularly the barriers and they've done that to a degree with um asics, uh the ers, uh sandbox give uh the way for fintechs to at least experiment and try to find that product market fit. So I do think that it's a great time to be a fintech. We're just at this starting point. I mean no one would have ever thought of buy now, pay later being a thing or even contactless uh 20 years ago. So what is the next thing? I think pay by bank and real time payments presents a uh massive opportunity as we move to a world which looks at money movement and even cryptocurrency and stable coin. Uh I'm very bullish that Those types of options will play a part in every merchant's uh, checkout options and consumers lives, uh, in the way that they choose to move their money.

Speaker B: Now, Marco Bluesky thinking, same question. What sort of settings, in terms of regulation and policy do you think are the right mix for that level of innovation to take place? Do you agree with Ben that uh, on some of the points he's raised?

Speaker C: Absolutely. And again, we can draw parallels to square entering the market and the limitation in being able to get access to the system. So I do think access is certainly a key point. The other critical point is enabling competition. And so uh, really whatever policy or regulation occurs, if it's in the spirit of enabling competition, then certainly we're incredibly supportive. I think you just need to look at what competition has resulted in here in Australia, certainly on the payment acceptance side. And it's not just square. We're seeing, you know, tens of others of payment service providers offering their wares to small business. And ultimately that means choice and as a nation, way better for that. And so competition and access, I think are two critical pieces to enable.

Speaker B: Another really live conversation that's happening at the moment is around productivity and the need for the Australian economy to do more with the resources that it has. And I'm curious to ask both of you what you think is the role of fintech in that discussion. Uh, Marco, I might start with you. Is there a meaningful role that fintech develops, can play to really uplift Australian productivity on a broad scale? Is that something it would be capable of and if so, what needs to happen for the fintech sector to get there, to really lead the charge in that space?

Speaker C: Absolutely. There needs to be a focus on, um, productivity. There needs to be a focus on homegrown innovation and intellectual property. I think there certainly needs to be a focus on stem, uh, and specifically engineering. We as Block, have uh, quite a large number of engineers based here in Melbourne and Sydney, uh, that are doing quite a lot of engineering work for Block across multiple markets. And so it's making sure that we've got the ability to facilitate that investment, um, making sure that we're working with entrepreneurs and you know, startups just like Ben, just as they're coming out with their idea and providing them the best support that we can, um, and also looking to use tools like artificial intelligence. I think that's going to be a big one from an efficiency point of view. So, yeah, yeah.

Speaker D: And Ben, I think when we're looking at increasing productivity, the fintech sector um, plays an important, if not vital role in actually getting that creative uh, juices going, delivering products that ultimately can expand. I mean there are no borders with fintech and we've seen that um, with the likes of afterpay starting off in Australia and being able to scale to a global success as well. So we need to support um, those fintechs to get that creative thinking, that productivity up and, and help Australia use the fintechs as a result, resource as an export resource as well.

Speaker B: And Marco mentioned artificial intelligence there. Um, Ben, I'm curious to hear from you. To what extent is artificial intelligence a part of your internal workflows? How do you think about incorporating it in uh, internally or in your product? What does that look like? Uh, and yeah, I'm curious to hear from you broadly about what artificial intelligence means to you and your organization.

Speaker D: So you might have heard of the term agentic commerce still very early on. But what does that do? What does that mean for a consumer? Um, as long as the protections are there and the authentication for that consumer to identify themselves and allow for the payment. That could be incredible. When you look at um, telling a bottle to look over when my bills are due and help me improve my cash flow so only pay on the due date, rather than forgetting about that bill and paying an overdue fee, um, you're giving the access for that bot to take the money and make that payment, uh, for the bill. So I think there's a lot of use cases. Uh, AI agentic commerce is also very early on, but when you look at the crystal ball, I think it'll be part of all new infrastructure and fintechs, uh, going forward.

Speaker B: M and Marco, uh, I know that artificial intelligence has played a role in Square's product suite for quite some time, but I'm curious to hear from you about how you think about it in your personal workflows and within your teams. We've seen so much rapid development in artificial intelligence technology in such a short amount of time. What does that look like for you and what outcomes do you think that could have for the users of Square technology too?

Speaker C: I'm a big proponent of A.I. certainly, uh, work at Square, I use it daily. Uh, a lot of the team does actually. I think all of the team, uh, really use it daily. And what we're seeing is just people in engaging with the tool differently as time goes on. Ah, so initially as a bit of a research assistant, um, and then getting a lot more creative from there around, being able to throw some really challenging thesis at it and then getting some interesting responses Back from a seller perspective, uh, one of the benefits that, that we have is that we design and manufacture our own hardware. And uh, as you can imagine a lot of the AI software overlays require quite intelligent hardware and to be able to run efficiently. And so we're providing our sellers the ability to get insights directly from their device such as, you know, what products selling the most at what time, uh, what sort of images are uh, working best from a sales perspective, therefore prompting and providing alternatives. And so really this is just the start. But ultimately it's about providing sellers and small businesses time back, making them more efficient and allowing to do what they love doing, which is either working on their business or spending time with loved ones.

Speaker B: For small businesses, uh, small businesses selling online, potentially the, the copy that goes along with uh, a product listing or the right image could, could determine if a lot of people buy their product or if know people buy their product. How do you think about ensuring trustworthiness and accuracy within those AI systems? What sort of safeguards do you have in place to ensure that the businesses using square technology and those AI functions are uh, can rely on the output of those to, and can trust that to make the right decision more often than not.

Speaker C: It's interesting you mentioned that sort of ashamedly using Uber Eats and notice uh, that some of the descriptions of the food menu items uh now say generated by AI, um you know, separate to the safeguards. I think what we're going to see is AI continue to evolve and improve and the use cases of AI continue to change and the value that AI provides, not just businesses but consumers in the world alike, continue to change and evolve and improve. Um, specific to safeguards, uh like ultimately these are uh, business owners that are trying to run and grow their business. Um, they certainly want to do everything they can to do that. And so uh, we haven't seen any instances of a business trying to do something that um, is nefarious or receiving the wrong information that they haven't been able to validate.

Speaker B: And Ben, you brought up agentic AI. I've heard uh, from some other senior folks in the fintech space that agentic AI is right around the corner. How would you think about ensuring trust and uh, getting the message across that this technology is going to operate within the confines of its, its operators. It's not going to just go on a tangent and you know, order things that shouldn't forget to pay bills, that it should. How do you think about ensuring that trust? Granted it's very early days but I'm keen to gauge your level of optimism in those systems performing as advocates say

Speaker D: that they will, ensuring that the appropriate restrictions and controls are in place from the get go. You can't just open the floodgates, uh, and let that bot do all your shopping and buy you a whole lot of things that you had no idea you wanted or you, you didn't order. So making sure that there's those gates, um, and at the beginning it won't offer a lot more convenience, but it will inform you and it'll get your permission. So I think with the proper permissions in place, then when you feel more comfortable, then it's about allowing or easing those uh, restrictions to then allow your assistant or your bot to uh, do more tasks autonomously.

Speaker B: Well, I think this has been a fascinating conversation and I've really enjoyed hearing from both of you about the development of payments technology in Australia. Obviously we've gone from the cash era to cards and more advanced payment systems. Just before I let both of you go, I am curious to hear from both of you, uh, looking once more into that crystal ball, what, what other major developments you think could be around the corner in payments technology in Australia? I know we've, we've talked about AI, we've talked about uh, agentic commerce, but are there any other uh, areas that you're looking at that you think are particularly viable to really kickstart that next level of innovation and choice and opportunity for consumers and merchants in Australia?

Speaker D: I think Marco brought it up. And to your point about productivity, it's actually speaking to merchants and consumers and learning what would make their lives easier and more productive. I um, really come uh, back to you need to have the infrastructure in place. I do see that things are ah, uh, moving to more real time, um, uh, pace so making sure that you've got your pay by banks, um, you know, on the agenda as something to implement, but also not being afraid of listening to and implementing a form of agentic, uh, commerce.

Speaker C: I think the opportunities are uh, endless and the ideas certainly can be endless. What we do know is, is that it's going to be driven by demand and convenience and safety and security. And certainly, uh, we will look to understand, and we continue to look to understand how people want to pay and certainly how businesses want to get paid. Don't have any sort of crystal ball ideas. Um, but you know, what I will say is I think it's an incredibly exciting future. Uh, it certainly excites me and maybe I'm a little bit boring, but uh, I think it's uh, an awesome industry, and it's great to be here today and being able to talk about some really important topics, not just for the small business community, but consumers in Australia alike.

Speaker B: Well, we've seen a rapid evolution of fintech in Australia. We've seen a massive, ah, development of new payment systems and payment rails. And obviously, there's still so much more, more adoption left to take place. It'll be a fascinating few years in the space. And I'm sure we'll speak again soon when those developments come down the pipeline. For now, though, I would like to take the time to say thank you to both of you for joining me today and to all listening. Thank you for joining us. Hope you got something interesting and informative out of this chat as well. I'll leave it there for now, but thanks again.

Speaker C: Thank you. Thank you.