Indirect Disruption of Payments – The Strategists Dream By Rob Fernandes It’s a well worn cliche that there has been more disruption in payments in the past five years, than the preceding fifty years since the dawn of the credit card. But while large tech brands and specific Fintech success stories have influenced a shift in payments thinking, very often it’s as a result of direct intervention. Klarna removed friction online. Card brands used contactless to remove friction in store. Stripe engaged the developer. Venmo personalised the money transfer. The challenge with direct disruption is that it is a result of good ideas, well executed. They don’t always work. For every winning bet, many ideas still fall flat. As any investor knows, the strongest opportunities ride the wave of indirect disruption – unrelated mega trends and macro trends that shift market demands. An obvious example is the proliferation of mobile feature phones and then smart phones – which increased the scope for digital payments and authentication. Less obvious but more disruptive has been a much longer term reduction in travel costs and barriers to travel, driving migration and in turn money transfers. The payments industry as a whole is buoyed by one long-term trend: the shift to cashless, but the real pockets of value stem from more specific disruptions. Only a few merchant payments solutions recognised that a trend for SaaS business software is driving payments CAGR around 4x general payments growth. Looking out beyond the payments industry and recognising all those indirect disruptions – both now and in the coming years – is key in any Paytech strategy.