Latest / The Payments Shed / Ep. 65 - LIVE from FTT Payments with Moonrise by Lunar: Agentic Payments, Stablecoins, and the Reality of Modern Payment Rails

Transcript

Ep. 65 - LIVE from FTT Payments with Moonrise by Lunar: Agentic Payments, Stablecoins, and the Reality of Modern Payment Rails · The Payments Shed

• 0:05
  Welcome back to FTT Embedded payments and super Apps.
• 0:08
  We are live. It's the payment show podcast
• 0:10
  Dwayne Jeffrey Co hosting with myself today.
• 0:13
  And we are joined right now by Nana Bergman, MD of Moonrise by
• 0:17
  Luna. Nana, welcome to the show.
• 0:20
  Please tell us a little bit about your, yourself, your
• 0:22
  career in, in sort of financial services and on your role
• 0:25
  currently at Luna as well. Absolutely.
• 0:28
  Super good to be here on the podcast with you.
• 0:31
  I have been in the industry for about 6:00 or so years by now,
• 0:34
  deep into the banking space. But I actually come from a
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  background in sort of consumer goods and big tech with Google.
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  So landed at random into banking initially with the Bank of
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  London in the UK that you might have heard about both for a good
• 0:49
  and for a bad. But even if it was a baptism of
• 0:53
  fire for me, I learned a lot from that.
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  And for the last year and a half been spearheading Moonrise by
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  Luna, which is essentially the embedded banking or banking as a
• 1:05
  service arm off the new bank, Una.
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  And we are focused on the Nordic markets, giving regulated firms,
• 1:13
  payment firms, Emis or other banks easy access to the Nordic
• 1:17
  region. So Denmark's we didn't.
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  Norway is our bread and butter. We do it really well.
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  We're direct settlement participants.
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  And yeah, you know the drill. That's a sort of our stronghold.
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  Reason, Well, I'll start off with the first question.
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  I think a lot of people think that cross-border or at least
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  the the problems with cross-border sits within the
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  correspondent and thank them later.
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  But I think you've mentioned easy earlier before that it's
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  much more of a last mile issue. What do you mean by that?
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  So I think the cross-border space is quite fascinating,
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  right? It's been a huge pain quake for
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  forever probably, right? And, and lots of different
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  companies will have had in their pitch decks to investors that
• 1:57
  they are solving for the horrific multiple days delay in
• 2:02
  any correspondent banking sort of network chain when they're
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  trying to move money across the world.
• 2:07
  Right. To be fair, lots of money is
• 2:09
  still being moved on the cross-border.
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  Sorry, the now I call it the traditional method of
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  correspondent banking nostril Astro accounts where you sort of
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  move it through that chain with a swift messaging to sort of
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  initiate this. But I think what we've seen over
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  the last decade or so, right, it's really lots of innovation
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  in that space initially with big sort of B2B infrastructure
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  partners who are building a network of local banks in order
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  to sort of circumvent that with a good example being Visa
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  Direct, if you're familiar with with them, who was a proud
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  partners of of ours. But in order for them to
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  properly build an alternative and like a global
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  infrastructure, right, they need to have proper local
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  connectivity because if you can't move the last mile, then
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  there is serial value in actually moving across the
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  globe, right. So yeah, that's sort of what I
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  what I mean when I say it. It comes down to actually still
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  having the the local access in order to enable that.
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  And stablecoins are kind of mooted as one of the solutions
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  to this problem, right? But you maybe would would have a
• 3:15
  different opinion there. Where do you think they're
• 3:16
  falling short at the moment? So I think they are stablecoin
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  is, is, is has a lot of potential and and it's sort of
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  like trying to solve the exact same use case, at least for the
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  cross-border use case for stablecoins rights that that
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  these sort of global networks are also solving for, right?
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  I think where stablecoin has an edge is that because you can
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  move the money or the representation of money
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  instantly, you don't have to have the liquidity pools into
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  the different markets necessarily.
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  However, you're not quite getting rid of it just yet
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  because stable coins aren't used as actual money is being used
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  today. So until we have stablecoin
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  being used on peakable and footing as Fiat money is today,
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  you will still have to sort of deploy a kind of refer to like
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  the sandwich methods, right? When you're sort of like in
• 4:07
  between in the local market, you actually do need to do a on and
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  off rent right off like into to actual Fiat currencies, because
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  otherwise there is you can't use the money, then what's what's
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  what good is the representation of it one.
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  Of my favorite terms in payments, the sandwich method.
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  Yeah, we had that. I'd never heard it until a few
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  months ago when someone came on the podcast and mentioned it.
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  Yeah, yeah. I think stablecoins is really
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  sort of like gained like yeah, momentum around that sandwich
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  methods, right, it's about. So does that eventually mean
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  that it comes down to having strong local banking
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  infrastructure on both ends at the end of the day can solve for
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  that problem? I think you will have to have
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  strong local banking partnerships rights.
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  Maybe there is a utopian world where if we all just did all of
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  our money needs in the stable coins right?
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  Maybe get the stable coin providers then be the
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  alternative, right? Would you pay for your groceries
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  and stable coins and get your salaries and stable coins?
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  I think that's if it. Pays me quicker then I'll take
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  it and stable. For sure, right.
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  And, and, and, and you can actually see the, the world sort
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  of moving in that direction. But I think what we need to
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  remember is also that the role of a bank is still to be the
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  safe custodians of our money, right?
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  And if all of a sudden your entire sort of wealth moves into
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  stable coins, you want to make sure that whoever holds those
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  are properly regulated, right? And regardless of that, there's
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  then the banks becoming those stable coin custodians or
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  whether it's the sort of the current providers of it, then
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  they will probably be regulated as banks, right?
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  So it's I have a hard time seeing a world where the local
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  banking partners are not part of that equation.
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  So on, on the notion of trusting where your, your money sits,
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  let's touch on trusting how your money moves, right?
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  And, and there's obviously a huge amount of focus at the
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  moment on the genetic money movement, the hype around AI
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  agents executing payments for you as well.
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  Where do you feel like the underlying infrastructure that
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  we see at the moment maybe is preventing us to be fully ready
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  for that at scale? Yeah, there's probably lots of
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  pinpoints in in, in fully enabling that, right.
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  I am personally super hyped about the binitzies or like the
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  the possibilities that that AI as a as a whole sort of unlocks
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  for us as a human race. But of course in in in the
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  payments, the the agentic spaces is really, really fascinating.
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  Majority, I think is probably plus 90% of all sort of
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  transactions, if not even higher, right still have some
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  sort of human intervention in that full chain.
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  And of course, as soon as you have a broken chain with a human
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  intervention, it can't be executed in in from machines,
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  right? So it can't be a gentic.
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  And that's of course a massive pain point in order to properly
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  enable for that. So, so we need to as a sort of
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  like collective industry within payments shift to like making
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  sure that it's super deterministic in all of our
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  rails, right? That it's machine readable, that
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  it's not because everything is right now still made for humans,
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  right? And and even even how we started
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  out with with ours. So we are API first and
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  foremost. But of course, the way that we
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  developed our API instructions, of course, initially with your
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  descriptions for developers, right, because that's who would
• 7:30
  connect to them. But now knowing it's likely
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  going to be a genetic connections into our API
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  structure, right, we're of course also doing that
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  translation. So it's it's everything.
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  It's machine readable on the step.
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  Absolutely it does on a great point, especially on the APIs
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  and the API design. How important is that API design
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  when it comes to enabling machine driven payments?
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  And are we heading towards a point where the limitation isn't
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  AI, but it's actually the rails themselves there?
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  Are probably multiple limitations probably also in the
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  in the LMS still right, But, but but if the underlying rails do
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  not allow for machine readability, you can build a lot
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  of sort of fences stuff on on the on the top, but it won't
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  actually execute the payments underneath, right?
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  So, so the rails absolutely must follow, right.
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  And I think back to your point brand on, on, on trust, right?
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  And there is lots of concern still in just letting any agent
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  go wild with your credit card information, right?
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  So, so we need to make sure that the rails that are actually
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  being built have some sort of programmability where you can
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  actually set clear guide rails of like when can you use, when
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  can you not use? What's the actual purpose of of
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  of this specific transactions? And we're just not there yet,
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  right? And the term instant gets landed
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  around a lot in payments as well.
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  Like a lot of providers are technically connected to instant
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  rails, but they're still operating in batch processes
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  behind the scenes, right? So what's the reality in the
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  market? How much of that is going on and
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  how many people are truly instant?
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  Yeah, this connects so clearly to a genetic execution as well,
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  right? Because a machine can't sort of
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  be sent out to do any transaction, right?
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  And and then be met with a wait until batches uploads it, right?
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  It's sort of it doesn't, it doesn't work.
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  It must be instant for it to actually take effect.
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  And, and I think what we see in the market is that even though a
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  lot of things or providers would be connected to the instant
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  schemes and the respective markets, if you're still being
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  asked to sort of upload a batch, even though it's saying that
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  it's instant, it's actually not really instant, right?
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  Because it is still then put into sort of a batch made
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  process, which yeah, doesn't make an instant essentially.
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  So what does that then mean for merchants in practical terms,
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  right, and especially when we're talking about liquidity in an
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  asset, I think? They're often the the, the ones
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  losing out rights. They are, if you think about it
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  intuitively, right. You're running a pizza shop,
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  right? Or a small restaurant chain,
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  right? And you're biggest, biggest
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  commercial timing is your Friday nights and all of your Saturday
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  and probably your your Sunday as well, right.
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  But the payment access is sort of closed over weekends if
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  you're on a batch processing, right.
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  So you actually need lots of money in order to buy
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  ingredients for those respective evenings, but you don't have
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  access to that money because it does.
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  The bank doesn't open until Monday morning.
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  And so I think the merchants are often the ones suffering, right?
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  They really need the liquidity, specifically the smaller
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  merchants, right, which lots of us are focused on helping our
• 10:43
  smaller merchants and our local communities, etcetera.
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  And they are really the ones struggling if they can't get
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  access to the liquidity. So I think what we see when we
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  speak, so we serve quite a lot of acquirers in, in, in, in the
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  acquiring space who work directly with merchants is that
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  the ability to sort of settle instantly to your merchants is
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  it's, it's becoming a must, right.
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  It's still sold as a premium product and probably will be for
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  yet some years to go. But increasingly, I would expect
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  the merchants are really demanding it.
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  And you mentioned your key markets obviously in the Nordics
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  and we wanted to maybe do a bit of myth busting with you today
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  because you know, maybe in, in the UK and, and other parts of
• 11:22
  European market, we like to say, oh, we're going into the
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  Nordics, we're launching the Nordics, right?
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  And there's this notion that it's 1 market, but actually the
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  reality is there is fragmentation across currencies,
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  across regulation, across payment methods.
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  You know what, What is the truth to that market and how easy is
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  it for people to move into the Nordic market We get.
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  A lot actually from mostly from the from the international firms
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  that come from abroad, right? When they sort of enter Europe,
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  they're like, Oh yeah, that's Euro, right?
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  And it's this episode. Easy, right?
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  And but then they realise that there are some markets that are
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  not yet in this episode and now is it not yet might not ever be
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  right. There's a political sort of
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  resistance in, in the, in the Nordic currencies or Nordic
• 12:02
  markets in order to, to do that. So, so reality is unfortunately
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  still that it is 3 separate markets, 3 separate settlement
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  system, payment systems, super local.
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  They're run on their own currencies.
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  And I I can probably count 1012 or so local rails if you compare
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  it to the UK where we've got what faster payments back shops
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  for a pretty big market. Easy.
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  A lot more in the smaller markets of the Nordics, right
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  So, so hyper fragments that are really hard to sort of enter,
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  which is makes my life in moonrise a lot easier because
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  that's a sort of what we've aggregated them and and enabled
• 12:39
  through a single API, right so it's so it's a good thing for me
• 12:43
  but a negative thing for the for the region because it makes it a
• 12:46
  lot harder for for companies to to enter if they don't go
• 12:49
  through us so it's. So why do so many of those
• 12:54
  fintechs and underestimate it, especially when they're trying
• 12:58
  to expand into the regions? And what's a good example of
• 13:00
  where those assumptions break down, maybe like particularly in
• 13:04
  Sweden, Yeah. I love that you bring up Sweden.
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  That is notoriously difficult because Sweden has an instant
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  scheme and an intraday scheme, as most markets have rights.
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  And the instant scheme got a lot of attention.
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  It's called Rick's Instant when it launched and, and, and there
• 13:21
  are some of the big banks, international banks that sort of
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  like were fastened on the wagon. It's like, yeah, we can
• 13:26
  absolutely give you access to to Rick's Instant.
• 13:29
  The challenge is that right now it's mandated for all the banks
• 13:33
  to receive, but not to send. So if you as a payment firm are
• 13:39
  trying to get access into Rick's instant, yes, you can do instant
• 13:43
  payouts. But if you're trying to collect
• 13:45
  money, actually more than 70% of their payments will fail, which
• 13:49
  is 70%. No one can survive on that,
• 13:52
  right? So you must be able to still
• 13:54
  default back to intraday, right? So it's so vital that you sort
• 13:58
  of like work with partners that actually do have the Nordic
• 14:01
  debts or like the debts specifically in Sweden here in
• 14:04
  order to sort of reroute the payments to the rail that's
• 14:07
  actually being used by the sending bank.
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  Because otherwise it's it's like you can't survive on 70% being
• 14:13
  yeah, cancelled, right? Yeah.
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  So Sweden is notoriously difficult I.
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  Think a few people might be messaging you for some advice on
• 14:21
  answering the market to be amazing?
• 14:23
  Cuts to speak to you today. We have a final section on the
• 14:25
  show called The Shelf of Shame where you get to nominate
• 14:27
  something from our industry to banish forever.
• 14:30
  What are you bringing forward for Dwayne and I today?
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  I, I, I must have to say the instant payments in Sweden just
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  because of the two challenges that it is bringing to the
• 14:41
  industry, right? And the misconceptions it's, we
• 14:44
  get so many payment firms that's been burned, right, because they
• 14:47
  thought they got access to instant payments in Sweden and
• 14:49
  then realized actually not really right.
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  So we're only being absurd. So I I think it's.
• 14:56
  Once you replace it with them. I would make the regulator
• 15:00
  faucets. I would make the regulator sort
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  of mandates that all the banks must properly integrate and both
• 15:07
  do with sending and receiving. Brilliant.
• 15:09
  Well for you I think and how you've described it and the pain
• 15:11
  points, I'm happy to to, to banish that today.
• 15:13
  Greed. Absolutely and.
• 15:15
  Where can people get in touch and find out more about lunar
• 15:18
  and moonrise as well? So obviously on our website,
• 15:20
  Moonrise dot Inc, they can search anywhere.
• 15:25
  It's yeah, freely available. Well, my parents will join us on
• 15:28
  the show today and enjoy the rest of the.
• 15:30
  Event Thank you. Thank you for having me.