The radical new technology underpinning digital currencies enables fast, cheap, peer-to-peer payments and offers users a financial freedom impossible just a few years ago.As a result, traditional financial institutions have been somewhat shaken up, even admitting that they may have to adapt to survive.However, one area of finance has been more receptive to the benefits of bitcoin and other cryptocurrencies: payments.As a number of bitcoin payments companies sprung up to serve the growing user base of this new technology, mainstream commercial payments providers like Mollie, Stripe, Shopify and Digital River have added bitcoin to their list of options, alongside credit cards, PayPal and so on.Sign of the timesNext month’s Bitcoin Finance (Bitfin) conference in Dublin, Ireland – which aims to bring together the “brightest minds in payments, finance, business, banking and bitcoin” – is a sign of this sea change that is becoming apparent in the world of money.
Unusually for a bitcoin conference, the speakers and attendees are not all from bitcoin-based companies, or at least not yet – and one such speaker is Colm Lyon, CEO of Realex Payments.Headquartered in Dublin, Realex Payments is one of Europe’s largest and fastest-growing online payment gateways, processing payments valued in excess of €28bn ($37.9bn) per annum on behalf of around 13,000 retailers throughout Europe.The company works closely with major brands such as Virgin Atlantic, Aer Lingus, Paddy Power and AA Insurance to deliver its online payment process.CoinDesk spoke to Lyon to find out why the head of a fiat currency-based payments company is talking at, and even sponsoring, what is ostensibly a bitcoin conference.For many decades, explained Lyon, the payments industry has been dominated by legacy, legacy rules, systems, businesses and people. In the meantime, technology has advanced at rapid pace and created a payments/technology gap, he said, adding:“Bitcoin is far more than a currency, it is a catalyst to change in the payments industry – that’s why we are sponsoring and speaking at this important event.”While, on the surface, the payments landscape may seem very competitive, in reality, Lyon believes, there is still a long way to go.“Many of the innovations of today are new applications sitting on top of existing structures such as the card schemes,” he said. “Competition is the key to innovating, it is the single most important factor in making efficiencies and getting organisations to move.”“This is why we like bitcoins. Accepting the fact that there is still some time and development required to create the triggers that will encourage wholesale adoption, there is enough there today to encourage everyone in payments to redefine their strategies.”Looking at bitcoinSo if bitcoin and its digital cousins are so admired by Lyon and his company, and indeed the likely driving force behind a massive change in the industry, will Realex Payments add bitcoin to its business payments options, or perhaps to its personal wallet service Realex Fire?“Both Realex Payments as a gateway for online commerce and Realex Fire as a payment account are highly compatible with bitcoin – we are considering all angles here!”The regulation issueMany people involved with bitcoin see the regulation of related businesses by financial authorities as unnecessary and, indeed, something detrimental to the decentralised and trustless concept of digital currencies.Regulation would, they fear, place burdens on bitcoin businesses, such as licence fees and compliance hurdles, which would raise the bar to entry and end up effectively centralising aspects of the industry in the hands of governments.Michael Jackson, Skype’s former COO, agrees that bitcoin businesses should avoid being regulated as much as possible.He recently told CoinDesk: “Companies need to just carry on doing what they are doing – if they can make a case for themselves that they don’t need regulation, they shouldn’t even go near it.”“[Bitcoin] has sparked a debate about the need for real and deep innovation in payments.”Such libertarian ideals are not universal, however. Many businesses in the bitcoin sphere now acknowledge the need for some controls and standards, especially in the wake of the failure of Mt. Gox and the resulting loss of public trust in the bitcoin system.Lyon, too, sees the need for rules in certain areas of the industry, in fact he believes that they can be beneficial.Part of Realex Payments’ business is currently regulated, and the company supports the regulation of entities that engage in core payment services, whether these use fiat or not.He said: “The conduct regulation is good for the users of payment services – both personal and business alike. Regulation is essential for the future development and adoption of bitcoin.”How to grow the industryIn Ireland, Lyon said, there are no e-money licenced institutions and only a handful of payment institutions, and more are needed. Furthermore, he advocates the creation of a new regulatory body to oversee and develop this market:“We need more competition in the payment market and we believe that it is time to create a new industry wide payments regulator. A new body that can consider innovation, competition and the overall development and strategy of the payments market.”Such a body could, he said, fall under the veto of the central bank, but having a separate board and executive team on a new payments regulator would be “a significant step on the journey to ensuring Ireland remains at the forefront of payments innovation”.Lyon explained that the United Kingdom has taken great leaps forward in payments regulations by engaging with all players in the industry.Now, with the cooperation of the Payments Council and the Financial Conduct Authority, he said, the UK is at the early stages of forming a new payments systems regulator to focus on economic rather than conduct matters.“That will lead to innovation and competition in the market.”What the future holdsLooking ahead, Lyon sees a bright future for the payments industry, and considers the arrival of the new block chain-based digital currencies a boon, not a burden.“Payment processing is set to become more accessible, more integrated, safer and less expensive,” he said, adding:“Bitcoin has a big role to play here, not just in itself as a new way to transfer value, but also as a catalyst that has sparked the debate about the need for real and deep innovation in payments.”When you read words like that, coming from a payments industry leader who is not currently involved in bitcoin business, it’s hard not to be excited about the future.Payments concept image via ShutterstockColm LyonpaymentsRealex PaymentsOriginal author: Dan Palmer