Q&A: EPA’s Tony Craddock

The Emerging Payments Association (EPA) is a UK-based commercial community of 130 payments companies, including the likes of Mastercard, Visa, FICO, Fiserv and FIS. Founded in 2004, EPA members transact more than £6trn globally, and employ more than 300,000 people. Tony Craddock, director general of the firm, helped to found it and is spreading the message that the payments industry can do more in collaboration than it ever could in competition. PaymentEye caught up with him to discuss his vision for the future.

What brought you into the industry?

I’m first and foremost a champion of communities. I’ve set up a whole series of trade associations through my career. Up until the last 15 years I had been doing it as a volunteer. As an entrepreneur, I could always sense opportunity. And the opportunity was that people in a fast-moving world can do a lot better if they collaborate rather than if they compete.

There’s lots of writing about this about communities and the power of collaboration and how much difference we can make, but there’s very few examples of organisations that have been set up specifically to facilitate that. That’s because while we know what collaboration looks like we actually don’t really get taught how to do it.

So, I looked first for an industry in which collaboration could be rewarded. Secondly, I looked for a model that I could overlay on to that community. When you put together the fast moving, technologically changing, regulator-influenced payments industry and when you take the model of a trade association which is around creating collective influence you get something very exciting.

That’s what we’ve done at the Emerging Payments Association. Now I find myself – by accident or by design – as the director general of the only trade association dedicated to payments in the UK. It’s also the only one growing at 20-25% and which has communities in Africa, Europe and Asia.

What are the main challenges you have faced over the past 15 years?

Positioning ourselves compared to other communities is really important. Some people can join more than one community, but not that many people do. We have some people who are part of the UK Finance, for example, as well as the Emerging Payments Association, but for most people, they need just one.

The second challenge I’d say, is making the making intangible benefits tangible. When you join a gym you’re getting access to a location that allows you to get some benefit, like a fitter body, enjoyment and a chance to meet people. Communicating the intangible benefits of joining a trade association is more difficult, especially when there is no clubhouse or jacuzzi.

I think generally people want to believe in us. People who we meet, they share our enthusiasm for the community. I think there’s two sorts of successful companies in payment services: those that have joined the EPA and those who are going to. Generally, we get them all eventually.

I suppose another challenge is probably knowing which new technology the back. We were very interested in in blockchain at the beginning. But in fact, we were cautious about backing it completely as the solution to people’s payments problems. That was why we were cautious because in fact, the blockchain has only marginal impact potential on the payments industry in the short term. Maybe it will in the medium and long term, so when we get to the medium term, we’ll be looking at it in more detail.

Turning down new ideas can be a problem, too, though. So many things we can be doing with this community. But we’ve got to be really focused on delivering the value that our members need, during that time and time again, and doing really, really well.

How has the collaborative mood in the industry changed since the EPA opened its doors?

Ten years ago, I do think we have helped remember 10 years ago, payments were seen as the plumbing of financial services. It was big, lumbering pipe run by big lumbering organisations. That was necessary to security and to get the economies of scale required to run the payments ecosystem.

The Financial Conduct Authority (FCA) has really been helpful driving an open mindset. Things like open banking mean are you are by definition having to be more collaborative and more open. I think the financial crisis helped a particular part of the industry as well, because the central bankers and the government said that they were never again to be held to ransom by the failure of big banks, and a compromising of their ability to have a secure financial system. They were really focusing on opening up the market.

When you open up the market, you end up with new players who individually can do little, but collectively can do a great deal. Collaboration is a tangible, practical thing. It’s working together to solve a common problem, working with each other’s strengths and overcoming each other’s weaknesses in a way that is impossible with each individual organisation. I don’t think [EPA] created the wave, but I think we’ve ridden it.

Where do you see that wave crashing over the next two years?

Well, the nice thing about waves is you get a series of different ones, and sometimes they take a long time to break. Contactless payments took a long time to break but look at the impact it has had on consumer buying behaviour. We’re going to see an increased digitisation of payments. People will be paying with phones and their rings and the cards a lot more often than paying for things with cash.

I see consumers getting hungry for the information that helps them become more in control of their financial management. We’re going to see people expecting access to information. I was with my wife this morning. She said, “What’s this £36 from an Amex expenditure?” It had popped up on her phone. I could quickly look at my app and tell her what it was. “Oh yes, that’s fine,” she said. I didn’t have to wait to the end of the month and look at the bill to get that information, it was there in real time. We’re going to see consumers e looking at that as the as the minimum rather than the maximum. Companies that don’t provide that will be weakened.

Obviously, Open Banking will be slow to be adopted. But we’ll be seeing all sorts of new use cases that will come through. Nobody will know that they’re open banking enabled, but they’re going to see a whole new change in the value chain of payments, which is going to be around open banking.

We’re going to see a whole plethora of those organizations coming through, and with that will come a shift in how banks operate. The ones that are smart and nimble, and collaborate with fintechs will be the ones that actually can capitalise on their balance sheet and their status in the market. Of course, there be other which will not be open to that. We have Barclays, Lloyds, NatWest, and RBS in our community, and HSBC doesn’t return our calls. So, who would I say of those five companies is the one that is likely to be left behind? Who’s going to call HSBC?

Another really important change will be the proliferation of digital identity. People having a commonly accepted digital identity that is available through a whole range of different channels is going to become not only accepted by consumers but expected by consumers. In 2006, it was something called the identity card in the UK, and after three years they disbanded it, it was a complete failure, costing several hundred million pounds. It was ultimately flawed and sacrificed on the altar of social compliance.

What is happening in the adoption of new payment technologies, enabled by the mobile phone and new regulations is that consumers are becoming increasingly willing, particularly younger consumers, to accept that “If I tick this box, that gives my service provider permission to send me messages that are relevant”. This is a wonderful combination of new technologies, regulation, and an entrepreneurial mindset in our industry that is actually going to help change consumers and how they think about this stuff. It sends a shiver down my spine in excitement at what could be possible in the future.

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