Ripple, together with Coins.ph, BitPay, Blockchain.com, and other well-known players in the crypto industry and beyond formed the Open Payments Coalition to create an alternative payment system – PayID – to make sending money as simple as sending email.
A user does not have to worry about which email service they use to send messages to others. The same is true with text messages these days. Texting is not restricted to a specific mobile operator.
Yet, this is not true with sending money on the Internet. While there are many connections, payment rails, on-ramp, etc, the reality is that these ‘compatibility’ is complicated, there is no “standard” and it often requires much higher fees from the sender of money. Payments are closed networks, that simple.
Enter PayID, which allows any individual to send and receive money just like they do email. Every user has their own “easy-to-read” address that’s easy to remember, a stark difference from a bank account number or even a Bitcoin address. At its core, PayID will allow for interoperability between payment networks.
PayID is open source, free, and claims to be simple to integrate with any institution large or small – from banks to ride-hailing apps. What’s more, according to the press release sent to me, there is a compliance solution built to satisfy requirements from the Finance Crimes Enforcement Network (FinCEN) and recommendations from the Financial Action Task Force (FATF).
Notable among us in the Philippines, Coins.ph is a member of the coalition that will implement PayID. According to Lisa Kienzle, Head of International Growth in the company, “PayID is a significant step in driving interoperability in the financial ecosystem and simplifying the process of sending and receiving money through multiple online platforms worldwide.”
In theory, this is excellent. Who does not want a simple and cost-effective solution in sending money? PayID is supported by a plethora of names in finance and crypto, committing to the coalition’s vision of simple sending of money: crypto exchange BitStamp, alternative browser Brave, Tangem, Wyre, Huobi, Mercury FX, BitGo, and BitPay, among others.
So who does not want a simple and cost-effective solution in sending money? The Open Coalition’s members list is impressive, but it lacks the membership of key players, like PayPal or Square, and other traditional financial players. The reality is that many payment platforms thrive on fees. The lack of interoperability often allows them to charge more. There is also no incentive for a user to register on another platform if he can already send money to that other platform cost-effectively.
The lack of banks in the coalition is another miss, although one can say anyone in the coalition can act as an intermediary to reach a bank account. (Update: Ripple’s PR reached out to me to say that one member of the coalition – Sygnum – is a bank.) For example, a person who receives money via PayID to their Coins.ph account can transfer that money immediately to their bank account through InstaPay or PesoPay.
Still, PayID is a massive initiative that’s probably just waiting to catch on. On its own, the Open Payment Coalition counts a record of more than 100 million consumers worldwide. That’s a lot, except that Paypal has 325 million active accounts.
But if PayID catches on and manages to attract banks and key payment platforms, the era of remembering multiple account numbers for a single person might be over. I still have a lot of questions about PayID and if I am able to get the approval to interview Ripple’s Southeast Asia Head, I will share it here.