Rise of the platforms

Big tech firms like Google, Facebook, Apple, Alibaba and Tencent want our payments data. Are we right to share it with them? “The entry of BigTechs into the provision of payment services raises serious market power and data privacy issues,” Agustín Carstens, general manager at the Bank for International Settlements (BIS), said recently. Although the tech firms have often only been in business for a decade or two, their market valuations are now many multiples higher than established payments players like the big banks or the credit card companies. According to Carola Westermeier, our guest on the latest New Money Review podcast, we’re witnessing a growing ‘platformisation’ of finance as the internet companies seek to monitor our financial activity while we’re using their websites and apps. “The ambition of tech-driven companies to gain access to financial infrastructures is closely linked to the growing importance of transactional data,” Westermeier wrote in a recent paper. “Payment services such as Google Pay, Amazon Pay and Apple Pay have built their platforms on top of these existing payment systems to collect that data,” she says. “Access to transactional data and control of payment infrastructures has political relevance and even geo-political implications,” Westermeier says. In the podcast, she explains why financial transaction data is so important and suggests that citizens worldwide need to use the financial system in a more conscious way. She describes the three models currently being used by tech firms to try to build payments businesses and explores their prospects of success. Westermeier explores the tensions created by the rise of digital payments and the declining use of cash. And she talks about the competitive playing field in payments between new entrants and incumbents.