Defining “payments modernization” is no easy task.
If you asked 10 different payments executives to define it, you might get 10 different answers.
But for payment processor Thredd CEO Jim McCarthy, payment modernization is a basic mission rather than an abstract concept. As he told PYMNTS for the “What’s Next In Payments” series, modernization is synonymous with adaptability and flexibility, crucial for staying ahead in a competitive market.
“Being modern means having that flexibility and adaptability to react in near real time,” he said, setting the tone for a discussion that traverses the intricacies of being a FinTech company: risk management; enabling technologies; international expansion; and the importance of partnerships.
For McCarthy and Thredd, being a FinTech company in today’s market is about more than just keeping up with technological advancements. It’s about embodying a mindset that is inherently flexible and adaptable. McCarthy underscored that Thredd’s mission is to stay nimble, a trait that has allowed the company to navigate the tumultuous regulatory landscapes of new markets, particularly in its recent expansion into the United States.
“You look for the things that are, in my mind, universal truths,” he said. “Payments are about risk management, compliance, reconciliation — all that stuff. The stuff that doesn’t get talked about because we all like to focus on the user experience and the user interface. But it’s really the plumbing that’s the most interesting to me. Those that do it well and do it in a way that’s compliant and secure, that’s where the focus needs to be.”
This ability to pivot quickly, establishing new relationships and partnerships, is fundamental to Thredd’s strategy, allowing the company to offer its clients seamless entry into complex markets. McCarthy said this adaptability is not just a competitive advantage; it’s a necessity.
The importance of compliance, such as anti-money laundering (AML) and know your customer (KYC), cannot be overstated, especially in a landscape fraught with regulatory scrutiny, McCarthy said.
“AML and KYC have been with us for a very long time, and you’ve got to do it,” he said. “It’s a quick way to close a program if you’re not doing those things. So, focusing on the less sexy aspects of FinTech, I think, is where a lot of the action is.”
Thredd positions itself as an enabler for its clients, particularly those looking to expand into new markets. McCarthy highlighted the company’s role in providing compliant, reliable payment capabilities, allowing clients to focus on their core competencies.
“We want to be the best platform so they can move in easily, in a way that’s compliant,” he said.
This focus on enabling clients extends to supporting diverse payment types, including the increasingly popular debit transactions.
“To play in debit, you’ve got to be compliant with Durbin,” McCarthy said, referring to the Durbin Amendment, a regulation that impacts debit card transaction fees in the United States. By ensuring compliance, Thredd allows clients to capitalize on new opportunities without the burden of regulatory concerns.
“My goal is to create that compliant, easy-to-use, reliable payments capability so they can move in and focus on what they do well, which is oftentimes a software vertical, whether it’s travel or serving consumers or doing payouts,” he said. “They can then focus on the UI, the UX — and all those things are important — and the value prop that they have without having to worry about is their payments partner reliable, secure compliant. So, it’s that combination — letting them sleep well at night while they focus on growing their business.”
Geographical growth remains a significant driver for Thredd, McCarthy said. The internet is a tool that has made the world “relatively flat,” despite varied regulatory regimes. Thredd aims to facilitate the international expansion of its clients.
“We see our role as an enabler to that and passporting clients across the globe into new markets as a significant differentiator for us,” McCarthy said.
Latin America, Asia, and now the U.S. are key markets where Thredd is focusing its efforts. The company views these regions as ripe for innovation and growth, using its adaptable platform to support clients’ global ambitions.
“Latin America is a great market that’s growing like crazy,” he said. “We want to be there. We’re doing really well in Asia, and we’re just landing in the U.S. and looking to expand.”
In the interconnected world of FinTech, partnerships and collaborations are indispensable. McCarthy pointed to Apple Pay as a prime example of successful collaboration, where Apple worked with U.S. banks and networks like Visa and Mastercard to create a groundbreaking payment solution.
“The industry has been predicated on collaboration,” McCarthy said. “Apple opened the devices, put the NFC chips in the devices, and worked with the banks in the United States along with Visa and Mastercard to create what is now Apple Pay. And I just saw a report today. It’s one of the most successful payment inventions of certainly my lifetime. Those things happened in partnership. That drove Visa and Mastercard to do tokens, which has become fundamental to a lot of the talk track for both networks.”
Initiatives like the anti-scam consortium led by Meta exemplify the industry’s move toward more robust partnerships to combat emerging threats.
He said the missing piece in the fight against fraud is efficient sharing of information across the payments ecosystem, “especially around identity and account takeovers. That will require a degree of cooperation that we haven’t seen before, to share information because that’s the only way you stop some of this.”
As Thredd looks to the future, geographic expansion remains a top priority. McCarthy identified Latin America as a burgeoning market and expressed an interest in disrupting consumer credit.
“Consumer credit is an area that is ripe for disruption,” he said, indicating Thredd’s commitment to exploring new avenues for growth.
The continuous advancements by major networks like Visa and Mastercard also keep the industry dynamic. McCarthy said he anticipates announcements from upcoming forums, confident that these will drive further innovation.
“There’s always something around the corner,” he said.
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