2025 is here, and the payments industry will navigate uncertainty across regulatory, geopolitical and economic fronts.
A new presidential administration will sweep into office, and as Jim McCarthy, CEO of Thredd, told Karen Webster, it’s anyone’s guess how things will shape up. We may see seismic shifts at the Federal Reserve, the FDIC, CFPB and other agencies. In the meantime, proposed rules, legislation, lawsuits and tariffs may touch on everything, from interchange fees to how FinTechs are monitored.
For executives, McCarthy said, planning for that uncertainty is akin to what he’s witnessed living in North Carolina and observed during NASCAR races — where long-term strategy meets short-term maneuvering.
“You drive straight through it all,” he told Webster of the challenges that are front and center and that still lie ahead. “You drive through the smoke and the debris … these [drivers] know that, and they step on the gas.”
So it is with payments, he said, where anticipating and reacting to changing competitive dynamics demands the resolve of a NASCAR driver and the flexibility to make changes in real time — and evolve.
As he put it, and as for the long-term strategy, “The world is flat for payments. People want to be able to transact globally. … It’s not just about banks and it’s not just about FinTechs. Payments occur everywhere.”
To really ignite innovation in payments — to make full use of the payment rails that are in place and are being built and expanded (such as real-time rails) — executives must take a 10-to-15-year horizon as innovations drive consumer adoption.
Apple Pay, for example, has been around 10 years. Payments networks Visa and Mastercard have brought tokenized transactions to the forefront through that same timeframe. Acceptance — on the part of merchants and consumers — fosters the ability to create additional value through the networks and build on top of those networks with value-added features.
McCarthy said that embedded finance will continue to reshape how consumers and businesses access funds. Account-to-account payments will gain ground in the age of open banking, and the Internet of Things — where commerce is available at every endpoint — will cement the fact that “You need access to all the devices available and other accounts too.”
Artificial intelligence will have its place with all of this, he added, existing as an “interesting tool” that is useful for automating a broad range of tasks.
As McCarthy told Webster, with a nod to real-time payments, especially, “We’re building out the capacity for when the demand shows up, but we’re not overbuilding.”
Crypto? The use cases have yet to be fully developed, McCarthy said, before the tipping point is reached for bitcoin and stablecoins to be used fully in commerce beyond a relatively small band of adherents.
Thredd, for its part, is focusing on back-office risk and compliance, helping client firms beef up their own back-office processes as they gear up for new rules and regulations, and is on track to deliver a new compliance platform in the near future. Over the longer term, the company may eye acquisitions in the embedded space, McCarthy said.
“We’ll leave our legacy platform behind and move into the future with our ‘most modern of the modern players’ technology stack,” he said. “Everyone that touches financial data has a ledger that needs to be licensed. … This is an area where we’re going to focus and do very well.”
The winners in banking and among the FinTechs, McCarthy said, will be the ones “who put the noise to the side, are executing and are recognizing that they may need to course correct — and that’s true each and every day.”