Uber on Market Megatrends: BNPL, Payments Innovation and Fintech Future

Armaan Brar, Payments Partnerships at Uber

Uber is often cited as the ‘king’ of the sharing economy’ - seen as one of the world’s most innovative disruptors and a modern example of an ultra successful start-up. Having shaken up traditional ways of doing business, Uber has played a large role in the rapid growth of the sharing economy market which has risen from $26 billion in 2013 to a whopping $110 billion revenue market ten years on. So, what’s the secret to their outstanding success?

We asked Armaan Brar, Payments Partnerships at Uber, his perspective. Armaan is an expert risk taker, innovator and Fintech fanatic - driving Uber’s payments innovation across the APAC region.

During this exclusive interview - we hear his predictions for the future of alternative payments, Uber’s vision as they expand into the Fintech space and...

• How to gain greater efficiencies through payment partners
• The importance of positive consumer outcomes when it comes to BNPL
• The obstacles in accelerating innovation in the alternative payments space
• Web 3.0 and the possible implications for our future

How are you working with payments partners to extract greater efficiencies and thus deliver a better experience for your customers?

In terms of working with payments partners, it’s about making sure the payment stack is relevant for the region - meaning that you must offer the right selection of payment methods in every country that has a separate nuance. It could be from offering local payment methods to making sure you have, of course, card acceptance and global.

It’s important to look at the payments experience as a sort of a marketplace of its own where you're not just building for the consumer experience, but making sure that there is the relevant pricing both for the merchant and in terms of offers for the customer. And, that the check out is as seamless as possible.

Buy Now Pay Later represents one of the biggest and fastest changes to consumer credit in decades and is growing rapidly in part because it serves an underserved market of younger, lower-income and more racially diverse consumers. How do you think we can ensure the best consumer outcomes through Fintech innovation?

I think that's the whole idea of Fintech innovation or any innovation for that matter. As innovators - we are supposed to be and focused on consumer experience or outcomes. So if you put the consumer in the centre of everything that you're building, then the strategies that you come up with are going to be very unique and different and hopefully that's what we can do with or the industry is doing with BNPL. 

Just as a differentiator from where you know you have credit cards today, there is no formal, you know, paperwork or application processes that are much simpler.

Credit card systems have annual fees. BNPL can surpass that. It is more around late payments or the revenue that they generate that is important as we want to know consumers are repaying the loan or the credit.

Demand is ramping up. I think making sure those two elements converge at some point will make sure that it's a consumer outcome for the best sort of possible experience and a new sort of technology evolving.

Image Source: https://www.uber.com/en-ZA/blog/new-digital-payment-options-rsa/

When it comes to alternative payments - what is preventing acceleration of innovation in this space?

BNPL is one of the fastest growing alternative payments - approximately 3% of ecommerce today and predicted to become 5- 6% over the next couple of years. That's a massive chunk from a global perspective moving towards BNPL. But of course, it's not the first alternative method - BNPL was preceded by many different form factors, digital wallets being one of them.

A region, say APAC or EMEA, is not as easy to take a payment stack and replicate it for the rest of the globe or another country for that matter. I think it's challenging for wallet providers, especially stored value. If we look at examples like ‘PayTM’ in India or ‘Paypay’ in Japan, which are in-country solutions that bridge the gap between the infrastructure which was not as accessible for the masses versus what infrastructure was available to those who had a credit card. However, it’s not scalable from one country to another because of the way regulations are built. This is something we’re focused on solving.

It's not that digitization has ramped up to a place where we can live without cash as the prevalence of cash and local regulation is a hindrance in ramping up alternative payments evolution. The regulatory aspect of expanding from one region or one country to several has happened - PayPal has done it, but they've done it not just for stored value. They've done it primarily for cards - the funding mechanism still remains the same.

In your view, how will crypto currencies disrupt the digital payments landscape and what are the challenges when it comes to keeping up with current regulatory changes across different countries?

Cryptocurrency is fundamentally going to be different from the sort of payments seen today, in that they're going to be decentralised. This is a core difference in how cryptocurrencies are built, there is no central authority governing the currency and in addition to that, open source software is going to be trusted as an intermediary which is permissionless without authorization from a governing body which creates a very different outlook to the whole ecosystem. The industry creates more avenues to embed artificial intelligence or to build on top of what we call the ‘semantic web’ - creating a whole self evolving system.

Improving the setup and technology can result in many new options and payment methods for consumers, we've seen this with Ethereum. The code base for this currency is very different from Bitcoin for example, since you’re able to build smart contracts on Ethereum and not just move money, also you can create financial services. Options are extremely vast, from this perspective, I think it opens up many new options in terms of what is possible for marketplaces, driving efficiencies for companies like Uber or Amazon because it reduces the number of intermediaries. For example, with USD currency, there's going to be a FX intermediary and a recipient bank account with a local currency.

Then, there's going to be the payment partner which sends the money out through that bank account to the driver or the owner or the courier or delivery person. Several entities are involved to get one disbursement processed. But when you consider cryptocurrencies, the whole thing within storing the value, converting the currency, paying into the right wallet, all of those three elements can be combined into one entity, making the process hyper efficient. It creates a much more scalable solution, allowing for a global approach for any sort of payments, disbursements or payouts to your owners on the platform. This is one example of the potential but the lack of regulation and the challenges will be scaling up these efficiencies. In fact, there are many risks; regulatory risks, cyber crime etc and these considerations will become more important as we scale up our decentralised web.This could make enforcement of any regulation very difficult - which countries' laws would apply to a specific website? An entity which has no authority or a centralised authority is going to be very hard to determine. Meaning it won’t be easy to enforce regulation or maintain it. 

Image Source: https://coingape.com/web-stories/uber-ceo-we-will-absolutely-accept-crypto-in-the-future/

Will Web 3.0 create a level of decentralization which is even beyond what we have with the economy?

From a technological point of view, from a regulatory point of view which will be needed or are being put in place are vast. I believe web 3.0 will fundamentally create a sort of differentiation from Web 2.0 or the semantic web.

As such, decentralized apps are essentially the decentralized dead apps as they call them, which are going to be front and center, allowing a lot of automation personalization to exist.

As an example - you’re planning your vacation or you're on a budget, spend hours sort of scanning through different websites looking at flights and accommodation, car rentals etc.

With Web 3.0 there could be an intelligent search engine or bot which could sort of collate all this information and generate it sort of tailored package based on your profile and preferences. It has the potential to create a lot of efficiency but efficiency should not be created just for the sake of efficiency. It should also take into account how the current system can be upgraded. I think that aspect of it is not clear to me. At least I don't know how we jump from where we are now to the metaverse future that everyone is so excited about.

I think it is going to be a lot more challenging in actually building that bridge. Then what we are probably envisaging today.

If you think of Web 1.0, representing the black and white movie era, web 2.0 is color and web 3.0 is an immersive experience. That's what we're thinking about, or at least is being promised. If we consider 2010’s as the decade where 2.0 became dominant or became a dominant force in the global business and cultural landscape. 3.0 could be this decade’s dominant force but it's going to take time. The momentum is there and it's something that is going to be super decentralized, but I don't know how we bridge that gap between where we are and where we want to be.