Kamran Hedjri on the past, present and future of payments

PXP Financial's chief executive officer spoke to me about where he sees the future lying, and what PXP are doing in the payments sphere

Kamran Hedjri is the chief executive officer of PXP Financial, a paytech that enables end to end payments both domestically and globally.

I sat down with Kamran to talk all things payments, including his long career, what he sees as the current hot topics, and what the future of the payments landscape may look like.

Thank you so much for speaking to me today, Kamran. Please introduce yourself!

I’m the chief executive officer of PXP Financial; I’m also on the advisory board of the Payment Association and I’m part of the Cross Border Working Group. I’ve been in the industry since 1994, and as you can imagine have seen a lot of changes. Paytech is something I’m very involved in, and there are several topics close to my heart, such as the cross-border payments process.

There’s a lot of noise around cross border payments at the moment from all aspects of fintech. Do you think that’s the next hot topic, simplifying the cross-border process?

I think there is definitely a need there. The cross-border market is huge, it’s worth £146tn. Is it done efficiently? I think everybody agrees that it’s not. There are many KPIs that people are seeking to change: it’s costly, it’s slow, it’s not especially transparent. Overall, it’s still very complicated.

There are some parties that believe it’s ok; as long as the transaction happens and there are some good domestic instant payments schemes, it works well. But we’re living in a time and age of globalisation, and so the cross-border process is getting more complicated. With BRICS coming together, they’re creating payment schemes and interoperability between themselves. Are these compatible with the rest of the world? Perhaps not.

What do you think are the biggest blockers to faster cross-border payments?

There are a lot of players in the chain. You’ve got the bank, you’ve got the intermediaries, and then you’ve got the receiving party. And the whole process needs to go through a series of regulatory checks, such as anti-money laundering (AML), no sanction lists, what have you.

A lot of those processes aren’t automated; you still need somebody at the intermediary bank to press a button, to manually go through a list and approve the transactions. With 3,000 transactions per day, and employees in multiple jurisdictions, it makes the cross-border process more costly and much slower. Regulation is of course necessary, and it’s good that we have regulations in place, but the processes are not adapted to it.

Do you think the rise of the challenger banks like Monzo and Revolut will change that? They may be able to automate these processes where the traditional high street banks with entrenched processes can’t?

I think the challenger banks think more out of the box. If you look at the Revolut customer experience, for example: Revolut are using different processes to traditional banks, they create their own ways of doing it using different systems, and that process is much quicker and much easier.

One thing that PXP is working on with PayAll, and MasterCard, is a strategic partnership to leverage the fact that MasterCard has got liquidity across the globe. They can utilise that liquidity to accommodate cross-border transactions; rather than waiting for the money to move across the border, we can use that liquidity to pay the person waiting for the money.

On top of that, if you think even more outside the box, the blockchains and stable coins and cryptocurrencies are other means of transacting. And soon, hopefully very soon, the CBDCs are coming and that will be another channel. There’s a lot happening in this sector and it’s making it a very interesting place to be.

Thinking about CBDCs: one of the key aspects of crypto is that it’s unregulated, but CBDCs obviously will be regulated. Do you think the CBDCs might be held back by regulation, or do you think they will affect a change on that regulation?

I think the regulation is required; we cannot bypass it. The regulation is good, it creates a safe environment that you can operate in. However, if there’s over-regulation it stops the innovation. There’s MICA in Europe and the European Union, so the regulation is coming. At the end of the day, it’s going to create an environment that is going to promote the expansion of CBDCs.

A good example I can give you is PSD1 (Payment Service Directive) and PSD2, with PSD3 coming soon. Prior to PSD1 & PSD2 there was an environment that meant non-banks started to participate in electronic payments; these payments were not regulated, nobody knew what needed to be done. Following the introduction of PSDs 1 and 2 there are now clear rules that set out how you can actually approach and complete an E-money transfer and participate in the payment process as a payment solution in the value chain. We see this with so many fintechs; for PXP, for example, regulation has been a very positive thing, because we started as a gateway, and then we started to see that we could increase our value in the process. We applied for licenses and became a principal member, before we started to participate in electronic payments and become a full-blown acquirer.

You’ve been in fintech and paytech for 30 years; you must have seen some incredible changes in the industry in your time?

Absolutely! The whole process of digitalisation, for example. I can remember in the 90s when the internet first launched; online shopping wasn’t really a thing. That started to increase and suddenly everybody was talking about how they could participate. That’s how we started to grow in the industry, through our integration of solutions, so that we could actually help the people to use digital payments so that they could purchase digital goods and services.

Then we had COVID, where there was a huge shift because the stores were closed. People’s behaviour moved away from physical shopping towards ecommerce. People don’t want there to be a difference; whether they’re shopping in-store or online, they want the experience to be as seamless and as painless as possible.

There’s always an evolution around how that’s happening. Take mobile payments for example: it was a long time coming, people were saying next year is going to be the year of the mobile payment! All of a sudden it came and took over. I don’t know how many of your transactions you do through your mobile, but for me it’s nearly 100% of the time; I just default back when the mobile is not working for whatever reason. Mobile payments and digital wallets are a big thing in our life. Think about blockchain, which wasn’t there, and the cryptocurrencies were not there, and now we get more and more people interacting with them.

When I was in New York earlier this year I visited a Whole Foods, and they had Amazon pay where you could pay with your fingerprint or your thumbprint. Do you think that’s going to be the next evolution?

Yes, I think so. I think biometrics are going to be used more and more, with the recognition of your face, your smile, smile to pay. All those biometrics are going to be more and more relevant.

But speaking specifically of Whole Foods and Amazon, I saw an article about how they did it at the beginning. What they actually had was a big customer service department in India, and the people were watching so they could track what the customers were buying. They had this big department filled with people watching the customers’ behaviour, who then were feeding that data into AI to allow them to automate a lot of those processes.

Take seamless payments: you don’t want to be bothered by the payments process, and you always have your face with you, you don’t need your card or PIN. That’s the best way to pay.

It works for convenience, but do you think it works in terms of security?

I’m in two minds. More and more are we living in the age of deep fake and AIs and all those things. It’s sometimes scary what AI can do. But at the end of the day, I think this is going to increase the security; all the biometrics that they put in place are going to increase the security for the customers without impacting on convenience.

But do you think there might be a pushback around that, from people who are concerned about privacy?

Of course, of course. Privacy is another big topic, alongside GDPR and data privacy. So there’s a balancing act: how far can I go and what is allowed? There will be always those challenges around data privacy. But how can you actually overcome that? There are clear rules and regulations around GDPR, for example, and that defines what needs to happen on data. As well as this, AI is also getting regulated in Europe, so there are now, or will be soon, clear guidelines around that. These regulations bring all these things together in a better format.

Focusing on PXP; where do you find the future lying, the immediate as well as the medium and long term?

What we do well is that we service our customers in an innovative way. We try to go with what they need and their requirements. The digital wallet was a big thing; we’re working with tokenisation, which is something that increases the security in removing the PCI requirements to some extent.

One of the topics that we’ve started to introduce more and more to our organisation is AI. We’re looking into more automation, then scalability with speed and efficiency, as well as removing the errors in the system.

Another thing is one we’ve already discussed at length, which is cross-border payments. That is very, very, very close to our hearts, particularly the idea that we can cover the payment methods across the globe. We’re in quite a few jurisdictions already, but we’re looking at expanding in Africa and the APAC area. Creating that global coverage is a key, getting more and more merchants that want to go beyond their borders and offer their services across multiple jurisdictions.

Something we need to focus on, and we do, is customer experience. We are a true omni channel, so we can cover end to end. It’s hugely important for us to create a seamless experience across all channels, whether it’s mobile, web, or in-store. Recognising each customer and providing the specific user experience they need is essential. From the merchant perspective, they want to know more about the customers; we have a huge set of data. And informing them about the data and the data insight is a big topic as well. So that’s where we’re also going to focus, providing more insight and more data for them.

Related: Kamran Hedjri on web3.

Image: PXP Financial

Robert Welbourn Robert Welbourn is an experienced financial writer. He has worked for a number of high street banks and trading platforms. He's also a published author and freelance writer and editor.