Around the year 2000 I was working on both my historical research about the development of payments in the Netherlands and in the payment policy department of the central bank. As a result I started to gain some more insight into the 'unchangeable' dynamics of the payment industry. I summarized these in a presentation that I gave on the First European Financial Cryptography Conference in Edinburgh. You can download the presentation here.
The location in Edinburg was very historic by the way. We were in the library, if I recall correctly, the library of the former parliament of the city. And we were in the hometown of John Law, a famous payment innovator, who was born in Edinburgh and at one point in time wrote: Money and Trade considered (with a Proposal for supplying the Nation with Money). Being asked to provide a key note speech, it seemed appropriate to me to refer to John Law, both in the title of my presentation as in the caveat at the end.
Overlooking many centuries of payment history, my main conclusions were:
1 - Payment techniques travel along with trade,
2 - as did John Law:
3 - The most efficient model is the centralised (giro) model . .
4 - but religion/legal rules determine local specifics of instrument use
5 - Kings and governments always want a piece of the action
6 - Country specific instruments only work with a fair deal of trust
7 - Security must be learnt - the Dutch banknotes
8 - Convertability into ‘real value’ is essential but not essential
9 - Accepted because confidence in the ability to respend it
10 - Any payment is in itself quite uninteresting to the user
11 - The payment product is a hygiene factor
12 - User risk depends on more than technical security
13 - Operating a payment system can be very profitable
14 - Respect existing deeply rooted traumas and successes
15 - Interoperability has never been a major problem for end-user
16 - Reduce the number of messages in payment protocols
17 - Don’t overvalue anonimity
18 - Multifunctionality won’t work with more than 1 organisation
19 - Critical role for government and the large retailers
20 - How to make new payment mechanisms work ?
And while all this took place at the second floor of the library in Edinburgh, his original book, as sent to parliament, was downstairs. What really made my day is that afterwards, when I went down, the librarian was so kind as to allow me to have a look at the original book, Money and Trade, that John Law sent to parliament (despite the fact that the library was officially closed and it was officially her free Saturday)