EXCLUSIVE: “On The Money” – Nabil Manji, Worldpay from FIS in ‘The Fintech Magazine’

Merchant payment specialist Worldpay from FIS supports more than 225 markets in nearly 135 currencies. So how does it see CBDCs impacting its business? We asked Nabil Manji, Head of Crypto and Web3.

THE FINTECH MAGAZINE: You believe CBDCs are the future. So, how do they fit into your role at Worldpay from FIS?

NABIL MANJI: I have a team that is responsible for providing all of our payment products and services into the crypto ecosystem (exchanges, wallets, ramps, etc). I also focus on thinking about how we, by which I mean Worldpay from FIS, think about how blockchain-based solutions could either enhance, augment, or potentially replace some of our products and services that we sell more broadly.

In the last two years, we’ve gone from the questioning phase of ‘are CBDCs a thing? Are they going to materialise?’, to where I now confidently believe that they are coming. And I have some fun facts from the Atlantic Council to support that. In May of 2020, there were 34 or 35 countries formally exploring CBDCs to some degree. Fast forward to today, and there are now between 130 and 135 countries that are in some formal phase of exploration, design, or development.

That is representative of 98 per cent of our global GDP and is inclusive of 19 of the G20 countries, and major economies like the UK, Europe, and the US. If that many central banks are delving into CBDCs and spending the time and the resource to do so, it’s coming.

TFM: Do you believe it’s the adoption or acceptance of CBDCs that will be the most challenging?

NM: The way I think about it is, CBDCs are just another form of digital money. In our lives today, we have a lot of different forms of digital money in circulation. We obviously have the numbers that show up on the screen in our bank accounts, but we might also have balances in something like a Venmo, a PayPal account perhaps, or other sorts of applications.

To me, using CBDCs is just going to mean we are in possession of another wallet containing central bank digital money, and which we might use for certain things that make sense to us, like peer-to-peer payments to a person who is in the same country as us, or using them for certain types of merchant payments.

In terms of usage, I think they’ll have a lot of the same use cases that we have for money today, but there might be some additional features or benefits to using the CBDC over a Venmo, a PayPal, a debit card, or a credit card.

TFM: What role do PSPs like Worldpay from FIS have in the future of CBDCs?

NM: There are so many different things that you can do with money: you can buy assets, like a home or a car; you can invest it into equities or stocks; and you can pay people and merchants. But the core purpose of payments is to buy goods and services. And for that to be true for CBDCs, merchants need to be able to accept CBDCs. That’s where we come in.

As a payment processor, we try to be payment method-agnostic, and so central bank digital currencies will become just another payment method we offer. And that is important because merchants, especially SMEs, are very unlikely to create a direct integration with a central bank digital wallet system themselves.

“SMEs are unlikely to create a direct integration with a central bank digital wallet system themselves. They’ll simply go to their payment provider and ask if they’ll enable it”

They’ll simply go to their payment provider of choice and ask them if they’ll enable it. That’s where we come into the equation and drive CBDC adoption as a new payment method.

TFM: Is Worldpay from FIS already in the process of helping merchants understand the value-add of CBDCs?

NM: Of course, one of our inherent jobs is to obscure the complexity of payments, and, at the end of the day, most merchants won’t want to think about the complexities behind accepting an e-wallet versus a bank transfer, versus a CBDC.

A big area that we are looking at is how CBDCs will fit into the ecosystem of our platforms today so that we may harmonise the integration, the reporting, the reconciliation, and the fraud and risk management of it all. Then merchants, when they choose to enable it, won’t be facing a big integration process. It’ll be as easy as saying ’hey, this is one of the five or 10 payment methods I accept, and I know everything around it is going to work, just like it does for my cards, e-wallets, and bank transfers.’

TFM: Will CBDCs have the same cross-border capabilities and interoperability as other digital payment methods, like Alipay?

NM: It’s a good question, which central banks are working through today. It also falls right into the biggest question that people within the industry, like myself, are asking with regard to the conversion capability of one currency into another.

Like pounds to euros, for instance. Is it going to hop across to their distributed ledger technology (DLT) system and be escrowed somewhere, or what?

TFM: And how will it work with your FX?

NM: That’s another good question, particularly because the FX system that we have today has been built up over decades with the use of agreed-upon standards and conventions created through an authority or community consensus on an agreed-upon process of interoperability.

It’s the reason why our FX platform is so quick at moving money pretty much anywhere in the world now. When we roll out the new rails, the same sorts of questions will need to be answered in order to have interoperability. At present, we are a little uncertain about where that’s coming from, but it must be there.

TFM: How is programmable money going to change the way that institutions and merchants at least try to reduce fraud?

NM: I’ll use some live examples to illustrate this answer. At present, I am in the United States. During COVID, the US government delivered a lot of stimuli into their economy. Some of that went to businesses, some of that went to households and consumers, etc, and we now know, with the benefit of retrospection and some of the research, that some of that money was misused.

In fact, due to the scale of stimulus undertaken by the US, the total amount of misused dollars was significant. So now, imagine if you’re a government and you want to distribute a stimulus package to a business so that they may pay their bills, rent, and employees. What if you could create a special purpose CBDC wallet, and program it so that when it receives money, that money is only allowed to be spent on certain merchant category codes, i.e. certain types of goods and services?

Such traceability is just impossible with today’s system. Once money is placed into someone’s bank account, the recipient can pretty much do whatever they want with it, and if spent inappropriately then you have investigated after the fact, and work towards potentially penalising them. I therefore think that the accountability and programmability aspect of CBDCs will certainly become a very big part of preventing fraud.

This article was published in The Fintech Magazine Issue 30, Page 60-61