Defining “payments modernization” is no easy task.

If you asked 10 different payment processors to define it, you might get 10 different answers.

But for the payment processor Thredd CEO Jim McCarthy, payments modernization is a core mission and not an abstract concept. As he told PYMNTS for the “What’s Next In Payments” series, modernization is about adaptability and flexibility, which are key to staying ahead of the curve in a competitive market.

“Being modern means having the flexibility and adaptability to react in almost real time,” he said, setting the tone for a discussion that spans the complexities of being a FinTech company: risk management; enabling technologies; international expansion; and the importance of partnerships.

For McCarthy and Thredd, being a FinTech company in today’s market means more than simply keeping up with technological advances. It’s about embodying an inherently flexible and adaptable mindset. McCarthy emphasized that Thredd’s mission is to remain agile, a characteristic that has allowed the company to navigate the tumultuous regulatory landscapes of new markets, particularly in its recent expansion into the United States.

“You look for things that are, in my mind, universal truths,” he said. “Payments are about risk management, compliance, reconciliation and all these things. The things we don’t talk about because we all like to focus on user experience and user interface. But it’s the plumbing that’s most interesting to me. Those who do it well and do it compliantly and safely, that’s where the focus needs to be.”

This ability to pivot quickly, establishing new relationships and partnerships, is central to Thredd’s strategy, allowing the company to offer its clients seamless entry into complex markets. McCarthy said this adaptability isn’t just a competitive advantage; it is a necessity.

No charm

The importance of compliance, such as anti-money laundering (AML) and know your customer (KYC), cannot be overstated, especially in a landscape fraught with regulatory scrutiny, McCarthy said.

“AML and KYC have been with us for a long time and it needs to be done,” he said. “It’s a quick way to shut down a program if you’re not doing these things. So, I think focusing on the less attractive aspects of FinTech is the whole point.”

Thredd positions itself as a facilitator for its clients, particularly those looking to expand into new markets. McCarthy highlighted the company’s role in providing reliable and compliant payment capabilities, allowing customers to focus on their core competencies.

“We want to be the best platform so they can move easily, in a compliant way,” he said.

This focus on supporting customers extends to supporting multiple payment types, including the increasingly popular debit transactions.

“To play with debit, you have to be Durbin compliant,” McCarthy said, referring to the Durbin Amendment, a regulation that affects debit card transaction fees in the United States. By ensuring compliance, Thredd enables clients to take advantage of new opportunities without the burden of regulatory concerns.

“My goal is to build compliant, easy-to-use and reliable payment capabilities so they can move on and focus on what they do well, which is often a software vertical, whether that’s travel, serving consumers or making payments” , he has declared. she said. “They can then focus on the user interface, the UX – and all these things are important – and the added value they have without having to worry is that their payment partner is reliable, secure and compliant. So, that’s the combination: letting them sleep well at night while they focus on growing their business.”

International expansion

Geographic growth remains a significant driver for Thredd, McCarthy said. The Internet is a tool that has made the world “relatively flat”, despite various regulatory regimes. Thredd aims to facilitate international expansion for its customers.

“We see our role as an enabler and the movement of customers around the world into new markets as a significant differentiator for us,” McCarthy said.

Latin America, Asia and now the United States are the key markets Thredd is focusing its efforts on. The company believes these regions are ripe for innovation and growth, using its adaptable platform to support clients’ global ambitions.

“Latin America is a big market that is growing dramatically,” he said. “We want to be there. We’re doing very well in Asia, and we’re about to land in the United States and look to expand.”

Partnerships and collaborations

In the interconnected world of FinTech, partnerships and collaborations are essential. McCarthy pointed ApplePay as the first example of successful collaboration, where Apple has worked with US banks and networks such as Visa AND MasterCard to create an innovative payment solution.

“The industry is about collaboration,” McCarthy said. “Apple opened up the devices, put NFC chips in the devices, and partnered with U.S. banks along with Visa and Mastercard to create what is now Apple Pay. And I just saw a report today. It is definitely one of the most successful payment inventions of my life. These things happened collaboratively. This prompted Visa and Mastercard to create tokens, which have become central to much of the discussion for both networks.”

Initiatives like the anti-fraud consortium driven by Half exemplify the industry’s movement towards stronger partnerships to combat emerging threats.

He said the missing element in the fight against fraud is efficient information sharing across the payments ecosystem, “particularly around identity and account theft. This will require a degree of cooperation that we have never seen before, to share information because that is the only way to stop this.”

Looking to the future: opportunities and innovations

As Thredd looks to the future, geographic expansion remains a top priority. McCarthy identified Latin America as a growing market and expressed interest in disrupting consumer credit.

“Consumer lending is an area ripe for disruption,” he said, pointing to Thredd’s commitment to exploring new avenues for growth.

The continued advancements of major networks like Visa and Mastercard also keep the industry dynamic. McCarthy said he anticipates announcements from upcoming forums, confident that they will bring further innovation.

“There’s always something around the corner,” he said.

See more in: anti-money laundering, credit, charge, News Featured, FinTech, Fraud prevention, Jim McCarthy, KYC, MasterCard, News, partnerships, Payments modernization, payments, PIMNTI news, Pymnts TV, Thredd, Visa, What’s next in the Payments series, The Future of Payments: Payments Modernization 2024

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