We had the pleasure of speaking with Marc Rubinstein, author of Net Interest, a financial sector newsletter, about his essay, Dee Hock, the Father of Fintech.

Marc writes:

“Payments…is the battlefield of finance for the next decade.”

So said Jes Staley, CEO of Barclays Bank, at the end of 2019. Since then, the battle has only got more fierce. Last year was a record for venture funding in payments and new models like Buy Now Pay Later have picked up momentum. Anyone who did their Christmas shopping at JD Sports in the UK will have a first-hand account of how the battlefield looks:

Envisioning how the battle ends is hard because it’s being fought on multiple fronts: electronic versus cash, credit versus debit, open network versus closed, crypto versus fiat, regulated versus unregulated, inside the financial services system versus outside.

But an analysis of what happened before may be helpful and there’s no better place to start than with the Goliath on the battleground: Visa. Last year, the company facilitated $8.8 trillion of payment volume globally. It generates $22 billion of annual revenue and earns a margin of 68%. The Department of Justice has accused it of exploiting a monopoly in online debit transactions, where it has a share of 70% in the US. The company reckons its “#1 competitor continues to be cash” but in the meantime, Visa is “everywhere you want to be”.

Visa was founded by Dee Hock, a man who deserves credit as the Father of Fintech. Patrick Collison, founder and CEO of the newest big payments company on the block, Stripe, is an admirer.

This piece looks at the history of Visa through the eyes of Dee Hock to see what lessons can be gleaned for contenders in the payments market today.

Read on or listen to our conversation (recorded on January 11, 2021):

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About This Audio Series:

MOI Global is delighted to engage in illuminating conversations on the financial sector with Marc Rubinstein, whose Net Interest newsletter we have found to be truly exceptional. Our goal is to bring you Marc’s insights into financial services businesses and trends on a regular basis, with Marc’s weekly essays serving as inspiration for our discussions.

About Marc Rubinstein:

Marc is a fellow MOI Global member, managing partner of Fordington Advisors, and author of Net Interest. He is a former analyst and hedge fund manager, most recently at Lansdowne Partners, with more than 25 years of experience in the financial sector. Marc is based in London.

About Net Interest:

Net Interest, authored by Marc Rubinstein, is a newsletter of insight and analysis from the world of finance. Enjoyed by the most senior executives and smartest investors in the industry, it casts light on this important sector in an easy-to-read style. Each post explores a theme trending in the sector. Between fintech, economics and investment cycles—there’s always something to talk about!

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