No Parler today, No Payer tomorrow
Two recent developments have reinforced the geopolitical aspects of payments and evidenced how the race to payments supremacy (and or autonomy) has really got going. The first is self-evident: the US ban on Chinese payment apps. The second is less obvious: how could a cloud provider's suspension of a niche social media platform possibly impact on payments?
In China two payment apps dominate the payments landscape. Just to give an idea of their scale: about a third of all non-cash payments in the entire world are made on two these 'Super apps': Alipay and WeChat. The US move to ban them (along with a bunch of less-used Chinese apps) underscores the increasing role of geopolitics in payments, sometimes also called the 'weaponization of Finance'. The concern was that the apps might capture vast swathes of information from users, including sensitive personally identifiable information, and or be used to track and build dossiers on US federal employees.
All payment apps can do that – not just Chinese ones. And all payment systems by definition carry swathes of personal information; where we went, what we spent and on what ... But of course if your payment system is owned by your adversary, yes Houston, there can be a problem. The 'threat to national security' cited in the Executive Order that laid out the ban, omitted to mention this bigger risk. It's not giving someone else access to this information that is the most problematic issue – it is putting the very functioning of your economic arteries (your payment system(s)) into someone else's hands that is the bigger risk.
Which neatly brings us to the second development.
How could Amazon Web Services' decision to suspend the 'alt-tech' Parler platform possibly have a link to payments? Bear with us. Huge amounts of data and processing are now held in and carried out in the cloud – and that cloud is decidedly American. Amazon Web Services (AWS) and Microsoft Azure dominate the tech skies, but Google Cloud, IBM and Oracle – are also right up there. And up there with them is our financial data and much of the processing that makes money move. Eighteen months ago then Bank of England governor Mark Carney noted that a quarter of major banks’ activities and almost a third of all UK payments activity were hosted in the cloud – proportions that will only have risen since then.
Before the AWS cloud decided to rain on Parler's parade, Apple and Google had dropped the Parler app from their app stores ... so it wasn't venturing into untrodden territory. Or was it? The app stores' moves undoubtedly raise some interesting questions; as do the decisions of payment providers like PayPal, Stripe and Square which had all previously stopped processing payments for Gab – another microblogging haven for denizens of the alt-right. You might instinctively want to applaud the providers for taking a moral stance (if you agree with it). But you might also be a tad nervous about what it means for the future if, as France’s finance minister Bruno Le Maire poetically put it, 'the digital oligarchy” becomes the final arbiter of the boundaries of free speech.
What's different about AWS is that it shows how very deep down into the pipework this problem permeates. We might take umbrage (or not) at the actions (or inactions) of the likes of Twitter and Facebook; PayPal, Stripe, Square, Visa, MasterCard and more. Similarly we might be shocked at banks' refusal to bank certain constituencies (and or their willingness to accommodate others). But significant as these players' actions can be, they aren't the be-all-and-end-all. Decisions these providers make to accommodate certain constituencies can be over-ridden in an instant by the cloud platforms they rest on. That in effect means that the best part of the global payment system is at the mercy of a few cloud providers, nearly all of them American.
No cloud, no way to pay.