In a competitive world, it has been suggested that the future of both technology and mobile industries should prioritise simplicity, security and cost-effectiveness. In particular, companies such as Apple and Google have clear dominance when it comes to mobile payments, which could have lasting effects on the entire industry.
Mobile Magazine spoke with Toby Rush, CEO and Co-Founder of Deem, on these issues, as well as his journey through the technology sector. He touches on the evolution of online and mobile payments and the potential impact of reports such as the one from the CFPB.
Additionally, he highlights also how Web3 could represent the future of mobile payments and how this evolution could - positively or negatively - impact the future of mobile payments.
1. Please introduce yourself and your role/s
I’m Toby Rush, the CEO & Co-Founder of Deem, a company unlocking Web3 for the world using phone numbers. I live in Kansas City, Kansas and I’m a twenty year mobile tech industry veteran, and I have experience as both a founder and an investor.
Before Deem I led the International Technology investments Team for Ant Group, the payments subsidiary of Chinese tech giant Alibaba Group. Before that, I was CEO of ZOLOZ, an Alibaba digital identity platform. ZOLOZ evolved out of EyeVerify, which I founded in 2012, and which became a wholly-owned subsidiary of Ant Group in 2016 after creating a novel eye-based biometrics used by Wells Fargo, RSA and Citi. And before that I co-founded and led Rush Tracking Systems, a computer vision and RFID solutions venture, which successfully exited to a Private Equity firm.
2. How did you come to work in the tech/mobile industries?
After getting my Engineering Degree from Kansas State, I was interested in building tech based businesses. This led to my first company, Rush, which I saw significant success with. Getting into biometrics brought me even deeper into both tech and mobile solutions. I also began learning about blockchain technology and what it enabled. It made me think about going beyond a simple biometric solution, and creating an entire identity platform, unlocking the power of web3 payments.
3. How have you seen online/mobile payments change and evolve in recent years?
Originally it was just credit card payments transmitted over the internet. Just a digital update to a 70 year old technology. Eventually we saw new digital payment services evolve, leading eventually to services like Google and Apple Pay. They made digital payments simple and intuitive, and made it easier for anyone with a mobile phone to use it for purchases. However these services had limitations, and needed to be used through these specific third-party providers. This meant following their terms of service, and the possibility of losing access at any time.
Now, Web3 payments have arrived. They offer the same benefits of previous mobile payments, but cut out the middleman of a service provider. Instead, payments are made directly and with fees far below what users are accustomed to. There’s no way to censor payments, and users stay in complete control of all their funds. It also has huge implications for fraud prevention, currency interoperability, and the ability for companies to offer loyalty programs. Originally, this technology had a bit of a barrier to entry, due to a high learning curve, but that’s changing. The future of mobile payments is Web3, I have no doubt about that.
4. How does the recent CFPB report shed light on the challenges posed by Apple and Google's dominance in the mobile device market?
Payments have become a huge market, one which is fundamental to society. In 2023, there is a massive shift towards Open Banking systems which allow for creativity and competition. However, by creating a duopoly which only benefits the tech giants themselves, Google, via Android, and Apple, via iOS, control almost the entire mobile industry. They have the most leverage in terms of this technology and are effectively walled gardens that force all users to follow their rules and limitations or else they cannot participate.
While technically other payment providers can still use things like QR codes for payments, Apple holds full control over their Near Field Communications (NFC) technology, and won’t allow it to be used by other companies for payments. Google does not currently restrict third party access, but nothing would stop it from changing its mind. The alternative of using QR codes aren’t as commonly used or as secure as NFC, and as such companies relying on it cannot realistically compete.
5. Can you guide me through your thoughts on the impact of the monopoly Apple and Google have over the mobile payments space and what the impact of this may be?
By restricting the options consumers have for payments through technology such as NFC, these companies are inhibiting free choice as well as innovation. Any other solution is effectively handicapped from the start. This acts as a major limitation for open banking to come to its full potential within the U.S. Such a system can effectively block lower-cost open banking innovations, for example allowing consumers to make point-of-sale transactions directly using their bank accounts, without being funneled through a third party.
6. How do the likes of Apple and Google benefit from the monopoly they hold?
They have majority control over the mobile payment landscape. Competition exists, but it is going to be a small portion of the field compared to services that can use tap to pay. Google and Apple can fully control fees, they can control who can use their services as well as when and where, and they can monitor and collect data on all payments. All of the benefits go to them, not businesses or consumers. If people don’t like it, there’s not many viable alternatives. The larger risk is that as the share of digital payments run through these proprietary pathways, the incentives will be for them to place more and more restrictions that ultimately benefit the incumbent. This is bad for consumers and bad for the merchants.
7. What benefits to other operators infiltrating the market?
This stands to put an end to everything that is currently problematic about these closed ecosystems that severely limit innovation, interoperability, data portability, and decentralisation. Opening up payments that don’t rely on a centralised third party offers huge benefits for business and consumers. Companies don’t have to play by the rules of a service provider, or see them take a cut of their revenue. They can have more freedom to decide how they accept payments and in what currencies.
As for consumers, they’ll have more choices for how they send payments that are all equally convenient and valid. When competing solutions exist, innovation flourishes and the consumers ultimately win. Furthermore, they too will see savings as they don’t have to pay higher fees to make a purchase. They can even decide what assets they want to use to make payments, as they can all become interoperable. This will overall be a benefit for consumerism and the economy.
8. What do you see the future of this sector looking like? And do you feel the report will have an impact on how it evolves?
The future of payments should be simple, secure and very cost effective. Optionality and competition drive new use cases and solutions. For options to exist in the market, consumers must have more choices than just Apple Pay and Google Pay. This CFPB report sheds light on a major risk factor that will continue to grow unless these monopolistic behaviours are put in check.
About the author
Toby Rush is the Kansas City-based CEO and co-founder of Deem, a platform that allows users to store and use Web3 assets via their mobile phone. Toby previously served as an executive at Alibaba Group, and in 2016 he sold his biometric company EyeVerify to Ant Group — the fintech affiliate of Alibaba — for US$100 million. Rush also co-founded and led Rush Tracking Systems, a computer vision and RFID solutions venture that was later sold to a Private Equity firm. Toby holds a BS in engineering from Kansas State University.
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