The Umbrella of U.S. Economic Competitiveness

The transition to digital payments in the financial and economic world has brought with it an insatiable desire for speed. While transactions used to occur on a (relatively) slower basis, automation, fiber optic cables, and the interconnection of networked devices has led to a consumer demand for increased rapidity with which money and products move.  

However, with the global economy becoming increasingly intertwined and more entities gaining the ability to engage in cross border transactions, there has also been a growing demand for decreased transaction costs. The demands of speed and cost efficiency have inevitably impacted entities from the largest financial institutions to entrepreneurial and opportunistic payments companies, which have high incentive to match these desires with their own solutions. ‘Mobile money’ has been one of the big winners in this transition, with products like Apple Pay, PayPal Mobile, Square, and many others offering their users solutions to both growing demands.

Mobile Money – A Global Review

Though many novel innovative technologies require an existing, developed infrastructure to flourish, mobile payments have increased in popularity in every type of economy around the world. While modern, fully developed, and diverse economies have great desire for faster, more secure, and lower cost transactions, so do emerging economies. On their way to modernization, many emerging markets collectively lack trust in credible banking structures, leading to the desire for a decentralized platform for holding value and conducting informal transactions. 

With basic Internet connectivity and the download of a single application, individuals globally have become empowered consumers. Mobile money has given emerging economies and small businesses the ability to informally transact, leap-frogging critical developmental stages in economic growth that have traditionally been reserved to the role of formal government.

In Europe, “77% of Europeans now use their mobile devices to keep track of their finances and make everyday payments such as bills, parking and going out.” In Asia, there are over 473 million registered mobile money accounts – almost half of all registered accounts globally. Africa has also shown significant uptake in mobile money accounts, with the Sub-Saharan region logging 43% of all new accounts. This brief review of the global mobile money market portrays a diverse set of cultural, value, and economic systems that have adopted this technological innovation over the last 15 years. With this exponential growth in mobile money, there has been a corresponding increase in financial inclusion, which remains one of the world’s most stubborn socioeconomic challenges.

The United States: Holding the Umbrella

The United States has adopted – and long held – a position of global economic and financial centrality. This privilege has come with a great set of responsibilities and implications for other national economies, simultaneously lending considerable prowess to U.S. economic competitiveness and soft power, as the dollar remains the global currency of choice. 

As with many appeals of the American way of life, the hallmarks of this financial competitiveness have been value-based: in preserving privacy, fostering financial inclusion, and encouraging innovation. When it comes to innovating new technologies throughout history, the U.S. has often been at the forefront, although democratized access to foundational infrastructure for innovation has led to more decentralized growth. This should not be seen as a threat to traditional banking and payment services companies, let alone to U.S. financial regulators, but rather as an opportunity. Harnessing free market innovation for the movement of money, is in many ways the market force that has propelled U.S. prosperity at home, and fueled U.S. economic linkages around the world. 

While it is certainly encouraged that individuals around the world continue to innovate and grow, we all must understand the implications of a financial design that is not centered around American ideals of privacy, empowerment, and inclusion. It is to the great benefit of American policymakers that the widely adopted protocols for using mobile or internet-based payment systems employ a value-based approach that considers these ideals as it is developed. American dollar innovation and continued economic competitiveness in the modern financial systems relies on the ability to harness a fast, secure, and privacy driven mobile and internet-native banking system that encourages continued engagement and reliance on the U.S. dollar. 

The umbrella of economic values that the U.S. has championed for 70+ years has led to a more interconnected global economy that benefits from transacting in the U.S. dollar. However, the global economic system is never stagnant and requires constant innovation. The current inflection point of democratized innovation and the financial empowerment of individuals through mobile and internet-based money requires the U.S. once again to lead in preservation of values, privacy, and prosperity.

Payments Optionality Improves Security

The void of openly accessible and interoperable payment systems in the U.S., irrespective of the form factor of money, is a vulnerability. This much was revealed by the onset of the COVID-19 pandemic, which laid bare the lack of payments optionality across the country. This exacerbated the economic plight of vulnerable individuals, businesses and communities, confounding government-led economic relief efforts. Faster payments should be prioritized, as much as a national payment system that functions as close to an “omni-channel” basis as possible, supporting a cash-based economy, a mobile and e-money economy, as well as a growing internet-native payments environment. The sum of these parts can and must be built under the line of sight of U.S. regulatory expectations following the same risk, same rules, technology neutral approach.

This is where free market innovation holds say over what has increasingly become a public good. For the future of money and payments – irrespective of the form – past is prologue.

Statements and views expressed in this commentary are solely those of the authors and do not imply endorsement by Harvard University, Harvard Kennedy School, or the Belfer Center for Science and International Affairs.

Dante A. Disparte serves as the Chief Strategy Officer & Head of Global Policy for Circle. He is a member of FEMA’s National Advisory Council and serves on the World Economic Forum’s Digital Currency Governance Consortium. He is also a member of Diplomatic Courier’s editorial advisory board.

Michael B. Greenwald is Director at Tiedemann Advisors and Director for Digital Asset Education. He was the first US Treasury attaché to Qatar and Kuwait, acting as the principal liaison to the banking sector in those nations, while serving in two presidential administrations and under three treasury secretaries from 2010-2017. He is a fellow at Harvard Kennedy School’s Belfer Center for Science and International Affairs, a Senior Fellow at the Atlantic Council Geoeconomics Center, and Adjunct Senior Fellow at Center for New American Security.