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Former Intuit CEO Bill Harris was one of the earliest fintech leaders, arguably before fintech was a thing. He was also briefly the CEO of PayPal around the turn of the millennium.
Today, he leads Miami-based investment management firm Evergreen Wealth Corp. He also has a lot to say about innovations in payments and advances taking shape in that sphere. Payments Dive caught up with Harris earlier this month for an interview about digital payments, crypto and what’s driving the world of fintech in the era leading into the new Trump administration.
Editor’s note: This interview has been edited for clarity and brevity.
PAYMENTS DIVE: What’s your take on stablecoins?
BILL HARRIS: That's fundamentally the most important of the potential crypto developments. Because, if we're talking about crypto as an investment, then things like Bitcoin would have their own volatility come into play. If you're looking for something to fund a payment network, particularly a payment network where people are operating in a fiat currency in the real world, and are really looking for crypto to be a quicker and less expensive mechanism for moving money, then doing it in fiat currency on a blockchain makes more sense if you try to build a payments network. So, stablecoin, I think, has got a big future, whether it's private or issued by central banks.
Do you think the Trump administration will pursue a central bank digital currency?
On the one hand, I think there's going to be less support for the financial regulatory apparatus, and [there will be] an attempt to reduce regulation. Of course, a great deal of the regulation on the federal side of the crypto world has been, essentially, to make it more difficult for unregulated crypto exchanges, etc. to flourish. The other side of it, though, is that I would bet that the deregulatory impulse goes even farther than that, and rather than pushing, or allowing, the central bank in this country to issue its own stablecoin, my guess is that it really opens up to private issuers of stablecoin. I would guess that that privately-issued stablecoin, denominated in U.S. currency, is likely to have a day in the sun.
What about cryptocurrencies?
As a payment network, as long as most of the world operates on a fiat basis, then it seems unlikely that a cryptocurrency — and I'm not saying blockchain, I'm not saying stablecoin — becomes the baseline for a large payments network simply because it means that for domestic translations, you're doing two conversions, one into the cryptocurrency and then one back out. And even for cross border activity, you're doing two conversions, as opposed to one, which would be just the the sender's fiat and the receiver's fiat. So in either case, for a payments network, a separately denominated currency seems like, at the very least, not an advantage and potentially a disadvantage.
Do you own any cryptocurrencies?
No.
How do they compare to other payment types?
If you look at the transaction cost today, just simply to buy or sell Bitcoin, as an example, they're typically higher than transaction costs in U.S. dollars electronic transaction costs. That's not always the case. If you compare it to a credit card, a credit card is quite expensive at two to two-and-a-half percent, but there are plenty of other electronic exchanges of U.S. dollars that are significantly less expensive than your typical cryptocurrency transaction. The other thing to think about is the speed of confirming the transaction. With some crypto networks, it's pretty fast. With Bitcoin, it's still slow: It could be 10 minutes to an hour before the transaction is actually confirmed...in terms of its transaction per second capability, and pale in comparison to the number of transactions per second that can be run by the Visa network or in China on Alipay.
Will crypto be useful in the broader economy?
I don't see cryptocurrency networks, in the short term, being significant payment networks at the retail level. At the business-to-business, bank-to-bank levels, it does make sense, I think, to think about stablecoin, particularly given the fact that wires and Swift and all of those (money transfer systems) are so archaic and slow and costly.
Are you talking about a particular stablecoin, or stablecoins writ large?
I'm talking about stablecoins writ large, but I would caveat that with in order to be effective, it has to be fully reserved, as in 100% backed by U.S. treasuries, or something like a government bonds if it’s another fiat. And then probably most valuable if it is U.S. denominated simply because most international transactions are done in U.S. dollars.
Do you still use PayPal?
Oh, yes, I do. Okay. I think it’s a marvelous product, and it remains a marvelous company, and it’s made a fundamental difference in the convenience and cost of the ability of consumers to move their money around, not only in what it's done itself, but also in the variety of other services that have been inspired by it.
Some people think the United States has essentially fallen behind many parts of the world in terms of advancing digital payment systems. What do you think?
You're absolutely right. I think the U.S. is a laggard. So, why, how did that happen? I think it's two things. First of all, regulatory resistance to change. But also the fact that we got there early, and in the same way that in Africa, they've experienced a quicker revolution with mobile technologies because they didn't have landlines already installed, in the same way, we have been, in some ways, hostage to our initial success. If you are first, it's terrific, but then you get stuck with your your DNA.
It's not dissimilar to what's happened throughout the financial services industry. For instance, most of the major transaction systems at banks and brokers are old Cobol systems that are at least four decades old at this point. So, why are we so back backwards today? Because we were so pioneering 40 and 50 years ago.
So, what will move the U.S. forward?
It's really not that hard to conceive of — it's hard to execute — but it’s not that hard to conceive of mechanisms to create faster, cheaper methods to to move money. And to the extent that blockchain steps into that role, I frankly don't think it's the ideal technical solution, but it is the available technical solution, and to the extent that blockchain steps into that role, it will have been because the incumbents were resistant to change.