After 35 years of stockbroking for some of the biggest houses and investors in Australia and the UK, the Secret Broker is regaling Stockhead readers with his colourful war stories — from the trading floor to the dealer’s desk.
When I go to my local coffee shop, I have an arrangement where I don’t have to tell them my order or tap and pay for it when I leave.
As they know me so well, I can just walk in, say my good morning greetings and plonk myself into my favourite spot.
I can even text the barista if I want another one and if I’m holding court, order for my fellow coffee drinkers and all without leaving my seat or waving my hand to a ‘not interested, looking at my phone’ waiter/ess.
When it comes time to leave, having changed the world one coffee bean at a time, I simply transfer the amount I owe directly into their bank account.
I use Osko to do this and their phone number is their PayId reference.
This enables me to pay them in real time, bank to bank and without any fees being charged.
Some venues add their bank fees when checking out, which at around 1.4% is money for jam for the Australian banks. But doing it the PayID way means no fees are incurred by either of us… and there is also one other major advantage to me.
No data!
No data is collected on me, so my coffee shop experience is totally anonymous to Visa or Mastercard and also to my Google wallet which I use to tap and pay when required.
My coffee shop owner/barista was smart enough to work this out for his customers, so for those of them who choose to remain incognito when they’re enjoying a cappuccino in peace, with no big brother watching and data recording, this is truly a special moment.
When I run through my transactions that I have used my Google phone wallet for, it shows me where and how much, including a map. This way Google now knows where I have been and how much I have spent there.
Using the Osko PayID system means I rob them of this bit of ‘free’ information.
If none of you know about PayID, the next time you open your bank app, click on New Payee and you will see four options.
One is for the usual BSB and bank account details but the other three will say phone number, email or business number. The last one is for a businesses ABN.
Arrive and leave without paying at the counter and without any data being collected on you. Just get up and walk out of the door.
Simples!
I just wish other haunts I visit like my local or golf club would do the same. I bet you Madam Lash has this bit sorted, rather than having to issue ‘car repair’ receipts. ( I’ll have to ask my learned friend the judge about this one.)
My coffee shop owner was smart enough to work this out but the bigger venues, with all their managers and staff, are too busy worrying about what weekend shifts they are rostered on for rather than actually adding value to any of their customers’ days.
Osko, PayID and instant bank to bank transfers. Look it up and do a little bit of research, especially all of you out there with the tin foil hats. It will help you in your cause.
Here comes the ‘but’
However.
There is a lot more to this instant transfer of funds as over in America, they are also allow to unleash this technology on to the public.
And it will have huge ramifications.
There are about 9,000 different banks and credit unions out there in the US of A and introducing instant payment will bring big headaches to all of them. And credit unions, especially the smaller homegrown ones.
We have already seen a run on banks like Silicon Valley Bank and the damage which can be done and this was before instant bank to bank has been introduced.
Their run was either in their physical branch or by bank transfer, after closing time. The online transfer was subject to the usual delays, before a debit would become a credit in another of your bank accounts.
They were still using the old EFT system which is not instant like PayID is.
All of these smaller banks are going to have to have a much larger cash buffer than they currently need at the moment.
What used to come in ‘overnight’ was managed with bonds and in a gentlemanly way, whereas instant is instant.
A run on a bank can now happen in real time and therefore, there is a good chance that many of those smaller banks just won’t survive.
The PayID system which is used by the banks over here will be called FedNow in America and it will be rolled out by the Federal Reserve Bank (FRB) towards the end of this month.
This is what the FRB has to say about it:
“…individuals can have instant access to their paycheck and be able to spend it the same day, rather than waiting several days for it to process; consumers could pay a bill last minute on the due date, potentially avoiding late fees; and small businesses could have immediate access to funds when invoices are paid, helping them manage their working capital.”
All of this points away from all of the fees which are gouged out from everyone at the moment.
This is why the banks over here keep all of this very quiet and why a small regional coffee shop offers it and not any major retailers. Because their banks haven’t told them about it.
Why lose a 1.4% fee, when if we all keep it hush, hush, no one will notice?
Fight the 1.4 per cent
Over the last year, funds on deposit at these American banks and credit unions have fallen by US$705bn as people start to chase higher rates offered by junk bonds and the like.
Word on the street is that all of these deposit-taking institutions will need to have 20% of their liabilities held in cash.
One of the interesting parts of the run on Silicon Valley Bank was that because of time differences, they couldn’t tap into their emergency liquidity funds. Those funds were offline, closed when Silicon Valley was still open.
So, you can all expect a bit more turbulence to come from the American banks over the next year as they all have to arm wrestle with this new technology.
Over here we should be okay though. When you think about it, me being able to instantly pay for something, bank to bank in realtime, wasn’t that something that all of these crypto coins were meant to solve?
Who in Australia now needs Bitcoin, when you can use PayID?
Ironic then that the price of a crypto made-up Bored Ape image has just crashed in value, just as my instant coffee payment system is being rolled out in America.
Ironic also, that I just managed to get ‘instant coffee’ and ‘Bored Ape’ into the same sentence.
I’m impressed but I don’t think having the word ‘instant’ in front of coffee will impress my barista.
Let’s see how my next piccolo turns out – burnt and bitter, or buttery and smooth?
Hopefully the latter!
PS. Online betting sites are now coming onboard with email PayID instant transfers in and out.
The Secret Broker can be found on Twitter here @SecretBrokerAU or on email at thesecretbroker@stockhead.com.au.
Feel free to contact him with your best stock tips and ideas.