Wholesale payment systems were designed in the era of punch cards and mainframes.

We pay a premium for this legacy.

But we don't need to.

What's wrong with the current system?

All card payments work roughly the same way. You give some financial details to a merchant (e.g. by swiping your card, or entering details online). The merchant uses these details to check if you have enough funds / credit for the purchase. If you do then the merchant will give you some goods / services. Later, the merchant will use your financial details to withdraw money from your account. Permission to withdraw money from your account is implicitly given when you hand over your financial details.

This process was necessary before the internet and before everyone carried a phone in their pocket. It is now outdated. Explosive growth in online purchases has shown that the implicit authorisation to withdraw funds is a gaping security hole that ensures that card-not-present fraud will be an ever present component of our payment system. We have become inured to the cost of this. In 2016 card-not-present fraud accounted for 78% of all card fraud in Australia and amounted to $421 million. Since 2012 card-not-present fraud has grown by an average of 23% year on year.

This isn't the only cost of relying on an obsolete process. Merchants, in particular, also suffer from costs related to things like charge backs, delayed payment, persistently high transaction fees and management of customer data / third party relationships for transaction processing.

What should we do about it?

Technology has now progressed far enough to support virtually instantaneous settlement of retail transactions. National settlement services are being upgraded to support this at the retail level. Consumers and merchants carry computers sufficiently capable of transferring the necessary amounts of data in real-time. There is no longer any need for a merchant to delay receipt of money from a customer. Customers, while in store, are able to authorise a transfer of funds to the merchant. Merchant, via instantaneous national settlement, will be able to see the funds arrive. No more implicit authorisation. No more card-not-present fraud. No more waiting for money.

In effect this makes electronic payments conform to the same payment process as cash. Merchants only provide goods / services once payment is received. This is what Yura is dedicated to.

How Yura will achieve this.

Changes are required at the card network and card processing levels in the current retail payment system. Very roughly the current system can be thought of as consisting of the merchant and customer, a card processor (e.g. Paypal, eWay, BPoint, Stripe, Afterpay), the merchant's and the customer's banks, the card network (e.g. Visa, Mastercard, Eftpos) and the national settlement service. When a payment is made the card processor collects the card information from the customer. A series of information flows occur between the various groups mentioned in order to accept or reject the card. Actual transfer of money eventually occurs at the level of the national settlement service usually as a bulk transfer collating many different transactions sometime after authorisation.

Assuming that almost instantaneous settlement of individual retail payments are possible, as can be expected in Australia in the very near future, Yura acts as a card network and a card processor, skipping any involvement of banks that might be required (e.g. as would be the case for authorisation of Eftpos or credit card transactions). At the card network level Yura acts as a message parsing system, converting data collected at the card processor level into a form suitable for transmission to the national settlement service. At the card processor level Yura will provide two things;

  1. a bare bones app allowing customers and merchants to authorise transfers and confirm receipt of money for specific transactions in an extremely simple and user friendly manor, and,
  2. a comprehensive API for third party card processors to access so that their customers can make use of Yura's systems.
Thus, Yura can be seen as a card network that has used technological progress to democratise access to wholesale settlement services by changing the foundational process on which electronic payments are based.

If no suitable national settlement service exists Yura will provide one. In this case Yura will provide two additional services

  1. accounts that customers and merchants can use to store currency that can be transferred using the systems described above, and,
  2. an "electronic medium" which acts as a replacement for physical cash online.

The effect of this is that electronic payments will take on the properties of cash payments; almost instantaneous settlement, explicit authorisation of payments, the impossibility of card-not-present fraud and a reduction in costs throughout the ecosystem supported by Yura. Owners of accounts will have substantially more control.

An electronic medium for cash

With the infrastructure described above it is possible to take the analogue to cash one step further and provide an electronic medium for purchases that;

  1. does not require management of account values,
  2. prevents tracking of personal expenditure,
  3. has no need for logins or passwords, and
  4. allows for real currency (indeed any asset) to exchange hands.

This system is based on cryptographic principles that underlie blockchain systems. However, it does not use a blockchain, there is no "distributed trust", there are no miners. For examples of this technology in the wild see GNU Taler and Digi.Cash.

Yura facilitates the adoption of this technology because of it's closer integration with the existing financial system. Please note that this technology does not have to be tied to Australian currency rather the "electronic medium" can be backed by anything with value; any currency or any asset can be used.

How does Yura make money?

For traditional payments Yura will charge a transaction fee. Because of the assumptions of explicit authorisation and immediate settlement costs associated with managing fraud and things like returns of good and refunds are significantly reduced. The result is that Yura can operate more cheaply than other card networks and card processors.

For payments made with the electronic medium a small fee for redemption of the underlying asset will charged. This allows, in principal, this electronic medium to be exchanged at no cost - just as with cash.

Talk to Yura

No doubt, if you've read this far, you'll have some questions.

Send us an email.


The Team

Cliff Senkbeil

Cliff is a consultant specialising in financial modelling, data visualisation, web technologies and software. He has a BSci. with Honours from the University of Tasmania.


Ben Whale

Ben has previously worked for Deloitte as a management consultant, in mobile development for Wolfram Research and as an academic. He has PhD in theoretical physics from the Australian National University.