E49: A Business Class for Consumers | David Dwumah, Adjunct Teaching Professor, WPI Business School

Colleen: Imagine a shopping mall in the 1980s. Music pumping through the speakers, neon signs glowing in storefront windows, and shoppers carrying armfuls of bags. At the register, charge cards slapped onto the counter to be run through a clunky machine, or someone simply said, “Put it on layaway.” Times have changed, but the urge to shop, charge, and borrow hasn’t. Today, layaway has been replaced by buy now, pay later. Credit cards are competing with digital wallets and stable coins. And artificial intelligence may soon shop and choose how to pay on our behalf. But as paying becomes faster and less visible, an important question can easily get lost: Can I actually afford this? In this episode of the WPI Podcast, we’re holding a business class for consumers. A WPI expert will help us understand what consumers should consider before clicking buy now. David Dwumah thank you so much for joining us take a, minute or so to introduce yourself to our listeners and your title here at WPI and a bit of your background that makes you today’s guest. 

David: Thank you, Colleen, for having me. A bit about myself. I teach digital currencies and payments and the future of fintech at WPI, and I’m also a fintech founder. The name of my startup is called OurFiin. And what we do at OurFiin is sitting at the intersection of tokenization and governance, making sure that as we move forward with the future of payments, that we have the right set of governance processes to make sure that we’re building up trust. So in a nutshell, that’s me. That is you. So excited to be here. 

Colleen: We’re excited to have you. So speaking of payments, the first that I think many listeners will connect with is buy now, pay later. What is this

David: great question. So I always tell people that we are living in probably one of the most generational times of our lives. How we pay, how we get paid, is going to fundamentally change over the next... We’re not talking years, we’re talking decades, okay? And if you look at the advent of fintech and the future of payments, we talk about BNPL. That’s one of the initial things that came out. So think of BNPL it’s kind of similar to a credit card, but it’s very different. Okay. In the case of a credit card, you actually, as part of your payments or your purchases, you’re getting access to credit. BNPL is a little bit different. It’s usually tied to a specific purchase, and it’s also tied to a fixed payment schedule, as opposed to your credit card that- Mm-hmm ... you can swipe here, swipe there, and keep spending. For those that are really remote, let’s step back and many, many years ago many decades ago, you know, you had the Sears and layaway. Layaway. 

Colleen: Yeah. I know layaway from my babysitting money. Yeah. 

David: Yeah, exactly. So think of it, it’s... BNPL is a little bit opposite of layaway, right? When you think about layaway, you pay first- Then you take the, the item home later. BNPL is a little bit different. It kind of flips the model, right? You get the item today, but you pay afterwards. So that’s how it’s different from layaway- Right ... at the same time being similar, and that’s how it’s different from credit cards, but at the same time similar.

Colleen: So no interest, which we often associate with a credit card, but again, it flips the layaway where I used to say, “I want this sweater, put it on layaway” every week that I got a $5 babysitting check. Yes, that’s how old I am. I’d put it towards that and get it. This is now, you get the sweater, and you then pay $12.50. Okay. So I have that, but if many of these BNPL plans don’t charge interest, how do these companies make money?

David: Again, it’s all something similar but different. Okay. So think about it this way. In the case of your credit card, you pay the interest. Guess what? The model is flipped. In this case, typically, the way companies are making money from BNPL is actually the cost that’s borne by the merchant and you might think, “Why would they do that?” At the end of the day, you wanna sell more stuff, so the more stuff that you sell, the better it is for your revenue. And so if as part of that, trying to increase your revenue and your sales, you’re incurring some costs that otherwise the customer would have borne, you’re still getting ahead. Okay.

Colleen: Does breaking a purchase into smaller payments encourage consumers to spend more? 

David: Yeah, and if you look at a lot of the BNPL products, there’s a lot of psychology associated with it, right? And there’s been a lot of research. It’s very fascinating and interesting. As human beings, when it comes to payments If I have to just use a little bit of money, like 25 bucks, it’s kinda easier. So if you even think about stocks, think about how stocks are priced. Mm-hmm. Very few stocks are priced, like, ridiculously, $10,000 per share. There’s a reason why. Because from a psychological perspective, it’s easier for people to purchase things when they’re in small increments and small amounts. Yep. So that’s one of the, um, psychological advantages that BNPL leans into, right? Mm-hmm. It’s just paying $300 upfront, whether with cash or with your credit card, psychologically, You find it easier to make a purchase when you see only 25 bucks today. Right. And you don’t think about 25 bucks for the next 11 months. You can justify it, saying, “You know what? I won’t go to Starbucks twice this week, and there’s my $25.” So that- Yeah ... is part of the psychology. Yeah. 

Colleen: What happens when someone has several BNPL plans operating at once? 

David: Hopefully you don’t have that many. Hopefully you don’t have it. Yeah. So that’s where it gets a little bit tricky, and it becomes, it sneaks up on people, right? Having one plan that you can afford to pay,, that might be okay. Five plans, I think you might have a problem because now you need to think about managing. Like, unlike a credit card, which is a one central place or two, you have multiple transactions, and now just trying to keep tabs on it, that in itself becomes a management nightmare for you. And so the challenge is not one payment, it’s the accumulation of smaller payments, right? Yeah. Right. It can easily lose track- Yeah ... and then you start getting pinged for non-payment. Exactly. So a lot of these financial products inherently are not bad products. They’re great products. It’s how you use it, right? And so if you’re using BNPL more as a budgeting tool it’s okay. But when it starts getting out of hand and becomes more of you’re missing now missing payments, you have multiple plans that you got to juggle, and then you’re using BNPL for everyday purchases, then we have a problem. Right. That’s when you begin to see the warning signs. 

Colleen: Can BNPL impact your credit score if you start just missing all of these payments? 

David: It could. It could. It could. Um- So even though you’re not using a credit card, you still could get dinged on your credit. It could. It could. Okay. And so the way I always tell people that think about it, you, a credit card is a credit product. Yep. BNPL is a payment product, right? Although there’s a strong relationship between payments and credit, those are two distinct concepts within finance. The way currently most BNPLs are structured is more for payment products. But depending if you start becoming delinquent- Right ... it can impact your credit. Okay. Depends on how it’s structured. And, you know, there’s a lot of conversation going on as to do we, as a society, should we still see BNPL as a payment type or a credit product? So there’s a lot of conversations, not just in the United States, across the world. Sure. Folks have different perspective, but it’ll be interesting to see how that evolves. All right. 

Colleen: So definitely something to track. So we’ll take a step back. The big question we’re asking is, can I afford it? These are different ways that you can pay. So what does it actually mean to be able to afford something? Basic question, but when you start to peel away the layers, that’s a big question.

David: I always tell people, think about it this way. What if? What if I don’t make that purchase? What happens? Would the world come to an end for me? And if the answer is no, then that’s your answer. But we’re still human beings, right? And the reality is that most of the time we buy stuff that we don’t really need, but we want. Right. But having the ability to take your time and think about, do I want this or do I need it, Use that as a filter. Okay. All right. I’m guilty. You know? I, I- Oh, I’m guilty too. Ah, yeah. So is being able to make the first or monthly payment the same as being able to afford the purchase? And I think that’s what we see in a lot of credit cards, maybe even buy now, pay later. You’re just looking at that smaller number. I think at the end of the day it’s not whether I can afford 25 bucks this month. Is, can I really afford $300 now? Yep. And if I can’t, ‘cause you know you can’t tell what happens tomorrow, then we have a problem. You shouldn’t look-- When you think about BNPL, you should think about it from the lens of, can I afford that whole amount? So think about it this way. Say we’re buying something for 300 bucks. Mm-hmm. If I put it on my credit card at 20%, I gotta pay that. Yeah. That’s one option. I could take 300 bucks from my account I could also leverage BNPL. In the case of BNPL, all things being equal, there are nuances to the process. In this case, my interest cost is being subsidized by the vendor. So if you think about it and you structure it well, and there are certain instances that it actually works in your favor, right? Because as a consumer, you’re not the one incurring the cost. The explicit cost, right? Right. They’re gonna find a way to find it anyway. They’re gonna, yeah. They’re not looking to take a loss. Yeah, so if I have... So, right. So think about it this way. If I have to buy something for $300, and I have one instance where I don’t have to pay the interest if I use my credit card, or forego my interest from an investment perspective- Mm-hmm if I take money out of my account, or I have option three where the merchant is the one incurring the cost of money, right? Yeah. Or the cost of borrowing, then if I can afford it and I need it, then inherently it’s not a bad thing. Just gotta watch it. 

 

Colleen: So this is somewhat psychology too, how do urgency, targeted advertising, and the frictionless checkout affect our financial judgment? They’ve made it very easy for us to just hit buy. Yeah, and it’s probably gonna get easier going forward, right? Really? Okay. I think so. I think so, um-

David: If you’re a merchant or a business, you wanna sell. You’re in the business of generating revenue. Mm-hmm. So you’re gonna try and make sure that you’re optimizing your pathways to creating more revenue. And so if you have less friction in the decisioning to pay or the decisioning to buy, you probably, as a merchant, you probably wanna lean into that. Mm-hmm. Right? And so that’s why some of these payment products, you know, make it easier for people to spend, right? 

Colleen: I can see that. When I wanna buy something and , it’s a vendor that I haven’t used before. It’s not the Amazon that has- Mm-hmm. ... all of my payment stored, so I can just hit buy now. It gives me, it gives everyone an extra moment or two to think when you’re typing in your credit card number or- Absolutely you’re typing in your address, contact number, that your brain starts to think, “Do I really need this or do I want it?” That extra time could be in your favor, but not the merchant’s favor.

David: Yeah, absolutely. And another thing that I think folks, uh, we need to, and we didn’t touch upon it, but I think it’s important to understand within the context of BNPL is there are over 40 million people in the United States that are credit invisible. 

Colleen: Credit invisible? Right. What does that mean? 

David: Credit invisible means they’re not on radar of the credit reporting agencies, right? They don’t have credit cards. They don’t have credit cards. I mean, the way the system’s set up. So how do they get access to credit? Access to credit in itself is good for all economies. So if you think about it, BNPL is trying to, although it’s a payment product, like from a regulatory point of view as of today, for the most part, it’s a way to extend credit, right? Yep. In a, you know, I’m using credit in the quotes, right? ‘Cause it’s not technically a credit product. It’s a way to extend credit to folks, and there are a lot of them- Yeah that don’t have a-access to credit. So if you look at it at a global level or at a, at a high level, just it’s trying to solve a problem. But we just have to figure out that it’s done the right way. And I, I think most of the time it boils down to the individual, right? If I’m one of the 40 million folks that don’t have a- access to credit- this is a way- to get some sort of synthetic credit. 

Colleen: Let’s move on to something else I, I said in the intro, stable coins. Stable, is that the operative word? Is it not? Is a stable coin a Bitcoin, which I’m still trying to- ... wrap my head around? So what is a stable coin? It’s supposed to be stable. Mm-hmm. Right? , 

David: Let’s just step back for a second. There are many types of money. , The dollar bill that we use or the check, and many types of payments. Stablecoin is a type of payment. Think of it as, in the case of the United States, more a digitized version of the dollar. Okay. And Bitcoin’s a little bit different. There are all types of digital currencies. There’s so many types of digital currencies. Um- Okay. So stablecoin isn’t just a, uh, a fun term for Bitcoin. This is something different. Different. Different. Got it. Different. Right. Depending on who you talk to, there are about, four types of digital currencies, which is something that I always make sure that my students understand, I was like, “If you leave this class, I hope you, you learn one thing, , you need to understand what is a digital currency, and what are the four main types of digital currencies,” ‘cause they’re different. You have cryptocurrencies- Mm-hmm ... such as Bitcoin. That’s one thing. Okay. Cryptocurrency. Okay. The second type is a stablecoin. Okay. Such as USDC, USDT, or Tether. Then you have tokenized deposits, which are kind of almost like stablecoins, but they operate within the formalized regulated banking ecosystem. And then you have CBDCs, which is not that popular in the United States. So you have four types of digital currencies, and if you think about what each of these digital currencies are supposed to do, they’re supposed to improve how we pay and get paid. But every time we run into some sort of problem, and as humans, we always want to improve, right? Yep. So if you think about Bitcoin, its original intent and purpose was to help improve payments, but over time, it became less of a digital currency, and became more of, depending on where you are on the fence, more of an investment/speculative asset. Cryptocurrencies are not tied usually to , something that’s stable. ‘Cause think about it this way. If I need to pay you- Mm-hmm ... or get paid, it’s very, very important that the medium of exchange is stable. Yep. Like $1 means $1. Not a $1 means $3 tomorrow and 50 cents yesterday. So cryptocurrencies are inherently not stable. So when it comes to cryptocurrencies functioning as a payment type, it becomes problematic. And so the great minds out there said, “Well, what if we have something that’s almost like a cryptocurrency, but it’s stable?” And so that resulted in stablecoins. A stablecoin should represent, the nominal value in the dollar. Okay. And so what that means in practice, it needs to be backed by something that’s either the dollar itself or something that looks like a dollar, whether it’s US treasuries or, money-like instruments. The difference between a stablecoin and a tokenized deposit is stablecoins operate outside the formalized banking system. Tokenized deposits are almost like a stablecoin. Think of them as bank-issued, bank-regulated stablecoin. CBDCs, or central bank digital currencies, are another, the fourth main type of digital currency. Those are issued by a central bank. Okay. And you said we don’t have any in the United States. As of today. As of today. That could change tomorrow the way we’re going. As of today. Yeah. And so one of the things, we talked about how there’s certain digital currencies that fluctuate. Certain digital currencies that don’t fluctuate, and some are gonna be regulated, and some are not gonna be regulated, right? Some are issued by private institutions. And so to get clarity on everything that’s going on, a year ago, there was a Genius Act that was passed. And that’s very important because it’s bringing more structure into the two main types of digital currencies in the United States. Okay. Right, which are stablecoins. How do we make sure that they’re really, really stable? So they need to be a little bit more regulated- Mm-hmm ... hence the Genius Act. And what do we do about tokenized deposits? Who can issue it? Okay. ‘Cause that matters. Okay. All right. I will brush up on the Genius Act. Yeah, yeah. Yeah, that- No, it’s important. Yeah. And so that’s why there’s a lot of conversation right now about stablecoins and less so tokenized deposits, because everything’s going digital. Think about it this way. The internet has been with us for a minute. But we’re still paying with non-digital types of payments, so it’s not aligned. So- These digital currencies kind of align how we pay with how we live our lives, which is mostly on the internet. Okay. All right. I am wrapping my head around this. I’m not there yet, but- That’s okay ... this conversation is getting me closer. Yeah. Yeah, I got my thing, yeah. Yeah. So I know y- they’re stable. Okay, I have it. It’s backed by something. 

Colleen: But what protections do consumers have if they’re scammed and they send money to the wrong place, or never receive what they purchase? Going back to the buy now, pay later, what are the repercussions if it goes wrong? 

David: Yeah. And so that’s why the GENIUS Act and its enactment is so, so key, right? Prior to the GENIUS Act, anyone could issue a stablecoin- Mm-hmm ... for all intents and purposes. Now that we have the GENIUS Act, which was passed last year, now we’re going through the process of, okay, what does it really mean? Right, from a from a law perspective. So the various regulators, the Fed, the Treasury, the FDIC, all those, you know, alphabet super regulators are trying to really answer those questions. Whose at fault if something goes bad. Mm-hmm. And so we’re actually in the period that’s called the rulemaking, where all these regulators are working together to crystallize what the rules are around the issuance of stablecoins and tokenized deposits. It’s gonna take a, while, yeah. But one thing that folks need to understand is going forward, probably starting in January of next year, that’s when a lot of the rules will start crystallizing and- Okay ... begin to mean something to me and you, right? Because all the issuers of, whether it be it a stablecoin and/or a tokenized deposit, they will have to comply with the Genius Act. So the Genius Act, through the actions of the various regulators, they’re gonna try and answer those questions and expectations, around scams, around what’s permissible, you know, what can you use it for- Mm-hmm ... who can issue it. So it’s a very interesting time. It might be boring, but there’s a lot of work going on and in the background around how do we make sure that... The reality is that digital currencies are here, but we got to do it right. So the Genius Act is trying to answer those questions for us in the United States, and other countries are doing something similar. 

Colleen: Does the Genius Act cover taxes, tax implications? 

David: Yeah. So it’s trying to answer as many of these questions as possible. The reality is that so if you think about how rulemaking occurs, y- the law is passed, signed by the president, after it’s gone through the congressional process. But what does it really mean? And so what then happens is that the various regulators, the Fed, the OCC, the FDIC, all those, there’s a whole bunch of them, say they take the law and try to make sense out of it, and those are called the rules- Mm-hmm ... and the regulations and practice. That’s essentially what’s gonna kinda tell whether you’re a bank or a payments company or a stablecoin issuer. If you’re part of that, process, what are the rules that you need to follow? And so the regulators will take the law once it’s passed and try and translate it into actual regulations, and that’s what’s going on right now. We’re actually going through the rulemaking of process as we speak. 

Colleen: This is fascinating. It must be, So difficult, and I think difficult is putting it mildly, to have to regulate something that keeps changing . So how do you regulate when the evolution continues? 

David: That’s why I’m saying in, practice. So it’s gonna start next year, January, but the reality is that it’s gonna take a while before we all collectively get clarity on what the rules are when it comes to these digital, um, forms of money, right? It’s a lot of work. A lot of work. 

Colleen: How do you teach this? How do you translate this to our students to give them the latest and know that there’s some wiggle room to change?

David: Uh, well, you can always come to WPI and be one of my students. That’s one- Well, there’s one way to get it. All right. Um, yeah. So give us a little, uh, sneak preview of that. Yeah. Um, and I always say that to me, the most important thing I always try to make sure that my students understand is we’re going through a generational shift, and to move forward, you need to understand the past. And so I always begin my classes with the history of payments. There was a time that we bartered, and then cowrie shell- And then silver and something- Mm-hmm ... and then gold, then paper money came about, and then credit cards, and then wire transfer. So we’re always trying to solve a problem. We haven’t solved it. And so digital currencies, right, in its various forms, are just trying to solve the problem or improve the problem of making how we pay and get paid better, faster, and cheaper, ‘cause always opportunities. And we’re trying to solve the problem when we have all these other net new innovations. So I do a lot of work, applied research around a lot of these new innovations, especially in payments and beyond, and how that ties to how we govern it. Governance is the most important thing. The technology, there are a lot of smart folks out there. But now we’ve moved past the technology stage. We need to make sure that we’re doing the right things. What are regulations that are out there? Mm. How are they evolving? How do we shape it? One of my mentors used to say that, “Think of payments as oxygen. You don’t really think about it, and you shouldn’t. But if it doesn’t work, we have a problem.” Big problem, yeah. That’s when you call your credit card, “Did my mortgage...” Or you know- Yep ... “I made a payment,” you know. “Did my payment go in?” When it works, there’s no problem. And payments are supposed to be transparent. But if we don’t have a good way to pay economic activity kind of grinds to a halt. And one of the things that’s very, very interesting is very often when we come up with a new way of paying, it doesn’t mean the old way goes away. We’re in 2026. There are countries and organizations that still do barter, and barter has been with us since the dawn of time. So payments is very fascinating in the terms that when we have new ways of paying, they don’t replace the legacy. They complement because they’re trying to make the overall process better, faster, cheaper. . But this time we have something very, very unique. We have the real-time payments, which is one type of digital payment. Yep. And then we have all these variation of digital currency that are evolving as we speak. That’s never happened in history. So this is the first time in history that we have two innovations evolving right before our eyes. It is. It’s a fascinating time.

Colleen: You got me thinking that, when we went from paying, , in gold and silver to, coins to someone saying, “Here’s a paper dollar.” What do you mean? Paper, this means something? That was a game changer way back when. Absolutely. And so if you think about it, it comes back to another concept that we have to work past, right? If I give you, I don’t know, a sheet of paper, would you take it? Probably not. Maybe now you would take it because- Maybe why? You seem- And now, yeah ... you seem trustworthy. 

David: Exactly. You said the operative word, trust. And that’s why governance is so key, right? Trust is the foundation of payment acceptance, especially when it come in new innovations. And so very often, if you look at digital currencies and when they started evolving maybe 10 to 20 years ago, they’re trying to solve a problem, but trust wasn’t there. Now we know the technology works. Mm-hmm. There’s some stuff we’ve gotta work through, but we can work through the technology. But then how do we solve? And what we need to solve for is trust. And to solve for trust, you need to make sure that you have the right governance processes and infrastructure in place. And so having like the GENIUS Act is a foundational to establishing trust. Okay. Yeah.

Colleen: That’s a great point. I’m gonna go to the fourth section of my questions. When you’re talking about trust, now we’re introducing AI. When AI chooses how you pay, this agentic commerce. So should an AI shopping agent choose between cash, credit, BNPL, and stable coins for a consumer? 

David: At the end of the day, what problem are we trying to solve? And one, to be able to pay faster, one, to be able to pay cheaper and better. Think about it. So next week I’m going to North Carolina, I need to buy a plane ticket Two years ago, what would I do? I’ll go to Google. I’ll Google flights. What makes sense for me? You know, based on my schedule and my life- Sure ... right? Then what flight options makes sense for me? Maybe I might have some l-airline that I fly frequently, so I want to leverage my points. Then when it comes to the payment, I gotta figure out what payment type works best for me. With agentic commerce, what it can do and the promise is that it can consolidate all those disparate activities into one. You know who I am. I type into the agent, “I need to go here. I’m going to North Carolina.” You know my situation, you know my schedule, you know what’s coming up. Find the best deal for me that works for my schedule for the least amount of money with the best payment type. So I don’t have to do all these distinct steps. Amazing. So that’s the promise of agentic Okay So it makes sense 

Colleen: It does make sense. The way you’re explaining it- It makes sense ... makes sense, but you’re giving up control, and it goes back to that question Trust. Exactly. How do I know that the agent is working on my behalf? 

David: Exactly On the behalf of the airline company, on behalf of the, um, the AI company? Mm-hmm. I don’t know. But those are the questions that we need to answer. And so as all these things, I always say that the biggest conversation in an innovation in payments and finance is about governance, and that’s gonna be the biggest conversations that we as a society will need to wrap our heads around and try and solve for, and it’s gonna take a bit of time. 

Colleen: Should an AI agent ever be authorized to borrow money or establish a payment plan on someone’s behalf, can an AI agent actually say, “ we’ll put that on layaway. We’ll take that three percentage or 20 percentage finance charge”? Does it have that authority yet? So we have the technology to do that. 

David: The technology is there. Yeah. But should we do that? And it comes back to the conversation on trust and governance. We need to answer those questions Better. Once we’re able to answer those questions, then we can cede more control. But there are certain things, until we’re where we need to be, you need to have a human in the loop. So as of today, will I trust a AI agentic agent to do all this stuff for me? No. But there could be a time, and it’s not too far down the road, that you’re just told, “This is what you purchased, and this is how much it was, and this is your payment plan.” And you have to trust this agent. Exactly. So that’s one of the biggest conversations that’s going on. As we look at all these new innovations, how do we ensure they’re doing the right thing, especially on my behalf, right?

Colleen: To wrap this up, why do we need this type of education right now? Why is this the right time for a business degree at a STEM institution? 

David: Yeah. I always say that the problems that we need to solve are not technology problems They’re human pro-problems. We know that technology can do it, but we need to get to trust. And if you want to build the right innovations that work best for all of us, whether you’re a merchant, whether you’re a bank, whether you’re a consumer, then you need to not only understand technology, but you need to understand business, the business of business, and you need to understand people. And that’s what I love about WPI, is that we’re not looking at, these innovations as solely technology innovations, we’re looking at it as an opportune time and a massive opportunity to make sure that we’re bringing technology, business, and the needs of people together. And that’s how you build the right systems that can scale, at the end of the day, technology can automate decisions, but accountability and governance cannot be automated. And that’s why those two things, having the understanding of technology and bringing business and people is what we do best at WPI.

Colleen: Well, thank you again for all your time, this insight. I thoroughly enjoyed this even though my head’s spinning . 

David: Yeah, don’t, don’t let your head spin too much. You did a great job. Um, conversations like this matter, and the conversation doesn’t end here. It continues in the classrooms, in the research lab, engagement with industry, with policymakers, because this is a lot of work that needs to get done, and we’re gonna do it. We’re gonna do it. 

Colleen: All right. Thank you very much for your time. Thank you. This has been another episode of the WPI Podcast. For more episodes, you can go to wpi.edu/listen or wherever you get your podcasts. A special thanks to today’s guest and Varun Bhatt, our audio engin