MASTERCARD Signals
Reaching Beyond: Payments in Space
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June 2020
Overview
Over the last 20 years, private industry has aggressively moved into the business of space—outer space—bringing new technology to the field and raising expectations for what is possible both on Earth and beyond. In 2019, private investors funneled almost $6 billion into the space industry. SpaceX, the aerospace company owned by Elon Musk, has planned to launch 38 missions this year and almost twice that in 2023. Overall, the global space industry is expected to generate over a trillion dollars in revenue by 2040. The heavens have never been closer. Interest in the cosmos extends far beyond the realm of aerospace firms. Consumer packaged goods, travel, and other industries are investing in a future that includes space tourism, space habitation, and the use of space technology to improve experiences on Earth. Four years ago, First Data and Nationwide Building Society completed a contactless transaction 100,000 feet above the Earth using a robotic arm and a weather balloon. Last year, Hilton Hotels became the first hospitality company to participate in research aboard the International Space Station (ISS) by sponsoring a program to bake Doubletree by Hilton’s signature chocolate chip cookies in space. P&G has been sponsoring research on board the ISS for almost a decade, leading to the development of new ideas, patents, and products.
Private industry funneled almost $6 billion into the space industry in 2019
$6B
"Because it's there."
— George Mallory (in response to the question, “Why did you want to climb Mt. Everest?”)
It would be easy to dismiss these explorations as PR exercises, but the advancements to space flight achieved in the last decade suggest there is reason to consider a future where humans both inhabit space and make use of either space-based or space-developed technology on Earth. So, at what point should we contemplate payments in space? If we expect space communities to exist within our lifetime, people or devices will eventually need to complete payment transactions. What near-term opportunities may exist? What will it take to realize them? And why, in the end, should we care? To answer these questions we spoke with experts, enthusiasts, physicians, educators, urban planners, and entrepreneurs to help us form a vision for what life might be like among the stars. Our goal was to paint a realistic picture of what living, working, buying, and selling in space would entail. The Earth is unique in the universe, as are its inhabitants. Thus, life off planet, at least initially, will be very different. Our homes, our commutes, the way we brush our teeth. Our notion of exercise, our vehicles. The resulting portrait suggests life off planet would require significant changes to almost all facets of human behavior, including commerce and payments, as we know it today.
The global space industry is expected to generate a trillion dollars in revenue by 2040
$1T
SURVIVING IN SPACE
Space flips our conventional notion of scarcity on its head. Rare earth minerals such as gold and platinum are believed to exist in abundance beneath the surface of asteroids and other celestial bodies. By some estimates, certain asteroids could contain more platinum than has ever been mined on Earth. Similarly, asteroids may contain enough iron, nickel, and cobalt to meet our needs on Earth for 3,000 years. Space also provides an ample supply of renewable energy in the form of solar energy. Over the last ten years, the cost of capturing and delivering solar power on Earth has fallen dramatically. Between 2009 and 2019, the cost of solar panels fell from over $8 per watt to around $2.50 per watt. In addition to solar, depending on the atmospheric conditions of the planet, wind power and even methane or hydrogen-based solutions could become viable. Conversely, items we take for granted on Earth—water and breathable air, for example—are in very short supply in space. In space, water will be among the most precious of commodities—perhaps even traded as such in global (galactic?) markets. In anticipation of this, some companies have focused their attention on solving for this life-sustaining requirement. The Japan-based ispace Inc. is working to develop low-cost lunar modules in the hope of efficiently transporting water and other resources between the moon and Earth. Where water is present in the form of ice, it needs to be mined, melted and processed before it can be consumed. Once consumed, water will then need to be treated and recycled. The need to recycle water consumed in space is complicated by the introduction of shampoos, detergents and other materials used in our everyday lives, which will need to be filtered out and disposed. Food, on the other hand, may be less of a constraint on our ability to live in space as humans require lower caloric intake while living there. Today, astronauts living on the ISS consume pre-packaged food, some of which must be prepped using water and an oven. Used food packaging is stored and returned to Earth as cargo where it can be disposed. Looking further out, it appears feasible that we could ultimately grow food from Earth-derived seeds.
LIFE IN SPACE
“Space exploration is a force of nature unto itself that no other force in society can rival. Not only does that get people interested in sciences and all the related fields, [but] it transforms the culture into one that values science and technology, and that’s the culture that innovates.”
— Neil deGrasse Tyson
GRAVITY
On Earth, life as we know it—the warmth and light of the sun, the Earth’s atmosphere, the currents of the ocean—depends in some way on gravity. So, how will we live without it? Today on the ISS, occupants must learn new habits and use specially designed equipment to conduct daily activities. Blankets float away if not strapped down. Droplets of water bounce off their intended target. Moving from one place to another requires forethought and planning. The simple things we take for granted on Earth become challenging puzzles in space. In an orbital space station, gravity could be manufactured using what are known as O’Neill Cylinders. First proposed in 1976 (and most recently by Amazon’s Jeff Bezos), O’Neill Cylinders are large cylinders designed to recreate gravity through centrifugal force. Under these circumstances, life in space—housed within giant rotating cylinders—could look very similar to life on Earth in terms of apparent gravitational force. By contrast, the moon and Mars have only one-sixth and one-third of the Earth’s gravity, respectively. Without a mechanism to recreate gravity in these environments, the challenges of emulating day-to-day earthly activities would be significant. Without gravity, our collective reliance on the use of pockets, wallets and handbags may need to change in space. Physical currency such as coins would pose a clear annoyance and potentially a safety hazard in places with diminished gravity. Contactless and online payments will most likely be the preferred payment mechanisms. Alternatively, biometrics could be used to identify consumers entering into a potential transaction. In fact, preserving the safety and security of the space community may require far more intensive tracking of individuals than we are used to. Location data, water, oxygen, and radiation levels will need to be monitored in real time. Given limited supplies, staying on top of resident health and welfare will be critical.
“Everything every day here on Earth is based on gravity, and you don’t realize it until you don’t have it anymore.”
— Peggy Whitson, Ph.D and NASA Astronaut
HABITAT
Where will we live in space? Today, most investment is targeted at developing habitats on orbital space stations, the moon or Mars. Orbital space stations would seem to have considerable advantages over both the moon and Mars in the near-term. On MIR and now the ISS, individual astronauts and cosmonauts have on more than one occasion spent more than six consecutive months in space – in some cases more than a year. Conversely, humans have not walked on the lunar surface since 1972, and we have yet to set foot on Mars. Because of their proximity to Earth, orbital space stations also provide more optionality and security in terms of transporting people and cargo. When this will happen is an open question. The structural elements required to house human life for extended periods of time in any of these locations could take years to transport or develop. Whether components need to be fabricated on Earth, sent into orbit, assembled and tested, or 3D-printed on site using resources mined from (or near) the intended location, the timeline may be quite long indeed. Of course, all of this could change very quickly. NASA is targeting a return to the Moon in 2024. Bezos’ private space company Blue Origin is developing rocket engines that could power future lunar landings. Musk’s SpaceX remains focused on the goal of not just putting boots on Mars by 2025, but breaking ground on a Martian city by 2030. Where and how we live will directly impact what we own and buy. On the ISS, the entire crew lives and works in an area just over one thousand square feet. Without room to store things, one wonders how often consumers will make purchases in space. In theory, this lack of storage could result in an increased demand for digital content. In closet-sized living compartments, digital windows and artwork could provide much needed distraction and customization. Esports could replace traditional sports. Music, movies and books will be digital. We will still need clothing, but even apparel will need to be rethought for space. Within the confines of a secure, pressurized environment such as a space station, people could theoretically wear clothes much like they do on Earth. However, washing and folding laundry present interesting challenges in the absence of gravity and readily available water. In open space, specialized equipment is needed to maintain life. There is no barometric pressure, gravity or oxygen, and temperatures outside of the Earth’s atmosphere are understatedly described as extreme. Temperatures in Earth’s orbit fluctuate between -250 degrees to 250 degrees Fahrenheit depending on the position of the sun. On Mars, the average temperature is about -80 degrees Fahrenheit. In this harsh climate, machine-to-machine communications including payments are likely to be needed. Activities such as delivering supplies, mining asteroids and terraforming planets will likely require prolonged exposure to inhospitable environments. Machine-to-machine payments would enable the exchange of payloads and information in addition to payment instructions to facilitate these operations. And what about stores? The lack of shelving and storage may mean merchant locations are almost entirely digital. Not only will this limit the amount of room needed to store inventory, but it will also eliminate the need for point-of-sale terminals, electronic cash registers and ATMs.
Payment transactions between Mars and Earth could take almost 45 minutes to complete
45mins
COMMUNICATION
Information is the lifeblood of an economy, allowing markets to function efficiently. In more developed economies, the ease and speed with which information can be sent and obtained is an afterthought at best. Consumers shop the global marketplace from the phone in their pocket. Factory floors can operate on a minute-to-minute basis. High-speed trading algorithms execute financial transactions faster (literally) than the blink of an eye. As we move towards 5G, our expectations for speed and availability will further advance. Today’s communication technology introduces significant latency into the system. Between the ISS and Earth, for example, communications experience a one- to two-second delay. But between the Earth and Mars, the delay could be anywhere from 4 to 24 minutes depending on the distance between the planets at the time of transmission. In an information market, how will this delay impact commerce? Consider a simple in-store credit transaction. A card is tapped or dipped; an authorization request is sent to the consumer’s issuer, and fraud checks are executed in real time by multiple parties. The authorization comes back to the merchant and the transaction moves forward ultimately to clearing and settlement. Imagine this same transaction on Mars. If the consumer or the merchant must communicate back to Earth to proceed, the payment process could take almost 45 minutes. If people living in space are going to maintain Earth-based financial accounts (an open question), then real-time communication between a space economy and the Earth will be required. Today on Earth we have mechanisms for dealing with communications that are delayed or interrupted. Stand-in authorizations, local processing solutions, and prepaid accounts, for example, can mitigate delays at the transaction level. Distributed ledger technology may also ultimately prove to be useful in these circumstances.
Between 1970 and 2000, the cost to launch a spacecraft was about $18,000 per kilogram. Today, the cost of a SpaceX trip to the ISS comes in at about $2,700 per kilogram
$2,700/kg
TIME
In addition to delayed communication, we will also need to contend with the challenges of keeping time. At one level, there will be an adjustment as we move to something other than a 24-hour day. A day on Mars is slightly longer than a day on Earth. On the ISS, the sun rises and falls 16 times over the course of the equivalent of a single day on Earth. Operating on a 24-hour Earth clock would at a minimum feel strange for anyone living in space. On top of this, it is incredibly challenging to maintain time synchronization between Earth and space. On Earth, refrigerator-sized atomic clocks help us maintain a common sense of time around the globe. In space, an equivalent solution is in testing, but it is not yet proven to be failproof due to the distance and environmental considerations involved. Why does this matter for commerce? Imagine the challenge of settling disputes or conducting exchange-based trades from space. Not only will there be delays in the messaging, but the time of the trade will need to be synched to the local time to maintain an accurate ledger. The distance between Earth and potential space habitats also creates some interesting challenges. A trip to a low-Earth orbital space station will take about a day. Travel to the moon takes up to three days, while travel to Mars takes approximately six to eight months. Additionally, because objects in orbit don’t stay in the same place relative to one another, a round trip can take more than twice as long as a one-way trip to complete. And of course, the cost of transporting cargo into space is considerably more expensive than on Earth. Between 1970 and 2000, the cost to launch a spacecraft was about $18,000 per kilogram. Today, the cost of a SpaceX trip to the ISS comes in at about $2,700 per kilogram. By contrast, the cost of moving freight by air on Earth today is estimated around $1.50 - $4.50/kilogram. Free shipping and returns are unlikely to be coming to space anytime soon.
1 Moon day = 27 Earth days If you were standing on the surface of the Moon, it would take about 27 days for the Sun to move across the sky and return to its original position.
Not all investments in space are as forward-looking as cities on Mars. Several companies are attempting to use space technology to deliver solutions here on Earth. In each of these technologies, there are clearly opportunities for payment use cases on Earth, although the extent to which they outperform current tools and methods is not yet known. Within the last decade, the cost of launching satellites into space has come down dramatically. As a result, many companies such as OneWeb, SpaceX and Laserlight are attempting to deliver low-cost broadcast and communication capabilities. The hope is that satellites will make high-speed internet access ubiquitous on Earth. Today, connectivity is hampered by physical constraints that would not impact the signal from a satellite orbiting above the Earth. These same communication networks could be used to send and receive payment information to remote regions in an effort to bolster financial inclusion. Blockchain and AI innovations built for space-based use cases will support the growing adoption of these technologies on Earth. Blockchain technology is being explored as one way to account for transactions of money, inventory supplies, and information. As transaction ledgers are adapted to meet the complex needs of outer space, improvements to the use of blockchain systems will no doubt increase the effectiveness and power with which we use blockchain for applications on Earth. Likewise, machine learning and artificial neural networks are playing a significant role in space exploration. With applications ranging from navigation to enhanced situational awareness, AI will play a major role if we are to ultimately send people to Mars and other locations beyond the Earth-moon system. In 2018, NASA and Intel partnered to develop an alternative to GPS that could assist with navigation on the moon. Instead of relying on a satellite and tracking software to determine one’s location, the system relies on AI-processed images of the lunar surface.
NEARER TERM OPPORTUNITIES
“There is a fledgling investment boom, but the feasibility of space as an industry (beyond telecom and mapping satellites) requires [not only] engineering feasibility but the creation of economic value.”
— Scott Stern, MIT
As we consider the implications of a future where payments in space may one day be needed, the clear question is why now. Banks are not lining up to establish branches on the moon (yet). Even in an era where space tourism seems likely, there is every reason to believe that any commerce occurring during these astral vacations will be completed using closed systems such as on a cruise ship or in a theme park. If you’re paying $250,000 for a ticket, the bottle of water and the astronaut ice cream had better be included. So why now? On a practical level, there is a growing interest in coordinating public-private partnerships around space to fuel an expanding appetite for research and discovery. Perhaps more importantly, in an era where the path forward is built on the latest innovation, and the challenges of tomorrow will increasingly require a mix of ingenuity, collaboration and diligence, setting our sights on the stars might be exactly the mindset we need. The challenges facing humankind are not insignificant. If we seek to live in a world where anything is possible, why not focus on the impossible? If we hope for a future that is bright and far-reaching, why not reach for rocket ships? To quote the late Norman Vincent Peale, “Shoot for the moon. Even if you miss, you’ll land among the stars.”
WHY SPACE?
Acknowledgements Expertise and inspiration for this article generously provided by the following: • Chantelle Baier (4Space | Managing • Partner)Cezar Rujan (MEGA AS | CEO) • Thais Russomano (InnovaSpace UK | CEO & Founder) • Nihar Shah (SES | VP Strategy and Market Intelligence)
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