It might be prime time for real-time today, but the truly global success of real-time payments requires the creation of domestic and regional systems that serve every market – and can carry these innovations over the last hurdle.
Regulators, governments, central banks and financial institutions all have a role to play in the realization of these new real-time payments systems. I spoke to Stephen Grainger, EVP – New Payment Platforms at Mastercard, about some of the challenges faced.
Craig Ramsey: Real-time payments and rich data standards hold a lot of promise for businesses, especially those that operate across borders – and there are compelling reasons for a country to put central infrastructure in place to support a real-time payments scheme. What is holding some markets back?
Stephen Grainger: For starters, central infrastructure providers will only launch a real-time scheme once, so in all likelihood those working on the project have never done it before. In the past, they have had to figure out how to work with multiple providers in order to tie in the various participants in the ecosystem – there’s not been a “one stop shop” for real-time payments infrastructure. While most countries start with a domestic scheme, the complexity is multiplied for international payments. Additionally, the unique nature of implementing a central infrastructure means there’s little opportunity for learning from past mistakes.
CR: But, can countries that are just starting on their payments modernization journey take learnings from others? We’ve seen already how some regions – for example in Southeast Asia, or the Nordic region with the P27 project – have made significant strides.
SG: Exactly. P27, for example, is an interesting model for how multiple countries within a region can collaborate with the goal of building a common central infrastructure. While it undeniably adds complexity, the advantage of this approach is that the scheme is built from the outset with cross-border payments in mind – and enables participating countries to share the costs. P27 has also demonstrated the importance of converting a real-time scheme into value propositions for businesses and consumers. The P27 model may serve as a viable model for those regions – like the Nordics – where countries are closely integrated in terms of business, trade and culture.
CR: For those that do want to emulate the more advanced schemes, it’ll require more than just copy/paste, not least because of local compliance and regulation issues. How can central infrastructures reduce complexity even as they take these learnings from others?
SG: There are many pieces of the puzzle that need to come together; software, scheme rules, digital overlay services, testing, participant connectivity and onboarding – not to mention compliance and regulation as you already mentioned. Some of that complexity can be addressed with an end-to-end solution that has the necessary “building blocks” – from overlay services and APIs to a choice of deployment models and rapid connectivity for scheme participants. While there will never be a one size fits all approach, if software providers partner effectively they can put their “building blocks” together to offer a more comprehensive end-to-end solution to central infrastructures and scheme participants.
CR: Can you give us a little more detail about the recently announced partnership between Mastercard and ACI, and the building blocks each brings to the table?
SG: Real-time payment schemes around the world are continuing to add new participants and value-added services, with additional country and regional schemes launching each year. To give you an idea of the scale of the growth, there are currently more than 20 schemes globally in varying planning stages. The recently announced collaboration between ACI Worldwide and Mastercard will help to accelerate the development and usage of real-time and multi-channel payment platforms across these markets. What is unique about this partnership is that both Mastercard and ACI have deep experience in supporting real-time payments schemes and central infrastructures – but contribute different building blocks to the joint solution. The result is a one-stop shop solution that leverages each other’s strengths and combines our expertise in supporting schemes around the world, but retains the flexibility and choice needed to adapt to local market conditions and continue driving real-time adoption.
Read more about ACI’s recently announced collaboration with Mastercard.