Around the world, countries that have not already implemented an immediate (or real-time) payments environment are moving to do so. UK Faster Payments, which went live in May 2008, continues to experience tremendous growth with bulk payment volumes, while FAST (formerly G3) in Singapore and NETS in Denmark are showing significant growth. Australia’s New Payments Platform is driving toward implementation in 2017 while the European Central Bank (ECB) has stepped forward with an initiative to try and standardise the systems in use across the Euro Zone. In the United States, the need for an immediate payments environment has been recognised and approaches are under evaluation.
The UK has been at the forefront of implementing a real-time payments environment. The UK Faster Payments Scheme has to-date achieved significant success in providing real-time payment and settlement services for small businesses and consumers, but there is more work to do before immediate payments realise their full potential. We are proud to support the UK Faster Payments Scheme as it prepares to open up access to new payments services providers – all of which will drive the growth and value of real-time commerce across the economy.
While each immediate payments scheme may utilise a different approach, the fundamental result is the same everywhere — delivering a mechanism to move funds quickly and cost effectively, making payments with the speed and certainty expected in an online world.
The immediate payments infrastructure is a fundamental change in itself – but the transition to real-time can also change fundamentally the way we do business, and raise the expectations of customers – both consumers and businesses alike.
Crucially, real-time enables services that disrupt the status quo – and financial institutions evaluating the path forward for real-time payments need to recognise the opportunities that are being created to maximise business value. From a financial institution’s perspective, immediate payments processing offers several areas of opportunity, including:
- Add-on service capabilities: driving increased value to customers and facilitating competitive differentiation
- Coordinated payments processing across silos: enabling any-to-any payments processing to improve customer experience
- Improved risk management: offering control, improved visibility and powerful analytics across payment types
We work with organisations to look beyond the technical implementation of a real-time gateway, helping them to overlay revenue-generating services that support their longer term strategic goals. Our experience in supporting members of UK Faster Payments has shown us the clear business benefits that can be achieved.
But there’s a bigger picture. At the macro, industry level, an immediate payments infrastructure does more than enable new banking services. It brings the promise of interoperable real-time schemes, across the European Union and globally. It raises questions that challenge and may, in time, fundamentally change the banking space. Questions like:
- What about real-time liquidity management for banks and for corporates?
- In a real-time world, what, if anything, is the future for cards?
- What happens to SWIFT, correspondent and corporate banking?
- With PSPs accessing bank account details (via PSD2), will banks ultimately be needed only for low revenue payment clearing?
These are all questions that banks around the world must ultimately resolve. Immediate payments is here, or soon will be, and it is not optional. It will provide both an opportunity to differentiate and drive value, and is a direct threat to current business models.