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Next-generation payment schemes, underpinned by the real-time transfer of funds, have become commonplace around the world. Most major markets are now either live with national account-to-account (A2A) instant payment capabilities or have them in development. And research from ACI and GlobalData forecasts that real-time payments will account for 27.8% of all electronic payments globally by 2027.
With the payment rails in place, the next phase of growth will be centered on developing the account-to-account, real-time, data-driven use cases that will promote consumer and business adoption to in turn generate revenue for banks, save cost for end consumers and unlock the economic benefits of more efficient payments for governments.
As Payments NZ pushes ahead with scoping out the market’s next-generation payments scheme, Aotearoa New Zealand’s banks have ample examples from around the world when it comes to the kinds of use cases most likely to drive breakthrough adoption — and the technology architecture best practices that underpin them. That means they also have ample opportunity to plan for how best to take advantage of the new opportunities on the horizon.
That planning will of course take place in the context of banks’ wider (and ongoing) challenges around transforming business models, operating procedures and market approaches in the face of constant influx of regulatory and industry changes.
Juggling multiple time-pressed projects at any given point in time, banks might be tempted to address only immediate requirements ahead of the launch of real-time payments. This would be a risky approach: real-time payment volumes have shown exponential growth in many countries and requirements often tend to grow larger in scope, and quickly. While most countries start their next-generation payments journey with simple functions like credit transfers, payment schemes will soon adopt more complex business flows involving larger stakeholder ecosystems. Hence it is vital that banks develop a three-to-five-year strategic business and technology roadmap when building out their business plans for real-time payments.
Scalability and extensibility
Practically speaking, there are two challenges for banks to solve from an underlying architecture point of view: connectivity to the new payments central infrastructure and building the core engine to process and manage end-to-end, account-to-account, real-time transaction processing.
Change is accelerating when it comes to payment habits and technology in general. So banks’ next-generation payment systems must be built with scalability and extensibility in mind. That way, they can efficiently and reliably support current ecosystem requirements and quickly and cost-effectively respond to future ones as new business services are added to the scheme.
To illustrate this point, Payments NZ has observed: “Older offerings in other jurisdictions are now being revisited to address functional limitations and new opportunities (e.g., Singapore FAST and U.K. Faster Payments).” Closer to home, Australia’s New Payments Platform (NPP) was launched in 2018 at a time when the Reserve Bank of Australia’s initial objectives did not include real-time debits, cross-border payments or third-party payments initiation. Today these are core features of innovative and competitive next-generation payment schemes, with PayTo starting to take off in 2023.
Banks in New Zealand might initially be expected to support a whole ecosystem of payments functionality from A2A and Request to Pay, to mobile wallets and POS QR-code acceptance. But future requirements could grow to include central bank digital currencies and cross-border connectivity. As such, it’s imperative that they find flexible technology solutions that will allow them to expand and grow their payments offering as new demands and capabilities arise, or as technologies and business requirements change.
In short: New Zealand’s banks must develop payment architectures that are easy to manage and extend in order to accelerate time to market on new services.
An example of next-generation payments architecture in action
In ACI Worldwide’s decades of experience in building, maintaining and connecting to real-time payment schemes around the world, on behalf of both central banks and financial institutions, that means a cloud-native technology platform. One that is also ISO 20022-native and that leverages microservices and open APIs for scalability and simplified connectivity. Ideally, it also means working with a vendor that can offer a single payments platform for both low- and high-value real-time payments.
Our work with one of the leading universal banks in the Philippines is an example of this kind of next-generation payments architecture in action.
The bank chose the ACI Enterprise Payments Platform for full payment hub capabilities for low- and high-value payments, including payment processing, domestic scheme gateways and SWIFT on ISO 20022 standards — all on a single platform. Our cloud-native real-time payments platform and flexible, modern architecture will ensure that the bank can provide secure services to consumers, merchants and corporate customers, including emerging and new payment types, while also staying ahead of evolving regulatory demands.
ACI: The leader in APAC real-time payment projects
ACI Worldwide’s work with Security Bank is simply a continuation of our unrivaled track record of implementing critical next-generation, ISO 20022-ready payment ecosystems and central infrastructures across the Asia-Pacific region.
For example, the central infrastructure for Indonesia’s BI-FAST is based on ACI technology and expertise. Into just its second year of operation, the scheme now has 106 direct participants representing 87% of the national retail payments market. BI-FAST’s stunning growth is the result of the Bank of Indonesia’s ability to respond, with the help of ACI, to rapidly increasing consumer demand for a fast, easy, secure and affordable national payments system.
ACI’s solutions also power the central infrastructure and entire bank ecosystem of Malaysia’s Real-time Retail Payments Platform, as well as Thailand’s National ITMX with real-time ISO 20022 bulk payments.
Globally, ACI Worldwide covers approximately one-third of the markets that offer real-time payment services, reaching about 1.8 billion people[i] served by various organizations, including central governments, payment networks, banks, financial institutions and fintech companies.
To learn more about ACI’s real-time payment solutions, head to aciworldwide.com. Or for more insights into key developments and trends in next-generation payments, read ACI’s 2023 Prime Time for Real-Time report or Real-Time Payments and the Future in Aotearoa New Zealand.
[i] Data provided by GlobalData