The need for real-time modernization

Across the world, markets are gearing up to change the way they pay. Convenience and speed are key and a huge benefit to customers. To enable the real-time movement of money and support the on-demand economy, there is a need for payments system modernization and this need for real-time modernization is increasing from all corners. Consumers expect to be able to make payments instantly, 24/7, while benefitting from an economy that does not rely on cash, enabling them to pay bills and taxes more easily. As seen throughout the COVID-19 pandemic, the ability for governments to reach citizens with disbursements in real time rather than sending a check in the mail has been essential to keeping the economy going.

Building for payments scheme success

Since announcing our collaboration with Mastercard in September 2020 to advance new payment solutions and experiences for customers, we have seen a real need for real-time modernization across markets. With the new innovative payment offerings in networks across the globe in 2021, it became clear that innovations such as digital overlay services were critically important for mass adoption of real-time schemes around the world. Innovations such as these enable consumers, banks and corporates to make in-app payments, make bill payments, use QR codes and have frictionless payment experiences in day-to-day life. But why is there a need for these services?

Payment networks to enable financial inclusion

In markets that have historically heavily relied on cash, or where someone must travel two hours or more, there is huge potential for increased financial inclusion if central banks are to embrace digitization. To achieve financial inclusion, central banks must embrace digitization to create access and drive usage to new payment systems. Smartphone adoption has reached 70 percent in developed countries, driving the adoption and increased demand for P2P payments, Request to Pay, bill and tax paying and mobile wallet usage. Somya Patnaik, principal product manager, real-time and digital payments, spoke on this very issue in a podcast with Central Banking – she discussed how to drive usage of these payment networks, primarily with QR payments, which are accessible via smartphones.

Whilst use cases such as QR payments can replace use of cash or checks and drive financial inclusion, services need to be accessible and as targeted as possible for each market to drive usage.  As such, when approaching payments system innovation, it is important to not only put the new technology in place, but to make sure it addresses the needs of citizens with a simple solution. With this approach, ubiquity will be achieved across the market. To hear more about successfully connecting to citizens with new payment systems, I discussed this in a Central Banking podcast with George Evers, senior vice-president, real-time payments, Mastercard.

The need for speed

We have seen over the past year that expectations are constantly increasing – every consumer and corporation wants to make payments secondary to their life; that is, they do not want to have to think about it. With increasing transaction volumes and the rise of payments worldwide, real-time ubiquity has become a necessity. Mastercard’s Evers and I also sat down for a video Q&A hosted by Central Banking to discuss the evolving payments landscape. We concluded that speed, certainty and finality are needed to benefit the end user, whether it be a consumer or a business. As we move further into 2022, this requires governments and central banks to evolve from an informal cash economy to a more vibrant digital payments ecosystem for the benefit of all citizens.

To learn more about how financial institutions can get up to speed with real time, download our joint eBook with Mastercard on keeping pace in a global economy.

Head of Real-Time Payments, Product Management

Craig has over 25 years' experience working with banks throughout EMEA with their corporate payments and banking needs. He has been with ACI for over 12 of those years, providing specialist consulting to wholesale banking customers. Through the initiatives of the Euro, SWIFTNet, CLS, TARGET, TARGET2, SEPA, and UK Faster Payments (amongst others), Craig has helped customers leverage the power of the ACI solutions to ensure that the business needs are met. Craig is currently Head of Real-Time Payments, Product Management. Working with customers, prospects and industry players alike, he helps to ensure that ACI's products are industry-leading and are always ready to help our customers.