Driving Faster Payments in the U.S. and Around the Globe
In advance of next month’s NACHA PAYMENTS conference, we wanted to connect with some of the companies that are driving real-time payments around the globe. VocaLink is one such organization. The company is providing the central infrastructure software to The Clearing House in the US for its Real-time Payments System. VocaLink operates the UK national payments infrastructure, which processes 90 percent of UK salaries, and also implemented the FAST service in Singapore and PromptPay in Thailand, enabling international faster payments. In September of last year, ACI and VocaLink announced a partnership to offer a complete end-to-end immediate payments solution to launch a domestic or regional immediate payments network.
We recently sat down with Jim Mortimer, Head of International Propositions at VocaLink, who shared his insights into immediate payments, how digital payments are evolving — and why millennials’ payment habits, in particular, are important to the industry.
What is VocaLink’s role in the broader ecosystem of faster payments?
We provide our Immediate Payments System solution for central infrastructures to manage the clearing of real-time payments.
In recent years, we have seen the demand from regulators and industry constituents for the modernisation of their payment systems increase dramatically. VocaLink’s role is to respond to that call from the international market and provide tailor-made real-time payments solutions. These solutions are built to address the needs of the regulator or the market, and provide a platform on which they can power a digital economy, enable further innovation and drive the modernisation of their country’s payments systems.
What lessons about faster payments can we glean from VocaLink’s latest global research on millennials?
The oldest millennials are hitting the peak of their economic productivity and purchasing power. Their choices are set to profoundly shape developments in business and commerce - especially regarding how they access money. What we saw from our research was the clear ascent of the use of mobile payments continuing amongst the millennial generation, as 36 percent of Dutch millennials and 25 percent of UK millennials are making mobile payments in-store, online and in-app. In the U.S., millennials are more risk averse to new technology from fintech providers with 70 percent of US millennials more likely to use a new mobile payment service if it was provided by their own bank, citing their bank as the most secure option. Regardless of where they live or how they pay, millennials want to use technology that is seamless and secure, and allows them to make payments instantly - a trend that will help support the international roll-out of faster payments.
There are faster payments schemes cropping up all over the world; when will faster payments become a reality in the U.S.?
As the digital payments landscape continues to evolve, creating global market and business opportunities, it is vital that the U.S. remains at the forefront of payments innovation. As the central infrastructure provider to The Clearing House, we are excited to see this go into production later this year.
Our IPS system is the most sophisticated software to be deployed in any of the modern real-time central infrastructures. Our goal is to build on the success we’ve had in markets like Thailand and Singapore and implement it in the U.S. And beyond that we look forward to the global interoperability of these various schemes.
How does a country like the US drive awareness and adoption of real-time payments given the vast number of financial institutions?
It is definitely a community effort. The Faster Payments initiatives underway with the Federal Reserve have provided a lot of visibility to this capability. It takes parties across the industry coming together to collaborate on how to best make this available. Partnerships such as the one we have with ACI helps facilitate bank onboarding to the scheme so more banking customers can be reached, faster. Rich functionalities such as Request for Payment will enable all kinds of billers to more easily accept real-time payments. Old-fashioned education will be an important component to reach end users too.
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