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The Potential of “Request to Pay” to Revolutionize Payments

Markets across the world are introducing a new payments innovation, called Request for Pay (RfP). It goes by different names in different markets; Collect payments in India, Request 2 Pay in Europe, Request To Pay (RTP) in the UK, or Request for Payment (RfP) in the US.

RfP offers the same benefits regardless of the name; secure messaging between the consumer and the biller (or merchant) to improve the control, flexibility and transparency of paying bills and – because RfP is primarily being implemented on top of real-time instant payments – immediacy of funds movement. As RfP catches on, the frequency with which consumers are confronted with the stress of ‘surprise’ bills should significantly decline.

Consumer benefits of RfP

A typical scenario, if using RfP as a consumer, would be receiving a ‘request’ to pay from a business, usually via a trusted app (most often a banking app) on your mobile device. A range of options offer greater control in managing the payment; paying the amount in full, paying in part, scheduling a reminder, asking for more time or declining the payment. The last two options would then trigger a conversation with the requester. The consumer gains more control of how and when they want to manage their money.

The benefits are clear. However, like any new product, for widespread consumer adoption the benefits of the service need to be well communicated and understood. Consumers need to have a compelling reason to use it. And that compelling reason has some hefty competition to stand up to.

Take eCommerce, for example, where PayPal’s payments experience has long been held up as exemplary customer experience and convenience. There are currently 254 million active PayPal accounts worldwide and it has widespread acceptance by merchants. For RfP to work, it needs to at least match – if not exceed – the expected standards around customer experience. Fortunately, it can, through pairing convenience and transparency.

In terms of convenience, when consumers want to check their balance prior to making a payment, they would quickly move to using their bank’s app. And that’s where RfP can deliver: if users want to see their balance, use their registered address if they need a delivery, or make sure they have the actual merchant’s name on the statement (rather than some back-office trading name they wouldn’t recognize).

Recognizing the appetite for these services, banks have already started to seriously look at the business case for RfP to improve customer experience and reduce overall consumer debt management costs. To further encourage adoption, banks now need to educate consumers on the benefits and think about how to incentivize them.

Driving adoption through incentivization

With budget-conscious consumers, incentivizing RfP usage could involve something we see in the credit card space; loyalty points. Offering loyalty points when the service is used could encourage consumers to use RfP, helping consumers collect points towards flights, hotels or event tickets. Loyalty points are a great way to get a customer to keep coming back and using a service. Alternatively, banks could offer cashback based on usage patterns, which is a common and effective practice in markets such as the United States.

Another way to incentivize the consumer would be through merchant-enabled installment plans, with real-time credit risk scoring so a line of credit can be offered immediately. Such an offer helps further consumer control over payments and financial position. With credit-enabled RfP, consumers can dictate to the merchant how much they’re willing to pay per month and for how long. This allows them to not only keep track of their personal budgeting, but own the purchased goods immediately. And merchants get the sale, plus potentially a share of any charge for credit. This capability is typically seen as a Day 2 feature in markets exploring RfP, but we can clearly see the applicability and desirability to merchants and consumers alike.

Those still using cheques – who often choose to do so because they know there will be a delay in the transaction – should also see a benefit in RfP; the amount of delay can be accurately specified by the consumer. They will have the power to decide when the money will be taken out of their account.

New use cases will continue to emerge

RfP has the potential to revolutionize payments, helping millions of consumers and billers to manage their money better, as well as allowing fintechs and merchants to introduce new ways to purchase goods and services.

It will be interesting to see the different use cases emerging as RfP continues to come to market across the world. We’re already seeing WeChat Pay being used in China; this is a payment feature integrated into the WeChat app (social messaging platform), allowing users to complete payments socially on their mobile device.

While there are hurdles to overcome, and mass adoption won’t happen overnight, by offering a flexible and transparent payments experience merged with the ability to better manage finances, I believe that we will be seeing more RfP digital payment experiences across Europe, the US and other markets that are already making the move to real-time payments.

Discover the use cases for real-time banks in the new whitepaper from Lipis Advisors and ACI Worldwide: Get More From Real-Time

Practice Lead, Real-Time & Digital Payments

Dean has been in the solution space for over 20 years. Initially starting out at IBM as an IT architect consulting to cross-industry blue chip clients, it was at IBM where, as lead integration architect on an ePOS chip & PIN replacement programme for a leading UK retailer, Dean caught the cards and payments bug. Following IBM, Dean moved 100 percent into cards and payments solution consulting and product management leadership within TSYS, and later with Vocalink. At Vocalink Dean was head of product for what is now known as Pay By Bank App, combining faster payments with mobile payments to replace plastic cards to buy goods (a precursor to PSD2). At ACI Worldwide, Dean has held various product leadership roles covering consumer and merchant management, clearing & settlement, reconciliation, dispute management, mobile payments and now immediate payments and hub solutions. With this latest addition Dean is working with global partners to support the transformation of payments into a digitally-native, real-time industry, supporting any payment, every possibility.