We are really only in the first wave of RTP implementation. The global payments industry has proved successfully that it can move money in real time, safely and securely. The next wave will see greater monetization of this service by both banks, fintechs & paytechs. Data will need to be moved as quickly as the funds themselves, and institutions will need to provide tailored services built on robust data analytics. We will continue to see increased demand for access to RTP systems globally as new players jostle to provide these services to their customers. Whilst the initial focus of RTP implementation has been P2P payments, strategies to increase usage in the B2B and B2C space will begin to take priority as banks & fintechs seek to drive volume.
Payments are still a network business and therefore we will continue to see RTP infrastructures supporting the industry in continuing to maximize their investment. RTP infrastructures globally have a continued role to play, not just in the continued operation of the system but also in design and/or deployment of innovative value-added services, standards development as well as promotion of access and usage. We are seeing this in many countries, from FAST in Singapore’s implementation of QR codes to Request for Payment in the UK & Canada.
The rise of Open Banking adds another dimension to the real time payments ecosystem. If Open Banking is to include payment initiation services, then it’s success is linked to the success of real time payments. Therefore, the impetus to ‘get it right’ will be strengthened. Payment initiation in the context of Open Banking will only be successful if a real time payments infrastructure is trusted and used by customers. Continued work will need to be done globally on consumer education both in terms of Open Banking and real time payments.
Real time payments are likely to be the ‘de facto’ method of credit transfer in the future, and a flexible but robust infrastructure is at the heart of the future economy. However, implementing the system is not the end of the story. Sufficient planning to understand usage volumes, a unified approach to legacy infrastructure and a strategy for increased value-added services should all feature in the recipe of a successful real time payments system.
Real time payments is the discussion within the payments industry, the focus has initially been on Person-to-Person (P2P) payments, as the use cases are more apparent. However, as banks and other payment service providers seek to maximise the investment they have made, other payment types are being considered as fertile ground for real time payments.
One of the most anticipated trends in payment industry is adoption of real-time payments. The demand for seamless, instant and easy of payment has reached a critical point. While the banks worldwide are getting to launch their instant payment services one must understand and overcome a variety of challenges that it will come with it. Real-time payments will soon need Real-Time posting of the payments.
Financial Institutions that rely on legacy back-office systems and processes are less equipped to handle faster payments. Adopting to faster payments without upgrading back-office systems will create bottle-necks in the payment transaction life cycle. Slow and manual back office processes will choke the posting no matter how fast the payments moves in the network.
So, what's Real-Time posting and how does it differ from settlement?
Real-time payment methods often have real-time postings (or near real-time), while settlement can still take place overnight. Real-Time posting is when the funds are made available to the person to whom money is paid and Settlement is the actual money that is transferred between the banks.
To remain competitive in current payments landscape, the changes brought by real-time payments creates a strategic opportunity to modernize end to end Business & Payments System processes.