More than 40 countries have implemented instant payment schemes, and over 56 real-time payment rails (platforms) are expected to be live by the end of 2020.
These instant payment services combined with the open payments paradigm are letting the world witness a wealth of innovative services. Confirming that the conversation about instant payments has shifted from merely building the business case for instant payments scheme into a dynamic discussion on how instant payments can add real value.
Businesses of all sizes are now keen to adopt instant payments to improve operational efficiencies, reduce costs, and create new value.
Here are a few key overlay services put to use to drive efficiencies: The ability for individuals, merchants, and businesses to pull payment from a customer or client.
- Hungary: Funds can be transferred using a payee’s mobile phone number or email address if the aliases or secondary account identifiers are registered centrally, with initiating banks authenticating the references at the time of initiation.
- Malaysia: P2P payments can be sent through alias services (Proxy Addressing Service) using mobile numbers or a national ID without knowing the bank account information of the recipient.
- Poland: The BLIK payment scheme (launched in 2017) enables real-time transfers to a beneficiary’s telephone number if it is registered in the BLIK alias database. BLIK allows users to pay through numerous channels, including online, mobile, ATMs, shops, post offices, local administration offices and through various service providers.
- Australia: Osko on NPP allows payment requests to be issued with a description from one or more parties; recipients can then respond with a payment in real-time.
- Europe: The EPC released the “Mobile Initiated SEPA Credit Transfer Interoperability Implementation Guidelines.”
- Malaysia: Request to Pay for mobile commerce and e-commerce applications.
- U.K.: Request to Pay enables the payer to pay in full, in part, decline or ask for more time, giving them greater control.
Real-Time Payments at POS
The ability to pay for goods and services directly at the checkout without the need for cards.
- Europe: The air travel industry (IATA) is working with Deutsche Bank to enable airlines to collect customer payments directly from consumer accounts for travel ticket purchases.
- France: A supermarket chain is leveraging its financial services wing to simplify the checkout process for its client base, using open banking APIs based on PSD2, through its smartphone app. Customers can directly pay at checkout and receive offers and discounts based on their behaviour and history through the app.
Payments Through Aliases
Being able to pay without the need for customers to use long, forgettable account numbers to transfer money to recipients.
- Hungary: Funds can be transferred using a payee’s mobile phone number or email address if the aliases or secondary account identifiers are registered centrally, with initiating banks authenticating the references at the time of initiation.
- Malaysia: P2P payments can be sent through alias services (Proxy Addressing Service) using mobile numbers or a national ID without knowing the bank account information of the recipient.
- Poland: The BLIK payment scheme (launched in 2017) enables real-time transfers to a beneficiary’s telephone number if it is registered in the BLIK alias database. BLIK allows users to pay through numerous channels, including online, mobile, ATMs, shops, post offices, local administration offices and through various service providers.
- Singapore: PayNow in Singapore allows transfers using a mobile number, national identification number and even a company registration number as a proxy address for the recipient, enabling businesses to migrate from traditional checks and cash to electronic payments and collections, reducing both costs and risks.
- Thailand: AnyID uses an alias beneficiary mechanism to eliminate the need to enter long bank account numbers. Bank account holders register bank accounts against a proxy ID of their National Identity Number or a mobile phone number.
- U.K.: PAYM has allowed P2P payments to be made using mobile phone numbers as an alias for bank account numbers since 2014.
- U.S.: Services like Zelle add important capabilities to underlying payment systems by populating and maintaining directories of aliases, establishing a common user-friendly experience, creating awareness and preventing fraudulent transactions.
Corporate Payments
Confirmation of Payee
Gives greater assurance that users are sending their payments to the intended recipient.
- U.K.: The U.K. Payment Systems Regulator has issued a specific direction to ensure that the U.K.’s six largest banking groups, covering around 90 per cent of bank transfers, fully implement Confirmation of Payee in 2020.
Going beyond retail payments to add services for corporate customer payments.
- Poland: Harbor customs offer just-in-time customs reporting and payments for imports/export at the port.
- Portugal: Offers Instant Loans service, in which banks use SCT Inst and open API banking to credit-check loan applicants and transfer funds instantly.
P2P Services
Making direct real-time payments from an application.
- Australia: Osko runs on NPP, offering instant funds transfer payment service.
- India: Money transfer apps Google Pay and Paytm feature chatting capability. Chatting apps WhatsApp and Hike have instant payment mechanisms.
- China: Market leaders Alipay and WeChat use QR code vouchers to integrate instant payments and add loyalty elements to a mobile wallet.
- China, India, Singapore and Thailand: Retailers, street food vendors and motorbike taxis display a QR code that customers scan for instant payment.
- Malaysia: P2P payments can be sent through alias services.
- Philippines and Thailand: Government payments use QR codes and underlying faster payment rails.
- U.K.: PAYM is a P2P payment mechanism using mobile phone numbers to send transfers (alias) and has been live since 2014 with 4M users.
As the world shifts ever closer to Real-Time Payments, it is looking increasingly unlikely that the incumbent payment solutions can meet the needs of today’s businesses and consumers.
Nth Exception is a boutique payments consultancy and technology firm, We help payments players capture opportunities in a fast-changing environment. Our payments-anchored capabilities assist banks in giving their corporate and financial institution customers more efficiency in, control over and value from payments.
