Real-time payments shift a gear to corporate level
There is no longer an issue of whether to offer real-time payments but rather how to offer them, according to the panellists in yesterday’s Real time: how fast is too fast? session. And now the demand has stepped up a gear from peer to peer payments to the corporate world.
Session moderator Liz Oakes, senior leader for payments at consultancy KPMG, commented that the debate at Sibos on real-time payments felt like it had moved on from delegates asking whether they should do faster payments, to how they should do it and what the risks were.
In Asia, the use cases and issues are different, said Karin Flinspach, head of cash products, transaction banking, Standard Chartered. Unlike in the US, for example, where there is a greater use of credit and debit cards, it is the mobile phone that is driving payments expectations in Asia. She said the debate so far had been driven around peer to peer and government to consumer use cases, but “now we see a lot of demand in the corporate space”.
Craig Tillotson, chief executive of the UK’s Faster Payments, pointed out that consumer expectations had changed with the availability of 24×7 payments. He noted that those working in companies are also individuals and are now bringing their consumer expectations to the corporate environment. “Businesses are saying ‘I could use Faster Payments to deliver a better experience’,” he said, giving the example of an insurance company that can make a payout to a customer immediately.
For a customer to receive an insurance payment immediately, however, it is not necessary for that to run on a faster payment scheme such as the one available in the UK. Ather Williams, head of global transaction services at Bank of Merrill Lynch, noted that in the US it would be possible to do that on Visa payment rails, for example. Williams said the expectations of his corporate clients are around interoperability between the different payment schemes. Also, he said, payments need to be “smarter”.
Another issue is the complexity that corporations have to deal with in navigating the different types of payments. E-commerce customers have a number of payment options and merchant acquiring becomes complex for the e-commerce company. “Corporates want someone to manage all this complexity, [and they say] ‘just give me one pipe’,” Williams said.
There are also differences in the expectations of how fast is fast enough. Tillotson said: “Real time is shorthand for very fast.” There is a difference, however, in the expectation according to the use case. In the case of mobile peer to peer payments over dinner, the expectation would be for the dinner companion to receive the payment in a minute or two. “If I am a taxi driver I expect payment in seconds. It has to match the business process you are delivering to,” Tillotson said.
It is not just real-time payments that are changing the expectations of users, however. “The genie was not out of the bottle with faster payments, but with internet and mobile,” said Tillotson.