Global shift to real-time payments gathers pace with demand for certainty and transparency

- By Collaborative Media & Publishing
The global shift to real-time payments is gathering pace, with 56 countries now live with instant payments systems and the coronavirus pandemic highlighting the importance of fast and reliable payments, according to the latest Flavors of Fast report by FIS.
 
It’s a strong rise from the first Flavors of Fast report in 2014 when just 14 countries had live payment schemes.

The report states that with the proliferation in faster payments infrastructures, real-time capabilities have become more sophisticated. They are supported by the innovation that overlay services and APIs fuel, and enable new business cases to continually emerge.
 
FIS said the global coronavirus pandemic has highlighted the critically important role that moving money instantly and digitally plays for individuals, businesses and corporations.

It says instant payments are not just about moving money. “They are also about instant connectivity. They are not just about speed; they are equally about precision, transparency and certainty,” the report states.
 
Erika Baumann, senior wholesale banking analyst at finance intelligence company Aite Group, noted that India is currently the fastest growing market for real-time payments, in part to support the large usage of mobile phones by consumers on the subcontinent.
 
Paying with phone numbers or email addresses to drive adoption
 
Baumann said being able to pay through aliases such as mobile phone numbers is a key factor driving adoption of real-time payments.
 
In the US this is enabled by Zelle, a consumer P2P service backed by a network of US banks and one of several competing schemes there. In Australia, the New Payment Platform’s PayID capability allows payments using phone numbers, emails or even Australian Business Numbers.
 
There are now over 5.4 million registered PayIDs, with an average of 150,000 PayID registrations added every month in 2020, according to NPP Australia.
 
Osko, BPAY Group’s overlay service on the NPP, uses the PayIDs, in addition to BSB and Account numbers, to allow consumers and small businesses to make instant payments via their usual online banking. It has been enthusiastically adopted by millions of consumers who appreciate the certainty and transparency that comes with being able to validate the payment recipient before making the payment.
 
The next factor driving adoption will be the request to pay function, Baumann says.
“For businesses in particular, this is beneficial because it is a much cleaner process than mailing an invoice or sending an electronic invoice,” she says. “With request for payment, the request stays attached to the payment allowing for a very clean reconciliation process and reduced [days sales outstanding].”
 
Need for more collaboration between countries
 
The Flavors of Fast report said the COVID-19 pandemic has accelerated the need for more collaboration between countries for services like cross-border and supply-chain finance.
 
“This will lead to more harmonization of rules and regulation globally and will greatly reduce friction in global trade,” the report states. “Where digital commerce friction remains, governments will start to align on global policy and standards to make a more seamless global economy.”
 
Compared with 2019, six countries more than doubled the volume of real-time payments; four doubled the value transacted.
 
India maintains its leadership role in global real-time payments with over 41 million transactions per day, making it the largest market by volume.
 
According to the latest statistics from NPP, Australia had an average daily volume of 1.7 million NPP transactions, with an average daily value of about $5 billion.
 
A report by Deloitte UK late last year stated that while several countries have already adopted real-time payments, the opportunity now exists to extend the economic benefits through wider adoption.
 
“The full impact of adopting real-time payments will only become clear with time (and within a given country) as corporates, start-ups, and policymakers deploy innovative services on top of the modern payments infrastructure,” the report states.
 
“Real-time payments can enable future innovations, creating a platform for the next wave of fintech pioneers. This could include the development of new products and services, which use the data generated by digital payments (subject to the appropriate protections).”

Published by BPAY Pty Ltd (ABN 69 079 137 518) email: marketing@bpay.com.au. The BPAY Scheme is managed by BPAY Pty Limited.  When you use BPAY payment products, the BPAY Scheme is paid fees relating to processing costs and BPAY Scheme membership.  Contact your financial institution to see if it offers BPAY payment products and to get the Product Disclosure Statement.  Any financial product advice provided by BPAY Pty Limited in relation to BPAY payment products is general advice only and has been prepared without taking into account your objectives, financial situation or needs.  Before acting on such advice, you should review the Product Disclosure Statement and consider whether BPAY payment products are appropriate for your personal circumstances.
 

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