The United States won’t be overlooked in real-time payments for long
There are dozens of real-time payment initiatives launched around the world that are accelerating the efforts that began during the pandemic to get people and businesses to pay quickly and securely.
ACI’s global head of real-time payments Craig Ramsey said in an interview with PYMNTS that although the United States has lagged behind other countries in adopting real-time payments, the country quickly catches up to places that have had a head start.
Ramsey’s comments were part of PYMNTS ‘new connected economy series that explores the post-pandemic digital acceleration that has seen 10 years of innovation stalled in the past 10 months.
Ramsey has named Venmo, Zelle, and The Clearing House’s Real-Time Payments Network (RTP) as the engines for real-time payments in the United States to date, while the Federal Reserve’s impending FedNow initiative is on the table. point of bringing more users to reality. time domain.
“We still need to see more traders and more businesses engaging,” he said. “Although P2P payments dominate today, B2B payments still have a long way to go before leveraging real-time payments to the extent possible, even today. FedNow will give the B2B space an extra boost.
In the meantime, the benefits and usefulness of real-time payments can be seen in the use case of Uber drivers who don’t want to wait overnight to get paid for the work they’ve done, Ramsey said. . They want the money to flow instantly so they can “reuse” those funds to serve the things that matter to them. Instant settlement is necessary to promote instant liquidity. The same benefits of instant liquidity can be extended to any number of scenarios, such as insurance or government payments in natural disasters, which then allow users to pay contractors or purchase power. food immediately.
Just as the positive spillover effects of real-time digital payments benefit the individual consumer, they also benefit the merchants who depend on them.
“Think of traders who specialize in very expensive products,” he said. “The retailer cannot stock a lot of inventory in anticipation of demand because inventory is expensive. But with real-time payments, they can take the money instantly and reuse it to get products shipped from factories the same day in a form of just-in-time supply chain management. This lightning-fast response improves the customer experience, and the customer will then reuse the retailer. “
Here in the United States, according to Ramsey, billers stand out as a group that has embraced real-time payments as they seek faster, more reliable ways to get paid.
“The biller’s nightmare is a failed payment; it costs a lot of money and time to process the exception, ”he noted.
Adopting real-time payments offers a more efficient way to get paid, increases liquidity, and has the benefit of being cheaper.
The data advantage
Regardless of the use case, real-time payments have the advantage of transporting more data, which helps streamline reconciliation processes. Messaging, such as through ISO 20022, which governs the exchange of data, can contain information about invoices and other data, resulting in fewer exceptions. The data can be used to drive innovation above the infrastructure rails, Ramsey said.
He compared this innovation to the construction of railroads centuries ago. People built railways to bring communities together to move freight.
“The real-time rails, the national programs that are being put in place right now… well, those are the rails,” he said. “And these are critically important, but in the end, that’s what you do with those rails that matter. These innovations are therefore happening on the rails. “
Banks will not be the only ones driving innovation in payments; FinTechs and payment service providers will be part of this landscape of finding unique propositions for customers who ultimately depend on real-time payments.
Right now, the United States is busy trying to generate payment requests – where clicking buttons on a mobile device can accept, reject, defer, or partially pay an obligation via a push prompt to the user. Payment requests have proven to be popular around the world and are now gaining traction here.
“I can see exactly what I’m paying for, and there’s a lot of fraud protection,” Ramsey noted.
At a high level, as he told PYMNTS: “We are witnessing a digital revolution where more consumers, businesses and merchants are adopting or preparing to adopt real-time payments. “