As dynamic technologies continue to revolutionize the payments space, conferences have become a critical way for payments professionals to stay informed and share their expertise. One of the signature events of the payments space is Nacha’s Smarter Faster Payments 2026, which will take place in San Diego from April 26-29, 2026.

In a recent PaymentsJournal podcast, Stephanie Prebish, AAP, AFPP, APRP, CTP, Senior Managing Director of Association Services at Nacha, and Brian Riley, Director of Credit and Co-Head of Payments at Javelin Strategy & Research, discussed the wide range of educational tracks and networking opportunities available at the conference—and how attendees can accomplish months’ worth of business in just a few days at Smarter Faster Payments 2026.

The Four Pillars

Nacha’s conference has become one of the most recognized events in the industry, thanks in part to its educational offerings, which provide an in-depth look at the timeliest topics in financial services.

“Our Payments conference is known in the industry as one of the best conferences out there and we’re planning another excellent year of education and networking and fun,” Prebish said. “We’re really just looking forward to it.”

With such a full event calendar, it is essential for attendees to come prepared with a plan. That plan should make room not only for networking opportunities and keynote speakers, but also for conversations with vendors on the exhibitor floor.

Amid all the activity—and the splendors of San Diego—there is more than enough to keep payments professionals engaged. Still, it is critical for attendees to review the agenda in advance and prioritize the educational sessions that matter most to them.

“We just finished up our first-round selections, and the sessions next year are going to be fantastic,” Prebish said. “We are on top of all the big, new, exciting changes that are coming to payments. We’re going to be talking about stablecoins; we’re going to be talking about fraud monitoring; we’re going to be talking about everything that’s happening with ISO 20022. It’s going to be an amazing conference.”

Defining the Audience

The tracks were carefully curated to span the full spectrum of the payments industry, highlight emerging innovations, shifting regulations, and strategies for mitigating fraud and risk.

New next year is a track dedicated to one of the industry’s most talked-about technologies: stablecoins. This track provides a detailed exploration of the opportunities stablecoins present for financial institutions, along with strategies organizations can adopt to harness their potential.

There is also a dedicated legal track designed specifically for attorneys working in the payments space. Additional tracks focus on artificial intelligence, compliance and regulations, cybersecurity, and ACH.

With such a comprehensive agenda, it can be challenging for attendees to identify the sessions most relevant to their role. To help, Nacha has developed a system designed to guide participants in mapping out the sessions that will deliver the greatest impact.

“We’re going to have personas dedicated to who you are in the payments industry, and with every session it will be indicated which persona will be the best choice for you,” Prebish said. “This is going to be really exciting for us because it’s not something we’ve done before, where we’ve defined audiences by session. In addition to the tracks, you can also look at these persona maps and decide where you’re going to be best spending your time.”

“Everyone goes to the Payments conference and affectionately calls themselves the rules geek, but that is actually going to be one of our personas—and also payments innovators, payment strategists, and FI leaders,” she said. “We’re really excited about the opportunities that the persona development has given us.”

Finding Like-minded Audiences

Along with innovations in its educational offerings, Nacha has also enhanced the networking opportunities at Smarter Faster Payments, while keeping long-standing traditions such as the Sunday Social.

“We’re still going to have our tried-and-true events like our Tuesday Night Out, which is going to be held on the USS Midway,” Prebish said. “We’ll have our accreditation reception, which next year is going to be super exciting because we’re adding the celebration of our AFPPs (Accredited Faster Payments Professionals).”

One of the best ways to maximize these networking opportunities is through the event’s mobile app. Attendees can use the app to locate and join meeting pods on the exhibit floor, see who else will be attending, and connect with colleagues to schedule time for conversations.

Another major initiative at Smarter Faster Payments is the development of the next generation of payments professionals. Two years ago, the organizers introduced their next-gen initiative, a “15 Under 40” program designed both to highlight emerging leaders in the payments industry and to foster their continued growth.

Across all these events and initiatives, Smarter Faster Payments provides opportunities for payments professionals from every background to connect, collaborate, and build lasting relationships.

“We’re doing a lot more in the hall, so we’re going to be working with our Payments Associations and offering what we’re calling a community corner, which is going to be a place for industry groups of like-minded audiences to meet up,” Prebish said. “We’re also going to have Coastal Coffee service in the morning and then we’ll have Pacific Pints beer in our beer garden in the afternoon. There is lots of fun stuff going on in the hall as well as our evening activities.”

Hitting the Three Criteria

Although the event doesn’t take place until next spring, early registration is now open for exhibitors, and attendees can take advantage of early-bird rates—including discounts for first-time participants and those under 40.

As this event has become the industry “who’s who,” Smarter Faster Payments 2026 is now a must-attend for financial services professionals.

“When I’m selecting conferences, one of the first things I look at is the sponsor, and Nacha stands out at the top of many of the things offered for the payments community today,” Riley said. “Also, the tracks are important and those are really well applied, and then the networking opportunities. From what I’ve seen at Nacha, this hits all those three criteria for me.”

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The payments industry has seen such rapid growth and dramatic technological advancements in recent years that conferences have become a crucial way to stay connected to the pulse of the space. There are few bigger industry events than Nacha’s Smarter Faster Payments 2025, which will kick off in New Orleans next spring.

In a recent PaymentsJournal podcast, Peter Tapling, Managing Director of PTap Advisory and a member of the Conference Planning Committee, Ashley Mustico, Director of Education and Accreditation at Nacha, and Brian Riley, Director of Credit and Co-Head of Payments at Javelin Strategy & Research, discussed the topics on tap for next year’s conference, the exhibitor experience, and the multitude of ways that payments professionals can make new connections.

The Payments Prom

Nacha might be most associated with the ACH network it governs, but the Smarter Faster Payments conference encompasses the entire payments ecosystem. Last year, the conference drew over 2,200 attendees, including professionals from financial institutions, fintechs, and organizations that serve as end users of payments services.

“It’s like the prom of the payments industry,” Tapling said. “You’ll run into a lot of people who support the ecosystem, everything from consultants and service providers to regulators, not just the staff who write the rules around the ACH.”

Smarter Faster Payments also differs from other conferences because the speakers and leaders aren’t whisked away once their talk is complete. Attendees will get the chance to meet and engage with the speakers, exchange business cards, connect on LinkedIn, and carry the conversation forward.

“The attendees come because they know that the conference offers unmatched access to first class payments education,” Mustico said. “People know that when they come here, they’re going to walk away with fresh ideas, brand new partnerships, the exchange of business cards, and practical, tangible solutions to everyday concerns that they’re facing at their organizations.”

Covering the Spectrum

There will be 10 main topics, or tracks, that the educational sessions will cover. Many of these sessions will provide different solutions to the same central question—how do organizations provide the innovation that their customers deserve and the frictionless experience that they crave, while staying compliant and keeping them safe at the same time?

The tracks were selected to cover the full spectrum of the payments industry, highlighting innovations across various payment rails, evolving regulations shaping the industry, and strategies for mitigating fraud and risk.

One of the innovations being implemented in every facet of the payments industry is artificial intelligence. Organizations are using AI to detect fraud, enhance security, and drive efficiency, and that is why there is a new track at the Smarter Faster Payments conference that is dedicated to AI.

“We’re going to see a lot of Rule 1033 content, which came out of the CFPB quite recently,” Tapling said. “The conference planning committee had hundreds of session submissions, and it’s always a tough effort to read those, understand those, and make sure we have a great mix of content and speakers and not too much overlap.”

In addition to the informational content, there will be recognition for those professionals who have been selected by the 15 under 40 program. The program is for under-40 professionals who have made significant impacts on the payments ecosystem.

“I would be remiss if I didn’t mention our awesome keynotes this year,” Mustico said. “We have Mike Massimino, who’s coming to talk about the importance of cohesive teamwork, which he knows just a little bit about from his time as a NASA astronaut, where he worked on the Hubble Telescope. Then we have Kyle Sheely, who’s an author and an influencer, and he’s going to be talking about nurturing ideas that can lead to more innovation.”

Networking Opportunities

There will also be plenty of networking opportunities. There are openings to connect during breaks, in the exhibit hall, and plenty of chances to meet over breakfast or dinner.

“I throw in preparation, preparation, preparation,” Tapling said. “That means that once you get registered, if you go to the app you can see the attendee list and identify the people that you want to meet with. But you want as much as possible to not overlap the education sessions with meetings.”

To eliminate potential overlap with the sessions, there are dedicated networking events built into the conference schedule. Some of the events will be tailored to various audiences, such as a gathering for lawyers in the industry, and a reception for professionals that hold a Nacha accreditation.

There are also activities that are available to all registered attendees, such as the exhibit hall networking event on Monday. The event occurs in the exhibit hall after all the educational sessions are over, so attendees don’t have to miss an educational session to meet the vendors and see the innovations. The conference has historically had over 90 exhibitors.

Attendees can also check out the George Throckmorton Innovation Center, which is sponsored by the London Stock Exchange Group. The Innovation Center will have an array of fintech demos so professionals can see the new technology solutions coming down the pipeline.

And finally, there’s the Nacha accreditation awareness center, where attendees can consider one of the organization’s accreditation programs and learn about the scope of the exam and how to successfully prepare for it.

“My favorite event every year is the Tuesday Night Out, which is a fantastic opportunity to let loose with your new contacts,” Mustico said. “There’s usually dancing, there’s great food, and it’s just a great way to put an end cap on a fantastic event.”

Getting a Beignet

In the thriving payments industry, conferences are one of the most important ways to learn about trends and make contacts with other professionals. Nacha’s Smarter Faster Payments 2025 is a unique opportunity to learn, connect, and grow, and it takes place from April 27-30 in New Orleans.

“As an attendee, it’s important in New Orleans not to get hung up going for beignets at Cafe du Monde,” Riley said. “There’s a real purpose to this conference and the educational tracks are a big deal. Nacha has a prime name in the payments industry, and it sounds like the place to be. “

With so much going on, a booth in the exhibit hall is a great anchor where organizations can meet with customers and colleagues.

“If you’re thinking that you want to get in on the action of the exhibit hall, there’s still time to secure a booth at Smarter Faster Payments 2025, but our booth rates are going up after January 1,” Mustico said.

Learn more and register for next year’s conference

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Is the UK going to turn its Faster Payments Service (FPS) over to an Indian company? Sky News is reporting that Tata Consultancy Services (TCS), an arm of the giant conglomerate Tata, is a leading contender to become the administrator of the service.

FPS is responsible for processing more than 90% of salaries, over 70% of household bills, and almost all state benefit payments. The current administrator is Vocalink, a British payments processor that has been owned by Mastercard since 2017. Vocalink also operates Canada’s real-time payments system, Payments Canada.

FPS was established in 2008 to supplement Britain’s BACS (for Bankers Automated Clearing Services) system. It cuts the time to settle transactions from days to as little as 80 seconds.

But the system has come under fire more recently for lagging behind more state-of-the-art payments processing. In November 2023, a report called Future of Payments Review charged that FPS has become clunky and was in need of updating. The report said that the FPS system was now slower than its foreign rivals, many of which can settle transactions in 30 seconds or less. The author called on the payments industry to embrace open banking technology that could offer an alternative to industry giants Mastercard and Visa, which process the majority of payments in Britain.

All Eyes on Tata

One concern about handling over control to Tata is recent scrutiny faced by another part of the conglomerate. Tata Steel is planning to cut 3,000 jobs in Wales as a result of switching to more eco-friendly furnaces. That decision has engendered much controversy because the switch was partly funded by a £500 million government grant.

In recent weeks, Tata Consultancy Services has announced that it would be focusing its growth more on areas outside of North America. “I wouldn’t say we are consciously reducing our North America exposure, but we are consciously increasing our play in other geographies because we want to work more in markets like Latin America, Southern Europe or Japan,” TCS CEO K. Krithivasan told Reuters in January.

According to Sky News, the FPS appointment is on hold until the UK government publishes Vision for Payments, a new strategy statement for the sector.

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The launch of FedNow was the most highly anticipated payment system news in the United States this year. The system enables users to send and receive money, 24 hours a day, seven days a week, 365 days a year.  

However, a recent study by Fenergo reveals potential fraud risks that were not anticipated since the launch of FedNow. Although the immediacy of these payments is valuable, it can create hurdles regarding security protocols, regulatory compliance, and fraud prevention. Moreover, because faster payments reduce transaction clearing times, the potential for fraud is magnified. This requires more adept and advanced security and fraud protection solutions.

After a survey of high-level risk and compliance officers in various fintech companies, it was discovered that 42% considered it a challenge to ensure a seamless user experience while undergoing compliance operations for FedNow adoption. Furthermore, 78% of risk and compliance officers voiced concerns about inadequate staff training.

“In the rapidly evolving landscape of financial technology, compliance and risk officers at fintech payment companies are navigating uncharted waters with the launch of FedNow,” said Stella Clarke, Chief Strategy and Marketing Officer at Fenergo. “Our research highlights the significant hurdles in financial crime prevention and compliance efforts, painting a vivid picture of the challenges faced in this new era.”  

A New Frontier for Faster Payments

The buildup to the launch of FedNow was abuzz with optimism. As the first government-developed instant payment system in the United States, FedNow was set to democratize access to instant payments for larger banks, smaller banks, and credit unions.

PaymentsJournal recently cited a study by Cornerstone Research that suggested 30% of FIs will launch real-time payments in 2023 and that 25% were waiting until FedNow was officially launched.

FedNow launched only in July, so it’s still early to determine how it will balance the sheer volume of payments that come through the system and customer privacy and security. Compliance processes associated with anti-money-laundering, know your customer (KYC), and fraud move at a much slower pace than the speed of payments.

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Bank of America has introduced Global Digital Disbursements for commercial clients that have deposit accounts in the bank’s Canadian branches. This solution enables the processing of several business-to-consumer payments and consumer-to-business collections. It offers an affordable and seamless payment option for businesses that want to do away with check or cash payments.

With its Request for Pay solution, businesses can send invoices to their customers via texts and email messages. A link is included so customers can pay the amount owed, promoting faster payments.

Some use cases include insurance companies taking advantage of its faster payments feature to settle claims. Tech companies can also use the solution to pay their many freelance workers without having to manage financial information.

“Global Digital Disbursements offers our clients fast digital payments and request for payments to consumers in Canada,” Leslie Konecny, head of product for global transaction services, Canada at Bank of America, said in a prepared statement. “The payments are sent with enhanced ISO (International Standard Organisation) remittance data, and companies don’t have to store their payees’ sensitive banking information.”

Instant Payment Adoption is Expanding

The demand for faster and more convenient transactions is increasing among businesses and consumers. Faster payments can benefit businesses by accelerating their cash flow, shortening the time between invoicing and receipt of funds, and enhancing cash flow management.

For consumers, faster payments mean quicker settlement times, enhanced cash flow management, and an improved customer experience.

On a global scale, Brazil, China, and India are seeing the highest adoption of instant payments, according to a Javelin Strategy & Research report by Albert Bodine, Director of Commercial and Enterprise Payments. The report is titled “Commercial Instant Payments and the Need for Speed.”

India’s Unified Payment Interface (UPI) volume made up 40% of instant payments worldwide in 2022. By contrast, Germany, the United Kingdom, and the United States have been slower to adopt instant payments, with Germany coming in at less than 3% of total transaction volume on real-time rails.

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Mastercard and Nuvei have announced an integration of Mastercard Send into Nuvei’s payment technology platform, which will now enable faster payouts to its clients, settling funds quickly and securely. No additional development is required. Typically, the processing of withdrawals was time-consuming, often taking days to complete.

This will greatly benefit online trading platforms and investors in the Asian-Pacific (APAC) region. Later this year, this service will be expanded to Hong Kong and Australia.

“Trading platforms rely on fast, secure deposits and payouts to optimize user experience,” Nuvei Chair and CEO Philip Fayer said in a prepared statement. “Partnering with Mastercard Send enables us to offer our partners another trusted, instant payout method that will win new traders and generate revenue growth.”

Faster, Seamless Payments Should Be Table Stakes

More than ever, consumers and businesses are looking for a faster, safer, and more convenient payment experience. Traditional payment methods are not meeting this growing need, and payers are ready to look elsewhere for these solutions.

Having been adopted in the United States in the past five years, real-time payments are also seeing dramatic growth. The use cases are also growing, with consumers widely adopting P2P platforms. Businesses wanting to pay their suppliers faster and more inexpensively are also looking into B2B solutions to request payments and pay invoices.

By 2027, real-time payments in the APAC region are poised to reach 12% of all payments, whereas North America is projected to see just 5%.

Without question, customers and businesses will be on the lookout for payment providers that offer real-time payments. These providers should take note: If they want to remain competitive in this ever-changing payment landscape, this offer will be a key differentiation.

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Starting today, all electronic payments made on weekends and public holidays in New Zealand can now be processed on the same day, 365 days a year. This was made possible via Payments NZ, which manages New Zealand’s core payment clearing systems. 

Everyday Processing 

Previously, banks were only able to send and settle payment transactions during business days. But now, consumers will be able to both make and receive electronic payments between bank accounts, within the same or a different bank, regardless of the day it occurs. High value transactions, in the case of house settlements, will not be affected by this change and will continue to operate within the five-business day model.  

Businesses will benefit from this move as it will enhance cash flow, and waiting a business day for a transaction to be completed will no longer be necessary. 

All banks participating within the Bulk Electronic Clearing System (BECS)—which manages automatic payments, direct debits, direct credits, and bill payments—were required to install the 365-payment capability by May 26.  

In a prepared statement, Steve Wiggins, Chief Executive at Payments NZ said, “We’re excited to see the next evolution of payments in Aotearoa, which is the end of the traditional ‘five business days’ model for electronic bank payments.” 

“Previously, banks could only send and settle payment transactions on business days. But from this weekend, consumers and businesses will be able to transact every day of the year and no longer need to wait for a traditional business day,” he said. 

Customers are expecting faster payments, more than ever before. A specific use case where this can be seen involves account-to-account money transfers (A2A). We’ve covered this growing use case where consumers might want to send money to an external account, from a credit union to a bank, with a simple push of a button.   

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The Federal Reserve published its Non-Cash Payment study, a tri-annual report on cash displacement. 

Here are seven things you should know.

• Non-cash payments grew faster from 2018 to 2021 than any previous measurement period, at a growth rate of 9.5% per year, reaching $128.5 trillion. The growth rate was twice the prior period.
• The most growth was seen in the value of ACH transfers, which experienced accounted for 90% in value from 2018 to 2021. ACH transfers grew to $91.9 trillion.
• Checks increased in value from $1,908 to $2,430; the driving force of the average value was the decrease in smaller checks. Overall, all checks fell 7.2% to 11 billion items.
• Card payments grew by 10% per year and now account for 7% of non-cash payments. Prepaid cards grew faster by value, at 20.6% per year, though they represent only 6.5% of all card payments.
• Debit cards were the big winner in card payments, with non-prepaid debit cards accounting for 56% of all payments, clocking in at 51.1 billion items.
• ATM usage dropped 10.1% per year, though the average ATM withdrawal grew from $156 to $198 in 2021.
• The biggest loser is Private Label Cards, where debit transactions fell from 5.5 billion units in 2018 to 5.1 billion in 2021. Credit transactions fell from 3.8 billion units to 3.3 billion in the same period. 2.7 billion items in 2015. In dollars, the numbers moved downward by 0.02 and upward by 0.02, respectively.

Here are five takeaways.

• Clearances are accelerating in the U.S., as the ACH growth rate indicates. With FedNow on the horizon and RTP well established, it is evident that ACH and faster payments will complement quicker settlement in the U.S., as top tech provider ACI Worldwide indicates.
• Checks are slowing down but are far from dead. Similar to the U.S. sawbuck, businesses, and consumers will always want the ability to cut a good-old fashioned check in some cases.
• The decrease in ATM access is exciting and reflects on broader payment card acceptance, such as credit and debit. Who needs cash anyway?
• PLCC flounders as buy now, pay later matures. See our recent study, Private-Label Credit Cards; Still Relevant but Losing Luster.

The next update will be the 2025 version, in the Fed’s excellent study.

Overview byBrian Riley, Director of Credit /Co-Head of Payments at Javelin Strategy & Research.

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Faster payments and the user experience are the differentiators that will enable banks and credit unions to remain relevant and competitive.

We’ve seen this gradual shift during the past decade as modern payments have undergone a significant transformation based on consumer expectations. And in the past few years, in particular, the shift has accelerated as the pandemic changed the way many are paying for goods and services.

To put it simply, consumers want convenience — and that’s what’s driving this surge in digital payments. “Most people are looking for the iPhone experience,” said Jeff Bucher, Senior Product Manager at Alkami. “On your iPhone, you can click on the app and you can get things right away. You can order food immediately and have it delivered quickly.”

“Banking is important and using banking in the same manner that you use other apps and other interfaces is what people expect,” he added. “At this point, people want digital banking at their fingertips. They want to be able to have a streamlined interface, and they expect robust capabilities — to pay their bills online, pay their friends and family, and pay their loans online as well.”

The growth of faster payments is starting to be reflected in new use cases, according to Mark Majeske, SVP of Faster Payments at Alacriti, especially when looking at real-time payments, which has been available in the U.S. for five years.

“2023 is going to be the year of use cases,” said Majeske. “How do you drive usage of these systems,  at the end of the day, adoption of these RTP [real-time payment] rails and FedNow — that’s coming up — really depends on us, with consumers and businesses using it. In the next couple of years, we’re going to see a huge emphasis on user expectations.

Key Differences Between the RTP^® Network and the FedNow^SM Service

The FedNow Service is poised to go live next year, and it shares considerable similarities with The Clearing House’s RTP network, which launched in the U.S. five years ago.

“Both the RTP network and the FedNow Service are instant, real-time payments, and they’re final,” said Bucher. “This is key to understand — that once you send the payment, it’s done. The only way to get the money back is to request that the money is sent back.”

“It’s a push-only method,” he said. “They’re not batches like ACH [Automated Clearing House] — both use ISO 20022 messaging to communicate, and this is key because ISO 20022 is a messaging method that’s being adopted around the world [and] is becoming more of a standard ever year.”

According to Bucher, both the RTP network and the FedNow Service are similar to wires, but they can replace wires in a lot of different ways because they’re faster, cheaper, and easier. “Some differences between the two are that you have to be on one network or the other,” he said. “They’re not ubiquitous, they don’t crossover, so you can’t send something on the FedNow Service and it will show up on the RTP network. You’re either on the RTP network or you’re on the FedNow Service.”

Another significant difference is that the maximum transaction limits are different. The RTP network has a maximum transaction limit of $1 million, and the FedNow Service $500,000.

Significant Use Cases for Faster Payments

One important use case around faster payments is account-to-account (A2A) money transfers. “We are partnering with Alacriti to offer A2A within our native environment,” said Bucher. “I think it’s something that makes a whole lot of sense. If you want to send money to an external account, say you’re at one credit union and you want to send it to a bank…you want to be able to send it immediately where you [can] press the button and it shows up in your account.”

“It’s a great use case, and it’s very needed and very desired among financial institutions and their users,” he added.

There are also many use cases within the business-to-business (B2B) space that are leveraging real-time payments—to pay for invoices, request payments, and even request payments back on invoices.

For business to personal transactions, a growing number of companies have gig workers who need to be paid daily, so it makes sense to use the FedNow Service and the RTP network for payroll. In addition, insurance payments can also be paid out quickly after a disaster to help people receive funds for housing, food, and clothing.

“Payroll’s another use case,” said Bucher. “There’s a lot of companies that have gig workers or temp workers and you need to pay them on a daily basis—and it makes a whole lot of sense to use real-time payments for that. It could be cheaper and easier than ACH in some instances.”

According to Majeske, real estate and automotive are other industries benefiting from RTP. “Some of the high-level transactions I’m starting to see is basically a car purchase. Let’s say you’re at the car dealership and you go to your mobile phone and sign up or apply for a loan,” he said. “The loan is turned around very quickly and at the end of the day, you’ve got the funds going to the dealership and you’re walking out with a set of keys.”

A Partnership That Works

In order for faster payments to work and for the consumer to take advantage of their offerings, they must be simple to use and fast. Ensuring that the front end of operations also has a user-friendly interface is crucial.

“Alkami takes care of all the back end,” said Bucher. “Alacriti has an engine that chooses the rail on the backside, whether the FedNow Service or RTP network, and we handle the interface to ensure they know we are executing their transactions and they can input what they need.”

“We picked Alacriti to partner with based on the fact that they were further along than a lot of the other potential partners that we talked to,” he added. “They really had an inside track on RTP and they were also in the pilot for the FedNow Service. Now they have strengths where we need them in payments, in particular, and they have a great track record of working with credit unions and banks.”

“It’s a win because at the end of the day, to be successful in faster payments you need the expertise on the payments side,” said Majeske. “Oftentimes, even more importantly, is that you [get] the user experience right, because without that, customers won’t easily use it or adopt it.”

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FedNow, the highly anticipated instant payment service, is set to launch mid-2023 and deliver significant changes to fintech companies and new players coming into the payments space. A recent article highlights how FedNow, the central bank’s new instant payment infrastructure, will offer retail payments in real-time, 24/7, 365 days a year. Recipients of payments will have immediate access to their funds.  

FedNow’s core objective is facilitating faster access to funds for both merchants and consumers to better manage their cash flow, at a reduced cost, and lower payment risk.  

The launch could pose challenges for fintechs that currently rely on existing payment rails, as well as credit and debit interchange fees. Likewise, non-bank providers that offer peer-to-peer payment services will also be feeling the impact, as FedNow is only available to traditional U.S. banks.  

These participating banks will be extending their instant payment service to businesses. Therefore, e-commerce merchants that hold accounts with participating banks can be the recipients of instant payments. Furthermore, if merchants enable an instant payment option for customers to choose when paying online, this will drive costs down as opposed to using debit or credit card rails. 

As more consumers look for faster, seamless, and convenient payments, businesses too are seeing the benefits as they can more easily manage their cashflow and make last-minute payments to their suppliers. FedNow is set to expand its offerings for all types of transactions.  

“Currently, instant payments are utilized in the U.S. for peer-to-peer (P2P) transaction types and are most frequently facilitated on platforms such as Zelle, Venmo, ApplePay, /GooglePay, or PayPal,” said Sophia Gonzalez, Research Analyst for Debit Advisory Service at Mercator Advisory Group. 

FedNow will enable all transaction types beyond P2P, such as paying a merchant at the point-of -sale, businesses paying businesses, and beyond. FedNow could also replace nearly all current payment solutions, including card payments and direct ACH payments.  

Current regulation is struggling to keep up with instant payments. This article points out how consumer protections on the Zelle platform need improvement. It is imperative for regulators to get ahead of innovation.” 

Although still a work in progress, the upcoming launch of FedNow will be moving things in the right direction. We have written about how FedNow will be addressing the most pressing consumer need for faster, instant payments here. 

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Today’s supply chain is in complete disarray. As transportation costs rise and warehouses struggle to meet demands, the financial sector is looking for new solutions. Enter faster payments.

In comparison to other countries like Europe, the U.S. is getting caught up with the real-time, account-to-account money movement —those most prevalent in B2B sectors like manufacturing. Financial institutions and B2B companies have trusted the ACH network since its inception in 1972. It’s a low-cost solution to sending large amounts of money via direct deposit. Additionally, the recent innovations that have expanded faster payment capabilities demonstrate the growing demand for innovation.

Communication is at the root of the supply chain crisis, with companies searching for ways to bridge the chasm. The same is true for payments, with transactions taking up to four business days to clear, there is a lack of immediacy and responsiveness for all parties involved. Manufacturers are waiting to begin production until they can pay their workers; shippers and carriers are having trouble keeping up with shifting schedules and increased transportation costs. These waiting periods have a negative impact on both cash flow and supply chain productivity, as consumers are continuing to see in everyday situations.

Empty supermarket shelves, computer chip delays, and skyrocketing lumber costs are more than an effect of supply chain challenges: they are a symbol of what will continue to occur if new technologies aren’t thrown into the mix.

Faster Payments: A Modern Financial Solution

Faster payment options offer the digital security of a direct bank payment with the immediacy of cash; businesses can send and receive funds to each other’s accounts within seconds. With over 54 countries participating in this new movement and the innovations being rolled out with faster ACH processing, it could bring positive changes to both the financial sector and the supply chain.

The supply chain benefits from faster payments because of their emphasis on efficiency. Once an invoice is received, companies can instantly transfer large amounts of money to manufacturers. This means that the production process can begin sooner, and those transporting the goods are likely to make their deliveries on time.

Faster payment methods will move beyond just helping boost timelines and productivity in the supply chain; they will also change how the industry functions by putting pay at the beginning of the work cycle. Payment needs to be received for the transportation and delivery processes. Workers do not want to wait or risk a transaction being returned after their hard work is done. Real-time payments are an option that can help ensure that payment is received and in the proper bank accounts well before the labor begins, creating a better work environment for all involved.

Some may ask why existing companies like Venmo and Zelle, which make immediate deposits, aren’t already being leveraged to help the supply chain. The answer is the supply chain’s reliance on manual processes and ACH. The supply chain’s loyalty to the automated clearing houses comes from cost-effectiveness. Account-holders pay little-to-no fees on all ACH transfers. In contrast, credit card companies often charge fees based on the sum of money being dealt with. For B2Bs transacting with tens of thousands of dollars and then some, a percentage fee for each card transaction quickly becomes exorbitant.

It’s clear that to help the supply chain and other B2B-focused industries operate efficiently we need to find a way to cut both wait times and additional costs. The goal is to create account-to-account advantages that allow customers to increase their control of payments by giving them the ability to both maintain funds and send them immediately. This will allow companies to increase their immediate cash flow and improve business relationships.

The Future of the Supply Chain

Yes, the supply chain is experiencing challenges independent of payments. The truth is that the issues our supply chain faces are complex and multi-faceted. But enabling faster payments is a critical step in reducing delays.

Real-time transfers are genuinely becoming the way of the future, with data indicating that over 85% of businesses are planning to convert to a type of real-time payment solution by 2023, and 71% of U.S. firms saying that they are very interested in implementing faster payment strategies. The supply chain is the foundation of the U.S. economy, enabling businesses to sell products and serve their customers. Companies and suppliers adopting faster payments will streamline the supply chain and increase economic growth.

It’s time to bring immediacy back to the supply chain, and real-time bank transfers are one step in the right direction.

The post How to Bring Immediacy Back to the Supply Chain With Faster Payments appeared first on PaymentsJournal.

When thinking of instant direct deposits, it’s easy to think of gig workers. An example is Uber drivers who can cash out at the end of their workday. Although gig workers have popularized these instant payments, the need does not stop there. According to a 2021 American Banker report, 31% of consumers with household incomes of more than $100,000 say they have ditched their banks. This is because the money simply was not moving fast enough for them.  

Quicker Payment Settlement Is Stickier than Standard Settlement 

According to an article from The Financial Brand, consumers and businesses are driven by speed and convenience. They want instant payments so badly that they’re willing to switch banks to access them. Instant payments allow consumers to get money instantly – whether that’s direct deposits, bill pay, or paying their friends back. In fact, that $25 your friend owes you for lunch appears in your Venmo account instantly. You receive your funds before you even take the last bite of your lunch! This is instead of you waiting three days for the transaction to clear.  

This poses a unique opportunity for FedNow. The Federal Reserve’s new solution for instant payments is poised to launch mid-2023. FedNow promises to be an ally to small banks and credit unions who traditionally are slow to adapt to new emerging payment technologies. The Financial Brand explains FedNow works as it is “applied against the master accounts that depositary institutions hold at the Reserve Banks, there’s no outstanding obligation between financial institutions and less need to move around liquidity to pre-fund instant payment activity.”  

Faster Payments: Nothing is Perfect (Yet) 

It’s important to note that this is the first new payments platform launched by the Federal Reserve in over 40 years. The National Consumer Law Center warns that FedNow seriously lacks protection against scams and fraud. When the speed of payments is prioritized, fraud prevention automatically takes the back seat. In the United Kingdom, where instant payments first hit the payments market, 96% of fraud caused by a consumer sending money to a scammer was processed on instant payment rails. The United Kingdom will now be requiring banking institutions to offer these victims of scamming compensation. The United States is still failing short to protect consumers in this type of fraud. While FedNow will be covered by the Electronic Fund Transfer Act (EFTA), that very act currently does not protect a consumer in the event of sending money to a scammer.  

Overview by Sophia Gonzalez, Research Analyst, Debit Advisory Service at Mercator Advisory Group.

The post FedNow: Faster Payments Are Faster, Better, Cheaper  appeared first on PaymentsJournal.

In response to a recent article from Axios, Steve Murphy, Director of Commercial and Enterprise Payments at Mercator Advisory Group, dives into the recent Fact Sheet the White House released, and what it means.  

He says: 

The Axios article is largely based on what was covered by the White House in a Fact Sheet they released, which summarizes some of the agency reports that were mandated by the executive order on cryptos, for example, back in March 2022. Reading through the fact sheet, one can see some summarized content of the nine reports that have been submitted to date as part of the executive order.   

At the time of the executive order, we commented on these pages that the Federal Reserve Board of Governors had already pointed out in their January discussion paper. But, we did recognize that there were some other things on the ‘to-do’ list, including reports from the Secretary of Commerce and the Attorney General around competitiveness and international law enforcement, and that all of these reports were to be coordinated, which is typically a good thing given the mammoth size of the executive branch of the federal government.  

All these reports are to be coordinated with other cabinet members, so this is just meant to show that everyone is basically on the same page. Various regulations are mentioned, and one interesting one from this purview is the statement that ‘The President will also consider agency recommendations to create a federal framework to regulate nonbank payment providers.’ That has long been an open question and one that we reviewed in recent member research. More is likely to come by Q1 2023. The author in the Axios article also makes a comment about the digital dollar, which of course is more or less a fait accompli. It’s just a matter of when, what delivery system, and how it’ll be managed. 

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group.

The post The Feds Want to Speed Up Domestic and International Payments appeared first on PaymentsJournal.

Interesting post in the Cryptopolitan about ISO 20022, which most readers who pay attention to payments will know is becoming the de-facto standard for payments messaging. All new instant payments systems globally utilize ISO 20022 and conversions will be coming (and underway in some cases) for wire transfers and SWIFT. So, the author in this piece review these realities and how that standard is also being adopted by the crypto asset space.

‘ISO 20022 protocol is a standard for electronic data interchange between financial services in the payment industry. It is based on DLT (distributive ledger technology) and uses ISO 20022 as a messaging mechanism…

ISO 20022 is a more advanced format based on the XML protocol and the Abstract Syntax Notation One (ASN.1) specification for bank communication, which meets the ISO 20022 standard for financial messaging. It better reflects today’s financial activities and transactions, locally, regionally, and globally…

Banks worldwide have already committed to this worldwide regulatory framework, which backs SWIFT and the Federal Reserve. And as we move toward this new quantum financial system, any third party that wants to interact with banks must be able to use the ISO 20022 format.’

The piece goes on to point out specific cryptocurrencies that have already adopted the standard. It also lists a number of timelines for ISO 20022 conversion, with one of the most important being SWIFT, which is underway for later this year. Any reader who wants a refresher on the issue can take the few minutes to read through this useful summary article.

‘SWIFT’s technological shift from MT to ISO 20022 will be complete. Banks will need to upgrade their messaging interfaces and test them before November 2022 to ensure they are compatible with the new payment communication standard…

Banks are under competitive strain to migrate to the ISO 20022 standard as the overall migration of the payment industry toward immediate payments makes their existing goods and services vulnerable…

Because ISO 20022 is a more modernized and versatile standard than conventional legacy formats, it requires significantly greater data volume processing. As a result, bank systems and databases will need to be capable of handling these larger volumes at quicker speeds for real-time payments, daily liquidity management, compliance checks, and fraud detection and prevention…

It’s critical to allow enough time for testing so that syntax and formatting information is accurate, and the data’s migration into all linked payment and clearing systems. Testing should ideally be completed by the second quarter of 2022 at the latest.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post ISO 20022 Is Fast in Coming for SWIFT, Crypto, and More appeared first on PaymentsJournal.

New payment types and form factors are finding viable use cases in the gig economy.  Yahoo! Finance noted that drivers for Grubhub now have the opportunity to get paid immediately after each delivery. PayPal has been front and center to bring this use case to life. Braintree (PayPal) is the gateway for the buyer transaction, and Hyperwallet (also PayPal) is the platform that is offering near-instant cash outs using the Visa Direct network. Here is more from the article:

Grubhub, a leading food ordering and delivery marketplace, today announced the launch of Instant Cashout via Direct to Debit, which drivers can use to immediately access their earnings. The new payout option, enabled by Hyperwallet from Paypal and Visa Direct- Visa’s real-time money movement network – offers more flexible access to earnings by allowing any driver with an eligible bank debit card to deposit their accrued earnings to their eligible debit or prepaid card.

“Cashing out is one of the most important features to Grubhub’s drivers, and we are constantly innovating to deliver the best possible experience,” said Mrugesh Bavda, product manager for Grubhub. “Direct to Debit will expand the ways our drivers can immediately and reliably access the income they generate on our platform, while maintaining the flexibility and independence that they appreciate from Grubhub.”

Direct to Debit is powered by Hyperwallet, a payout management platform managed by PayPal, which in turn uses Visa Direct to deposit those payments to bank debit cards.

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

The post Grubhub Using Debit Push Payments to Pay Drivers More Quickly appeared first on PaymentsJournal.

Consumers today have been conditioned to expect everything in a real-time digital environment. Whether they’re taking out a loan, buying clothes, making an investment or performing countless other activities, customers expect their transactions to happen instantly and with minimal friction.

Online payments, by and large, have not kept up. This is an issue for merchants, whose customers are frustrated with long settlement times and payment processes that require extra steps. Instant payments solve this by not only offering a seamless experience, but also helping merchants build customer trust and reduce churn. 

Benefits such as improved speed, lower operational costs, better conversion rates and a seamless checkout experience await businesses that adopt instant payments. 

Barriers to adoption 

So why aren’t instant payments ubiquitous in Europe? There are several factors. 

One is the continued use of physical plastic cards in countries such as France, Spain and Ireland. Though payments via cards can be instantly authorised, they are not settled on real-time payment rails. For example, online card payments can take up to 10 days to settle. Not only does this make it harder for merchants to manage their cash flows, but it also slows down the refund process for customers. Digital wallet transactions can be faster, but still suffer from a 24-hour delay. 

Bank transfers solve this issue when instant payment rails are available. But in Europe, this infrastructure suffers from a lack of interoperability. One such example is Single Euro Payment Area (SEPA) Instant Credit Transfer, or SCT Inst. Launched by the European Payments Council in November 2017, it was the first pan-European instant bank payments scheme. But SCT Inst has several flaws. For example, it is optional for banks, and it uses two different infrastructure solutions, RT1 and TIPS. Banks can choose to opt into either. Yet these two systems aren’t interoperable, so a bank using TIPS can’t make an instant payment to a RT1 participant and vice versa.

Historically, SEPA was also reserved only for banks. Following the implementation of PSD2, open banking has helped provide merchants with greater access to these rails.

How to realise the promise of instant payments through open banking 

Luckily, recent initiatives to create open banking standards in Europe now make instant payments within the reach of any merchant. Open banking allows registered third parties to access their customers’ bank account if the user consents.

These standards allow businesses to take payments and retrieve data directly from customers’ bank accounts, with expressed permission, via open application programming interfaces (APIs). When instant bank payment systems are available in a country, like the Faster Payments system in the UK for example, open banking can offer instant payments that are seamless and secure for both consumers and businesses.

Take TrueLayer Payments, which brings instant bank payments to customers in Ireland, France, Germany, Spain, Lithuania and the Netherlands. Using open banking and Europe’s fastest payment rails, TrueLayer Payments delivers the following benefits to merchants and their customers.

• Improved speed: Immediate settlement doesn’t just benefit merchants. It also speeds up refunds for customers. Instead of waiting for their money to return to their accounts, consumers receive it instantly. The result: a better experience and increased customer loyalty.
• Lower operational costs: Legacy payment approaches require time-consuming, manual tracking processes, which are both costly and prone to human error. With instant payments, however, these processes are automated. Instant bank payments also help businesses avoid the interchange fees and chargebacks associated with card payments, making instant payments far more cost-effective. 
• Higher conversion rates: Instant payments can help businesses improve their conversion rates. Cards and manual bank transfers both require customers to punch in sensitive data, which takes time and effort. If they feel that a payment process takes too long, they may simply leave before completing it. Instant bank payments solve this issue by using biometrics on mobile devices to authenticate payments. This creates a fast, seamless experience that’s more likely to convert customers.
• Increased liquidity: Many businesses — especially small businesses — struggle with managing liquidity because of how long it takes traditional payments to settle. Instant payments powered by open banking can change this dynamic. Deloitte notes that real-time payments can be “especially impactful to small merchants who may be used to waiting days for their settlement, possibly creating a positive impact on their cash flow and daily sales outstanding.”  
• Improved security: Traditional payment approaches come with high fraud risks, especially as it pertains to card-not-present (CNP) transactions. Global financial losses related to card payments are estimated to reach more than $34 billion this year, and in 2020, CNP fraud accounted for 76% of all fraud losses. Open banking reduces much of this risk because card details are not shared in the transaction. Instant bank payments also harness biometrics to authenticate users, adding further security.

Key industries that benefit from instant bank payments 

While businesses across all industries can benefit from instant bank payments, a few industries stand out in particular. 

Financial services

Any platform that allows its users to invest in both traditional financial instruments or cryptocurrency should facilitate instant payments. Firstly, users of these platforms do not want to go through a lengthy onboarding process. In a TrueLayer survey, 61% of European investors said they’d leave a sign-up process that took longer than 10 minutes. As noted earlier, open banking protocols can allow users to seamlessly authenticate themselves.  

Secondly, speed is essential when trading. Traders want instant deposits because waiting even an hour to make an investment can cost users a lot of money, especially in fast-moving markets. It’s perhaps no surprise then that almost half of current investors (46%) say they were likely to switch providers for instant withdrawals. Providing access to instant withdrawals and deposits creates trust in an investing platform and makes customers more loyal.  

E-commerce

Shopping cart abandonment is a big problem for online retailers. Their customers are often fickle and won’t tolerate long, complex checkout processes. And when they do complete a purchase, they want to be sure they have access to quick, easy refunds. Failing to offer either can cause merchants to experience customer dissatisfaction and churn.

Instant bank payments offer smooth, frictionless flows that make paying as simple as scanning a fingerprint or using a face ID. They also facilitate instant refunds, fostering loyalty in the process. Together, these features help merchants offer a smoother shopping experience, increasing conversion rates and preventing abandonments.

iGaming

Like trading and crypto, iGaming companies need to offer a fast experience to keep up with customer demands. Users need instant access to their pay-ins, and more than half of iGaming users are likely to switch to a service that offers instant pay-outs as well. Both features are key to bringing an in-person gaming experience to a mobile app.

Instant bank payments with TrueLayer allow companies to offer just that. Transactions settle in real-time, allowing users to access their deposits quickly. And when the time comes to withdraw their winnings, customers get peace of mind in knowing their funds are available immediately. 

With instant bank payments, both businesses and consumers in Europe can experience the many benefits of speedy, cost-effective, and highly secure digital transactions. Visit https://truelayer.com/payments to learn more.

The post The Promise of Instant Payments in Europe  appeared first on PaymentsJournal.

The market for financial services has never been more competitive. Digital banks, neobanks, challenger banks—even merchants like Walmart, groceries, and drugstores—and other fintechs are all offering financial services in a less regulated setting than that of financial institutions (FIs). How can earned wage access make a difference? 

Offering digital services is of paramount importance to financial institutions, but it can be very hard for FIs to acquire the technology and talent they need without having it funneled toward new regulatory and compliance needs. As a result, many FIs are partnering with fintechs to outsource the development of innovative payments technology.  

Earned wage access (EWA) is one of the hottest new features that fintech and FI partnerships are adopting. EWA is the ability for employees or contract workers to request immediate access to some of the pay they have already earned.  

To learn more about EWA and how financial services providers can participate in the on-demand pay movement, PaymentsJournal sat down with Rob Nardelli, Director and Business Development Lead for Strategic Partnerships at DailyPay, and Sarah Grotta, Director of Debit and Alternative Products Advisory Service at Mercator Advisory Group. 

Fintech/FI Partnerships Are the Future 

After the 2008 Great Recession, the banking industry saw a massive regulatory overhaul. “Compliance became critical,” said Nardelli. Know Your Client (KYC), the Office of Foreign Assets Control (OFAC), and anti-money laundering (AML), according to Nardelli, “ruled the day, and in some instances, at the expense of the client/customer experience. Innovation became challenging, to say the least.”  

Meanwhile, fintechs with fewer regulatory hurdles were filling the gap in customer experience enhancement. Now, semi-post-pandemic, banks have made major adjustments to a full customer experience (CX) commitment and are looking for strategic partnerships to provide value and innovation. Ergo, there is an increase in FI-fintech partnerships. 

However, many FIs are wary of the longevity and scalability of such partnerships, not to mention security concerns and the risk of long-term commitments with new partners. “Banks know they have to partner with fintechs,” Nardelli clarified. “It’s where the industry is heading. But they are not sure who is real and who is not.” 

The Effect of the Great Resignation Rotation 

According to DailyPay research, the last ten years have produced a tectonic shift between quits and layoffs. Quits are up 102% and layoffs are down 23%. But rather than seeking early retirement, most workers are simply “rotating” into new positions that offer better pay and benefits.  

“The American worker’s choice has become the new hallmark for employment,” stated Nardelli. “On-demand pay has become the must-have employee benefit.” Information from the Bureau of Labor Statistics earlier this year showed about twice as many job openings as people looking for jobs. “Workers have never had more leverage than they have right now,” Grotta added. “Employers have never been looking for more solutions to help them attract and retain workers.” 

That is where DailyPay comes in. “DailyPay helps employers hire 52% faster and retain employees for up to 73% longer, which has a significant impact on the bottom line,” said Nardelli, citing a recent survey. As for employees, 73% of DailyPay users say they used the app to pay bills on time and in full, to avoid costly overdraft fees; and 70% said it helped them avoid taking out a payday loan. “We’re trying to give folks another option,” Nardelli summarized.  

DailyPay users also check their available balance almost every single day. “You go out for your lunch break, you come back, your balance went up,” Nardelli offered as an example. “It’s the psychological benefit of knowing that those funds can be made available to you when and if you should need it, by the click of a button.” 

Earned Wage Access Today and Tomorrow 

We are smack in the middle of the “on-demand generation” right now. Everything from media to food is expected instantly, and banks need to connect with customers who want the same speed and control with their money. As a result, people turn to DailyPay—the industry leader in EWA growth and adoption—to make their lives more manageable. 

“DailyPay is all about choice,” explained Nardelli. “The choice to make a decision of what is best for you and your family. And by that same token, it is all about trust. America’s largest employers and their millions of employees trust us with their pay. We have the highest security accreditation in the industry. That is what sets us apart.” 

Partners with DailyPay gain access to proprietary on-demand pay capabilities including PAY, the flagship program giving employees earned wage access prior to payday. There are three “flavors” of marketplace partnership to choose from: 

• White label partnership 
• White label + card platform 
• Embedded application programming interfaces (APIs) for retail and digital bank accounts 

Most employers will offer EWA in the next three to five years and, with DailyPay’s recent white label partnership with PNC bank, this is only the beginning. “Ask yourself this,” Nardelli concluded. “Do you want to be a financial health and wellness champion, or do you want to be a follower two years from now that has to fill a product gap?” 

The post Leading the FI Pack with Earned Wage Access  appeared first on PaymentsJournal.

PISCATAWAY, N.J.–(BUSINESS WIRE)–Alacriti, a fintech company specializing in payments and money movement, today announced its new, fast push-to-card solution that enables businesses to disburse funds directly to their eligible debit cards—in real time—enabled by Visa Direct, Visa’s real-time money movement network.

Business and consumer expectations for convenient, secure, and fast money movement is increasing across every use case. According to research by Visa, 82% of surveyed consumers would be more likely to work with businesses that offer fast disbursements through push-to-card. Orbipay Push-to-Card can quickly meet this demand with minimal cost and integration hassle.

Orbipay Push-to-Card enables businesses to deliver faster payout experiences and helps drive customer satisfaction. Consumers don’t need to remember or share their bank account information, and funds can be sent to their most-used eligible card. It’s convenient and quick, and supports the growing consumer demand for faster access to their money. Orbipay Push-to-Card is a part of Orbipay Unified Money Movement Services, a cloud-based platform that enables businesses to quickly and seamlessly deliver modern, intuitive digital payments and money movement experiences.

“Our introduction of push-to-card capability, enabled by Visa Direct, provides a new and innovative way for businesses to deliver faster payment experiences,” stated Mark Majeske, SVP of Faster Payments at Alacriti. “Our solution can be deployed quickly, integrates into existing payout flows, and comes with a risk-free pricing model, allowing businesses to improve cash flow management, drive customer satisfaction, and increase efficiency.”

“Visa Direct is a compelling capability offering incredible reach to more than 5 billion cards and accounts and supporting more and more money movement use cases around the globe,” said Yanilsa Gonzalez-Ore, SVP and North America Head, Visa Direct. “We’re excited to partner with Alacriti in the U.S. to help enable digital payout capabilities for their clients and remove slow and inefficient paper-based processes.”

About Alacriti
Alacriti is a leading financial technology company with a comprehensive money movement and payments services platform, dedicated to helping clients accelerate their digital transformation. Built on a flexible, cloud-native framework, Alacriti’s array of solutions allow clients to deliver the money movement experiences and payments innovation that today’s users demand, while seamlessly integrating with their internal infrastructures.

To learn more about Alacriti or to request a demo, visit alacriti.com

The post Alacriti Announces Fast Push-to-Card Payouts Enabled by Visa Direct appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s Report: The Cost of Fraud: B2B Payments Experience 10% Increase During the Pandemic

Types of Business Fraud Experienced in Conjunction with Faster Payments:

• 64% of surveyed businesses experienced vendor impersonation fraud in conjunction with faster payments.
• 57% of surveyed businesses experienced CEO fraud in conjunction with faster payments.
• 50% of surveyed businesses experienced invoice fraud in conjunction with faster payments.
• 42% of surveyed businesses experienced authority impersonation fraud in conjunction with faster payments.
• 28% of surveyed businesses experienced some other type of fraud in conjunction with faster payments.

About Report

Mercator Advisory Group released a report covering fraud in commercial payments titled The Cost of Fraud: B2B Payments Experience 10% Increase During the Pandemic. The research explores the impact of fraud with particular emphasis on the B2B payments space. Through an analysis of internal and external fraud, one can gain a deeper understanding of the most common types of fraud schemes, what payment types are subject to the most payments fraud, and how the industry is fighting back. The report also explores the rise in business email compromise (BEC) fraud and new ways that fraudsters are targeting organizations.

“As fraudsters continue to adapt to ever-changing payment trends, organizations must be ready to defend their bottom lines,” comments Ben Danner, Analyst, at Mercator Advisory Group, and the author of the research report. “Organizations can perform several technological and non-technological interventions to combat this rising problem.”

The post Types of Business Fraud Experienced with Faster Payments: appeared first on PaymentsJournal.

The widespread adoption of bill pay services has made it easier than ever to pay your bills on time. However, there are still a number of people who prefer to pay their bills in person or by check. For these people, real-time payments offer a convenient way to pay their bills without having to go to the bank or post office. Real-time payments are processed immediately, which means that you can be sure your bill will be paid on time. In addition, real-time payments can be made from anywhere in the world, allowing you to pay your bill even if you’re traveling. Whether you’re paying rent, utilities, or another type of bill, real-time payments offer a convenient and reliable way to get the job done.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s Report: 2022 U.S. Faster Payments Forecast: A Year to Build On

Importance of Real-Time or Faster Payments for Bill Pay:

• 22.8% of consumers rate real-time or faster payments use as very important.
• 26.5% of consumers rate real-time or faster payments use as important.
• 23.9% of consumers rate real-time or faster payments use as somewhat important.
• 11% of consumers rate real-time or faster payments use as not important.
• 15.8% of consumers rate real-time or faster payments use as not at all important.

About Report

2021 was an important build-out year for real-time and faster payments in the U.S., as explored in Mercator Advisory Group’s annual look at the market; 2022 U.S. Faster Payments Forecast: A Year to Build On. Payment options such as the debit network’s debit push payments, The Clearing House RTP network, Same Day ACH, and Zelle all experienced strong growth dependent on the specific use cases where each predominates and the maturity of their respective solutions. Following through on the pandemic fueled growth in 2020, more financial institutions and technology providers integrated to faster and real-time rails, launched new products, and advanced their strategies.

“We have found in the last year that consumers are becoming much more aware that some payments transact quickly, even instantly, which for transaction types like bill pay, account-to-account transfer and some person-to-person funds movement is beneficial. This leads to a compounding effect that is creating greater demand for faster payments in more use cases,” comments Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group and author of the report.

The post Importance of Real-Time or Faster Payments for Bill Pay appeared first on PaymentsJournal.

Importance of Real-Time or Faster Payments for Banking A2A Transfers:

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s Report: 2022 U.S. Faster Payments Forecast: A Year to Build On

Importance of Real-Time or Faster Payments for Banking A2A Transfers:

• 19.9% of consumers rate real-time or faster payments use for banking account-to-account transfers as very important.
• 23.5% of consumers rate real-time or faster payments use for banking account-to-account transfers as important.
• 26.1% of consumers rate real-time or faster payments use for banking account-to-account transfers as somewhat important.
• 11.9% of consumers rate real-time or faster payments use for banking account-to-account transfers as not important.
• 18.6% of consumers rate real-time or faster payments use for banking account-to-account transfers as not at all important.

About Report

2021 was an important build-out year for real-time and faster payments in the U.S., as explored in Mercator Advisory Group’s annual look at the market; 2022 U.S. Faster Payments Forecast: A Year to Build On. Payment options such as the debit network’s debit push payments, The Clearing House RTP network, Same Day ACH, and Zelle all experienced strong growth dependent on the specific use cases where each predominates and the maturity of their respective solutions. Following through on the pandemic fueled growth in 2020, more financial institutions and technology providers integrated to faster and real-time rails, launched new products, and advanced their strategies.

“We have found in the last year that consumers are becoming much more aware that some payments transact quickly, even instantly, which for transaction types like bill pay, account-to-account transfer and some person-to-person funds movement is beneficial. This leads to a compounding effect that is creating greater demand for faster payments in more use cases,” comments Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group and author of the report.

The post Importance of Real-Time or Faster Payments for Banking A2A Transfers: appeared first on PaymentsJournal.

Importance of Real-Time or Faster Payments for Receiving Funds In a P2P App:

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s Report: 2022 U.S. Faster Payments Forecast: A Year to Build On

Importance of Real-Time or Faster Payments for Receiving Funds In a P2P App:

• 17.9% of consumers rate real-time or faster payments use for receiving funds in a P2P app as very important.
• 20.5% of consumers rate real-time or faster payments use for receiving funds in a P2P app as important.
• 24.6% of consumers rate real-time or faster payments use for receiving funds in a P2P app as somewhat important.
• 13.7% of consumers rate real-time or faster payments use for receiving funds in a P2P app as not important.
• 23.4% of consumers rate real-time or faster payments use for receiving funds in a P2P app as not at all important.

About Report

2021 was an important build-out year for real-time and faster payments in the U.S., as explored in Mercator Advisory Group’s annual look at the market; 2022 U.S. Faster Payments Forecast: A Year to Build On. Payment options such as the debit network’s debit push payments, The Clearing House RTP network, Same Day ACH, and Zelle all experienced strong growth dependent on the specific use cases where each predominates and the maturity of their respective solutions. Following through on the pandemic fueled growth in 2020, more financial institutions and technology providers integrated to faster and real-time rails, launched new products, and advanced their strategies.

“We have found in the last year that consumers are becoming much more aware that some payments transact quickly, even instantly, which for transaction types like bill pay, account-to-account transfer and some person-to-person funds movement is beneficial. This leads to a compounding effect that is creating greater demand for faster payments in more use cases,” comments Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group and author of the report.

The post Importance of Faster Payments for Receiving Funds in a P2P App: appeared first on PaymentsJournal.

Importance of Real-Time or Faster Payments for Sending Funds Through a P2P App:

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s Report: 2022 U.S. Faster Payments Forecast: A Year to Build On

Importance of Real-Time or Faster Payments for Sending Funds Through a P2P App:

• 17.7% of consumers rate real-time or faster payments use for sending funds through a P2P app as very important.
• 17.6% of consumers rate real-time or faster payments use for sending funds through a P2P app as important.
• 25% of consumers rate real-time or faster payments use for sending funds through a P2P app as somewhat important.
• 15.2% of consumers rate real-time or faster payments use for sending funds through a P2P app as not important.
• 24.5% of consumers rate real-time or faster payments use for sending funds through a P2P app as not at all important.

About Report

2021 was an important build-out year for real-time and faster payments in the U.S., as explored in Mercator Advisory Group’s annual look at the market; 2022 U.S. Faster Payments Forecast: A Year to Build On. Payment options such as the debit network’s debit push payments, The Clearing House RTP network, Same Day ACH, and Zelle all experienced strong growth dependent on the specific use cases where each predominates and the maturity of their respective solutions. Following through on the pandemic fueled growth in 2020, more financial institutions and technology providers integrated to faster and real-time rails, launched new products, and advanced their strategies.

“We have found in the last year that consumers are becoming much more aware that some payments transact quickly, even instantly, which for transaction types like bill pay, account-to-account transfer and some person-to-person funds movement is beneficial. This leads to a compounding effect that is creating greater demand for faster payments in more use cases,” comments Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group and author of the report.

The post Importance of Faster Payments for Sending Funds Through a P2P App: appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s Report: 2022 U.S. Faster Payments Forecast: A Year to Build On

Consumer Usage of Faster Payments:

• 21.8% of consumers have used a P2P transfer network such as Zelle to transfer money within minutes/seconds.
• 19.3% of consumers have sent funds through a P2P app to a recipient in another country who received the funds within minutes/seconds.
• 14.5% of consumers have transferred funds to another account they own at another financial institution within minutes/seconds.
• 8.4% have needed to pay a bill quickly to avoid being late and was able to do so within minutes/seconds.
• 5.9% of consumers have been refunded for a product or service and received the funds within minutes/seconds.
• 5.0% of consumers have sold property and received the proceeds from that sale within minutes/seconds.

About Report

2021 was an important build-out year for real-time and faster payments in the U.S., as explored in Mercator Advisory Group’s annual look at the market; 2022 U.S. Faster Payments Forecast: A Year to Build On. Payment options such as the debit network’s debit push payments, The Clearing House RTP network, Same Day ACH, and Zelle all experienced strong growth dependent on the specific use cases where each predominates and the maturity of their respective solutions. Following through on the pandemic fueled growth in 2020, more financial institutions and technology providers integrated to faster and real-time rails, launched new products, and advanced their strategies.

“We have found in the last year that consumers are becoming much more aware that some payments transact quickly, even instantly, which for transaction types like bill pay, account-to-account transfer and some person-to-person funds movement is beneficial. This leads to a compounding effect that is creating greater demand for faster payments in more use cases,” comments Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group and author of the report.

The post Consumer Usage of Faster Payments: appeared first on PaymentsJournal.

EML Payments’ (ASX: EML) (S&P/ASX 200) Seamless platform offers a timely solution to companies grappling with complex or outdated payout processes in favor of a simple, secure and instant alternative. Seamless’ payout choices enhance the customer experience with instant refunds or disbursements. Companies can outsource payment choices through a single administrative and consumer portal, removing the costs associated with checks and avoiding collecting bank or consumer card information.

The Seamless platform enables payout transformation with the flip of a switch, custom branded and live in just weeks. Making a payment is as simple as sharing an email and an amount. From there, consumers or SMEs onboard themselves and manage their preferences. Sectors benefitting from the secure, cost-saving and revenue-generating benefits include merchandise exchanges, home rentals, transportation, utilities (telecom, gas and electric), e-gaming, Payment Service Providers (PSP), resellers, insurance, fintech, lending and more.

EML Seamless’ Key Benefits

• Delights customers by giving them control of their payment – a true one-size-fits-all approach.
• Establishes trust by radically accelerating payout and creating a positive brand interaction.
• Digital-age disbursement solutions (B2B).
• Back office payment transformation (B2B).

”The EML Seamless platform is North America’s long overdue payout-in-a-box alternative, giving consumers or SMEs multiple options to receive their funds – effortlessly. EML Seamless aims to disrupt B2C payments the same way Venmo disrupted P2P,” commented Ailie Kofoid, CEO Americas at EML.

To test drive EML Seamless’ ease of use for yourself, take a demo by visiting: https://www.emlpayments.com/payment-solutions/products/seamless/

About EML Payments
EML provides an innovative payment solutions platform, helping businesses all over the world create awesome customer experiences. Wherever money is in motion, our agile technology can power the payment process, so money can be moved quickly, conveniently and securely. We offer market-leading programme management and highly skilled payments expertise to create customisable feature-rich solutions for businesses, brands and their customers. 

Come and explore the many opportunities our platform has to offer by visiting us at: EMLPayments.com

The post EML Launches a Radically Simple Digital Payout Platform – Seamless appeared first on PaymentsJournal.

AUSTIN, Texas, Feb. 23, 2022 – Nerve, the banking app originally for music creators, has launched public APIs in its push to service the fast-growing creator economy – allowing companies that serve creators to make instant, low-cost payouts. Platforms and service providers who make payouts, advances, and/or royalty splits can use Nerve’s public API to dramatically reduce transaction fees while also offering instant availability of funds to their customers. Simultaneously, these companies can empower their creators with free digital embedded banking services for their businesses.

Creators make up one of the fastest-growing segments of the global economy, representing over 50 million businesses encompassing musicians, authors, entertainers, filmmakers, makers, podcasters, social media content creators, songwriters, and many more. These individuals and small businesses require secure access to funds and payments, and Nerve provides a free business banking account with a no-paperwork, 1-minute account signup that can now be embedded inside of any app or website. Nerve’s groundbreaking APIs provide both digital business banking accounts for creators, and low-cost, instant payout capabilities to the companies who pay creators.

“For too long, creators have been underbanked and overcharged. Every creator deserves financial dignity, and we believe that this begins with a business checking account, and collaboration tools that meet their everyday needs. They are businesses and should be afforded those same benefits. Companies that pay creators deserve the best, fastest, and least expensive way to pay those they serve, and our APIs open up win-win options for all in the ecosystem,” says John Waupsh, co-founder of Nerve. “Companies providing distribution, licensing, advances, credit, marketplace, or other services are now able to use Nerve’s APIs to deliver instant, lower-cost payouts to creators.”

Enterprises can easily embed Nerve’s solutions into an existing platform to enhance any creator-focused business with easy-to-use, free business bank accounts and payments. Organizations interested in accessing Nerve’s public APIs and sandbox can go to https://build.nerve.pro to get started.

The new API offering joins Nerve’s customized banking app designed to help creators better manage their business expenses and plan for the future. 

About Nerve 
Nerve’s mission is to help creators of all types create sustainable businesses. Nerve offers a multitude of customized tools to help English and Spanish-speaking U.S.-based creators manage their finances, including business debit and savings accounts, free instant payments to other users, and fee-free access to 55,000 ATMS. For more information, visit https://nerve.pro. 

The post Banking App Nerve Expands Coverage from Music to Wider Creator Economy, Releases Public APIs Enabling Embedded Banking for Creator Platforms appeared first on PaymentsJournal.

This article identifies a wide range of concerns that demand banks create a new data layer that operates in real-time. The problem is that the article argues banks are quickly running out of time. In reality, most of the use cases the article identifies can be addressed independently by the impacted business units. Faster Payments will need faster fraud detection, but that is likely to be built directly on the payments platform with hooks into the account holder authentication process, combined with a fraud tool that looks at data from multiple banks using aggregation.

“Bank product leaders are demanding instant, responsive, and personalized services, and bank technology leaders need to quickly execute a “real-time data” strategy.

Why? Because everywhere you look, time is being wrung out of financial processes.

For example, equity and other investment trades used to be processed and settled in three days (T+3 processing, in security trading parlance), but in September 2017 settlement was condensed to two days (T+2). The industry is currently working on T+1 settlement.

Credit card transactions seem fast at the terminal, but they’re actually much slower than they appear. Card transactions are only “authorized” in seconds; the actual payment settlement happens a day or two (or sometimes four!) later. Now, instant payments like Single Euro Payments Area (SEPA) in Europe; the RTP Network from The Clearing House in the United States and the Federal Reserve’s FedNow service, are fully settled with funds available in seconds.

If fully irrevocable payments are settled in seconds, it follows that fraud detection and anti-money laundering checks will need to happen in sub-second time.”

Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group

The post Faster Processing Is Good, but Most Banks Have No Need to Panic appeared first on PaymentsJournal.

Real-time and faster payments are slowly becoming a reality in the U.S., with The Clearing House’s RTP network up and running and the launch of the Federal Reserve’s FedNow imminent. But there is still much work to do. What use cases exist for faster and real-time payments, and when will we reach interoperability and ubiquity?

To learn more about why collaboration across all industry stakeholders will be key to the adoption and success of faster payments, PaymentsJournal sat down with Will Graylin, Founder & CEO of OV Loop, Reed Luhtanen, Executive Director of the U.S. Faster Payments Council, and Tim Sloane, VP of Payments Innovation at Mercator Advisory Group.

Faster payments are becoming a reality, but there’s room for growth

There have been significant strides in recent years when it comes to launching faster payments in the United States. Most significantly, The Clearing House’s RTP network, which went live in 2017, was the first new payments system launched in the United States in 40 years. Meanwhile, the Federal Reserve’s upcoming RTP network, FedNow, is anticipated to launch in 2023.

Even so, the United States has historically lagged behind other countries when it comes to launching interoperable and ubiquitous faster and real-time payment rails. This is not due to a lack of interest by businesses and consumers; The European Union has seen rapid uptake since launching its own RTP infrastructure. “There’s an appetite for this. There’s no doubt about it. The U.S. infrastructure just doesn’t quite have all of the solution sets yet,” explained Sloane.

Despite these gaps, payments industry stakeholders are aware of the importance of faster payments system ubiquity and interoperability. In fact, 71% of survey respondents from the Faster Payments Council’s 2020 Faster Payments Barometer survey view interoperability across faster payment systems as very important:

Part of what is missing are the Application Programming Interfaces (APIs) necessary to achieve ubiquity and interoperability. “As we replace the older ways of money transfer, including older rails such as ACH, we need to bring better kinds of applications to more brands and more ways to utilize the faster payment rails for everybody to appreciate the experience,” said Graylin.

Ultimately, the goal of real-time payments networks is for them to have ubiquitous reach. “At the end of the day, what we’re looking for in terms of interoperability is a strategy to achieve the objective of ubiquitous reach for these payment rails so that you’ve increased the utility for everyone who’s using them,” Graylin added.

Transparency is key to faster payments

Faster payments and real-time payment rails are of interest to banks, billers, and merchants alike. Each of these key players has their own priorities driving this interest, but transparency is a common theme.

Banks are interested in implementing faster payments for several reasons. First, it enables banks to compete with nimble fintechs and remain relevant in the eyes of account holders. It also allows them to offer increased transparency. “There’s an increasing expectation that [if] we go in and look at our online banking, it should reflect the reality of our account. When you’re transacting instantly, that is the case,” said Luhtanen. Finally, faster payments can help banks achieve greater financial inclusion by opening banking relationships to unbanked and underbanked individuals.

Billers’ top priority has long been to make bill payment an easy, simple, and hands-off process for customers. “Both the biller and the customer want to avoid exception cases. They don’t want shutoffs. [Billers] want the customer to be able to pay [bills] quickly and easily, and the customer also wants that,” added Luhtanen.

Like banks, billers and their customers also crave transparency. For example, most consumers have had the experience of making a bill payment but not knowing whether that payment went through. Next generation messaging abilities embedded into instant payments can provide the reassurance that the biller received that payment.

Meanwhile, merchants have long prioritized offering the payment options customers want to use. Faster and real-time payments are no exception. “As customers begin to demand different payments, merchants get on board with that. I’d also say merchants have an interest in security, costs, and certainty,” said Luhtanen. For merchant customers, instant payments could mean receiving a merchandise refund in real time. This can have a big impact on customers who need that refund to buy the item they originally intended to purchase.

Sophisticated chat support drives transparency

Making or receiving a payment is typically the last step of a transaction. “For merchants and billers, and banks are certainly one of those billers as well, it’s important to understand the experience by which they send their bill across multiple channels. And the payment is the last step,” said Graylin.

Before someone decides to pay, they may have questions about components of the process, such as why a late fee or roaming charge is appearing on their bill. “Those are friction points, so providing a convenient way for [billers] to address those questions, particularly leveraging chat support… is an important element to the conversion process,” said Graylin.

The need for transparency around faster payments is something that OV Loop is addressing in its OV Concierge Chat solution, which enables billers’ customer service representatives to become concierge agents to better service their customers.

Making faster payments ubiquity come to fruition

In 2017, the Fed’s Faster Payments Task Force called upon industry stakeholders to realize the vision for a payment system in the United States that is faster, ubiquitous, broadly inclusive, safe, secure and efficient by 2020. Coming to the end of 2021, that vision has yet to be realized. “It’s always going to feel like we’re coming up short, because we’re going to be thinking about what’s next,” acknowledged Luhtanen.

But that does not minimize the noteworthy progress that has occurred. For example, Same Day ACH is significantly faster and more ubiquitous than it was in years past. “In the background, we have achieved a level of ubiquity that we probably weren’t thinking about, but that is extremely valuable to the users of those networks. But now that those are in place, we rightly want to work on the next improvements,” said Luhtanen.

Because of the sheer volume of work that needs to get done, pinning down an exact date for payments ubiquity is hard to accomplish. “The date can’t be nailed down because there’s going to be constant improvements, and demand will drive what those improvements are and what’s necessary,” said Sloane. “Since every new use case has its own set of fraud and issues, it takes time to build out a faster payments rail to do everything,” he added.

Underscoring the value of real-time and faster payments to those that will benefit from the rails will be crucial to propel further progress. “The key is going to be continuing to get the word out to would-be users, whether they’re financial institutions, corporates, [or] consumers, about why this is important to them, what it does for them, how it provides value to them, and why it’s worth their time and resources to invest in this. And I think that’s going to come because enhancing payments enhances something that everybody, whether it’s a consumer or business, does every day,” said Luhtanen.

Innovative startups can drive forward faster payments

Large corporations and banks do not need to be the only organizations enabling faster payments. Startups in the payments space can also step in as innovators and fill in the gaps for what’s needed on top of real-time payment rails.

That is the role OV Loop has taken on. “We’re focused on the next generation of commerce experiences… for merchants and billers as well as commerce experiences for members in their loop. From that perspective, being able to provide them with a set of tools to leverage an easier and more interactive billing [and] invoicing solution in terms of next generation messaging is a really important aspect of where we’re moving,” said Graylin.

A hurdle that startups can face when getting involved in the payments space centers around high-stakes compliance and security considerations. “If I was in the startup mode, partnering with an established technology company to marry the best of your agility and innovative nature with the best of their expertise and scale could potentially be a successful recipe,” said Luhtanen.

Everyone is looking forward to the proliferation of real time payments in the United States. Organizations like the Faster Payments Council and startups like OV Loop are partnering across the industry to bring the vision to reality. Onward and upward, as they say!

The post Industry Collaboration is Key to Faster Payments Ubiquity appeared first on PaymentsJournal.

For over a decade, authorities in the EU have been looking for an opportunity to develop a unique payment network to replace Mastercard and Visa. The EU is focused on developing a solution that is not necessarily different or better than that of the global card networks but can reduce reliance on the U.S.-based companies. The global networks already have competition from domestic networks, but these often only function within the confines of a specific country. The European Payments Initiative has set its eyes on a wider network encompassing all of Europe. Efforts around open banking and real time payments are helping to make this a reality and beginning to gain some momentum, although the initiative is still in need of funding. The American Banker had this to say on the matter:

With the Chinese payments systems Alipay and WeChat Pay also encroaching on the European market, some of Europe’s largest banks have united to create the European Payments Initiative with the aim of establishing a European alternative for peer-to-peer, mobile, real-time and card payments. This aims to challenge the existing card networks as well as newer payment brands such as Apple Pay.

So far the concept has been met with support from both the European Central Bank and the European Commission. However, historical precedent suggests it will face challenges. In 2008 the Monnet Project was launched with similar grand aims of rolling out a unified payments system across Europe, but folded three years later despite gaining the support of 24 banks.

Pierre Lahbabi, CEO of the payments consultancy Galitt, said the EPI initiative still needs a stronger message.

“EPI, in my view, started with a defensive approach,” he said. “How do we gain autonomy at European level? How do we make sure we are not too dependent on Visa and Mastercard? It should also move towards a more offensive approach, so it should also set a goal to offer one of the best and more fluid digital experiences for end users and for merchants.”

The European Payments Initiative’s long-term success will largely depend on whether it can persuade consumers to switch to a completely novel payment method, although Weimert does not view this as a significant challenge. All issuers that are part of the EPI will pitch the new payment option to their customers. The EPI also plans to attract users through an instant payment system and a method for merchants to track consumer spending more easily.

The EPI hopes to roll out its first usable applications in 2022, but experts say it will face challenges along the way. Last week [EPI Chief Executive Martina] Weimert revealed that the project requires several billions of euros in funding to be completed and called for public financing from across the European Union to support its development.

Lahbabi predicts it will take longer than anticipated for the EPI to launch its first use cases, given the IT adaptations that will be required to support instant payments in many of the major European banks. Lahbabi expects the best-case scenario is that pilot trials and small deployments will begin within two to three years, with a full, large-scale deployment happening in five to six years time.

Macchiarelli says that while the demand for the EPI is there, the practical implementations will still prove challenging.

While the EPI has the support of more than 30 European banks and acquirers, the number of banking institutions that have signed up still varies widely from one European Union member state to another. In countries like Sweden, the EPI will also be competing with domestic alternatives such as Swish.

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

The post The EU’s Plan to Replace Mastercard and Visa Picks up Steam appeared first on PaymentsJournal.

TORONTO–(BUSINESS WIRE)–Payfare (TSX: PAY) and Wise (LSE: WISE), the global technology company building the best way to move money around the world, today announced plans to bring fast, low-fee and secure international money transfer capabilities to Payfare’s digital banking app in 2022. The partnership will bring together the leading instant payout and digital banking solution for contract workers, Payfare, with the low-cost leader for international money transfers in a digital payments experience tailored to the gig economy.

Beginning next year, the North American gig and contract workers Payfare supports will be able to send money abroad instantly via Wise’s payments infrastructure, directly from Payfare digital banking apps. Payfare, who works with some of the world’s largest on-demand platforms, will be the first to leverage Wise to enable the growing gig economy to send money internationally.

“To transfer money to family and friends abroad, the workers we support have historically had to use various legacy services that were costly, inconvenient and had hidden fees,” said Marco Margiotta, Payfare CEO and Founding Partner. “We couldn’t be more excited to bring this service to our platform in order to deliver more convenience and cost savings to our cardholders.”

With its mission of making international money transfers fast, cheap and convenient, Wise helps people and businesses securely move and spend money in over 56 currencies. With full price transparency, including low cost pricing, and the use of real-time exchange rates, Wise strategically aligns with Payfare’s mission to power financial inclusion and empowerment for the global gig economy.

“Wise is committed to providing a best-in-class digital user experience for international transfers, coupled with speed and convenience,” said Ryan Zagone, Head of Americas, Wise for Banks. “Payfare is similarly committed to providing a leading instant payout and digital banking solution in which we can work together to bring a faster international money transfer solution to millions of workers in the U.S. and Canada.”

About Payfare (TSX: PAY)
Payfare is a global financial technology company powering digital banking and instant payout solutions for today’s gig economy. Payfare partners with leading platforms and marketplaces, such as Uber, Lyft and DoorDash, to provide financial health for their workforce.

For further information please visit www.payfare.com.

About Wise
Wise is a global technology company, building the best way to move money around the world. With the Wise account, people and businesses can hold 56 currencies, move money between countries and spend money abroad. Huge companies and banks use Wise technology too; an entirely new cross-border payments network that will one day power money without borders for everyone, everywhere. However you use the platform, Wise is on a mission to make your life easier and save you money.

Co-founded by Taavet Hinrikus and Kristo Käärmann, Wise launched in 2011 under its original name TransferWise. It is one of the world’s fastest-growing tech companies and is listed on the London Stock Exchange under the ticker, WISE.

10 million people and businesses use Wise, which processes over £5 billion in cross-border transactions every month, saving customers over £1 billion a year.

For more information on Wise Platform and capabilities, visit wise.com/us/business/api.

The post Payfare, Wise to Bring First International Money Transfer Capabilities to the North American Gig Workforce appeared first on PaymentsJournal.

On-Demand, Earned Wage Access (EWA) solutions have been growing rapidly, particularly as the need to attract workers in a tight labor market gets increasingly difficult. Given the success of EWA providers, this is only attracting more competition which necessitates incumbent players to innovate and reach out to new markets. One trend is for providers to look at their technology less as a product and more as the platform for any and all worker distributions. 

An announcement from card issuing platform Marqeta on Finextra is just one example. Here, Marqeta is providing card processing services and has partnered with Branch, a workforce payments platform, to get drivers for Uber Freight paid about two hours after confirmed delivery, a process that normally can take weeks to accomplish. Branch is also providing a mobile wallet that drivers can use to manage their account and card.  Here’s more from the article:

Uber Freight has partnered with Marqeta and Branch. Through Marqeta’s modern card issuing platform and Branch’s digital wallet, Uber Freight can pay carriers significantly faster than the industry standard, at no additional cost. Rather than waiting 30 days or longer for the traditional accounts payable process, carriers on Uber Freight can get paid two hours after approved proof of delivery, a 99.7% reduction in wait time.

“We’re seeing growing demand for faster payments that better reflect the real-time nature of today’s workers,” said Renata Caine, SVP of International, Strategy and Planning, Marqeta. “Uber Freight is a leader in the transportation industry and their deep knowledge of logistics makes them a fantastic partner to bring our modern card issuing and Branch’s accelerated payments to a new market.”

According to the American Trucking Association, the U.S. trucking industry is responsible for transporting 70% of all goods in the country and the industry’s total revenue reached $879 billion in 2020. But with relatively few technological advances in the industry, driver experiences have largely remained unchanged for decades. E-commerce purchases jumped 33% to $792 billion during the COVID-19 pandemic, making up 14% of all retail sales and putting more pressure on shipping companies to satisfy customers and improve the experience for carriers in an increasingly competitive industry. Developed with the growing number of small carriers in mind, this new solution can provide carriers with greater cash flow and helps them afford the large upfront investments and expenses required to keep their businesses running and growing.

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

The post Uber Freight Drivers Get Paid Faster with the Help of Marqeta and Branch appeared first on PaymentsJournal.

Another posting about the ongoing theme of connecting two or more domestic faster payments systems into a potential real-time cross-border scenario.  This piece appears in The Hindu and discusses collaboration between the central banks of India (RBI) and Singapore (MAS) to link their respective fast payments systems, UPI and PayNow. We have been commenting on the various initiatives for accomplishing connections between sovereign payments systems to facilitate easier, faster and less expensive cross-border payments, which has seen a particularly active set of efforts in south Asia.

‘The linkage is targeted to be operationalised by July 2022….“The UPI-PayNow linkage will enable users of each of the two fast payment systems to make instant, low-cost fund transfers on a reciprocal basis without a need to get onboarded onto the other payment system,” the RBI said in a statement.…“The UPI-PayNow linkage is a significant milestone in the development of infrastructure for cross-border payments between India and Singapore, and closely aligns with the G20’s financial inclusion priorities of driving faster, cheaper and more transparent cross-border payments,” the RBI said.’

In this case the targeted transactions are P2P and C2B, allowing for instant transfers between customers of participating banks without having to share bank account numbers.  Both systems have been in operation for roughly 4-5 years now so this initiative will be another step in the modernization of cross-border payment efforts, at east for a portion of the population and use cases.

“This initiative is also in line with RBI’s vision of reviewing corridors and charges for inbound cross-border remittances outlined in the Payment Systems Vision Document 2019-21,” it added….UPI is India’s mobile based, ‘fast payment’ system that facilitates customers to make round the clock payments instantly using a Virtual Payment Address (VPA) created by the customer….This eliminates the risk of sharing bank account details by the remitter. UPI supports both Person to Person (P2P) and Person to Merchant (P2M) payments as also it enables a user to send or receive money….PayNow is the fast payment system of Singapore which enables peer-to-peer funds transfer service, available to retail customers through participating banks and Non-Bank Financial Institutions (NFIs) in Singapore….It enables users to send and receive instant funds from one bank or e-wallet account to another in Singapore by using just their mobile number, Singapore NRIC/FIN, or VPA.

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post India and Singapore Central Banks to Link Their Faster Payment Systems appeared first on PaymentsJournal.

This piece appears in Banker and Tradesman and discusses the results of a Federal Reserve survey around the topic of faster payments. The survey was conducted during the second half of 2020 among a variety of business sizes and vertical industries.  A full summary of the survey is available through a link in the posted article. As readers will likely know, the Fed is in development phase for FedNow, a real-time payments system which is expected to launch in 2023.  So in some sense, the survey is meant to reinforce the development of key services that meet use case demand. We have provided member research on the faster payments space consistently for several years. 

‘Shonda Clay, the Federal Reserve’s chief of customer and industry engagement, said in a statement that the survey was designed to uncover insights to help the industry deliver instant payment services that meet the needs of end users….“Businesses’ appetite for faster payments has clearly accelerated due to growing acceptance of digital commerce during the pandemic,” Clay said. “Businesses are calling for consumer-to-business and business-to-business payments that facilitate quicker access to funds, the ability to post payments immediately and automatically, and timely notification of payments.”…The survey found that about 90 percent of businesses expect to be able to make and receive faster payments within three years, including payments that credit the payee’s deposit account within seconds. A majority of those surveyed said they had used some form of faster payments, and most expected to use faster payment options by 2023 or sooner.’

Although not covered in the article, if one reviews the full survey summary there is ominous news for banks that are not providing these services as 75% of medium and larger businesses will consider faster payments provisioning as a key decision factor for a bank relationship.  So as we have reported adoption is gaining momentum across many use cases.  Thise interested will want to review the full summary.

‘A majority of the businesses surveyed had sent and received faster payments in the past 12 months, including through digital wallets, same-day ACH and “push to card” services that use debit card networks….The pandemic continues to play a role in the accelerating the demand for faster payments. Managing cash flow and working capital in the current business climate were among the top concerns for nearly 75 percent of micro businesses and more than 60 percent of other businesses surveyed….“Coming out of the pandemic, many are focused on offering additional digital/online payment options, ensuring payment timeliness and growing sales and revenue,” the Federal Reserve said in the statement.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Fed Survey Finds Access to Faster Payments Important to Most Businesses appeared first on PaymentsJournal.

CUNA, the Credit Union National Association, is urging the Federal Reserve to throw more resources toward speeding up the development and launch of the FedNow real-time network. Many credit unions object to joining The Clearing House’s RTP network, not because of its capabilities but because its ownership is comprised of large banks.  As RTP, launched in 2017, continues to expand in transactions processed and clients, credit unions eager to join the real-time payments bandwagon want to start catching up. 

Here’s the letter that CUNA sent to the Fed.

This is what CUNA had to say about the matter on their website, CUNA.org:

CUNA supports the Federal Reserve’s ongoing development of the FedNow service, a 24x7x365 real-time payments network, it wrote the agency this week. CUNA filed its comments in response to potential modifications to Federal Reserve policy on payment system risk to expand access to collateralized intraday credit, clarify access to uncollateralized credit, and support the deployment of he FedNow service.

“Credit unions look forward to working with Board staff as the network is developed. We encourage the Board to use all the resources at its disposal to speed up development of FedNow so that new products and services can be brought to the market,” the letter reads. “We also look forward to continuing to work with the Board as it proposes changes to regulations and operating procedures to implement FedNow and the FedNow Liquidity Management Tool (LMT).”

CUNA also encourages the Fed to:

Continue to work with credit unions and other financial institutions as adjustments may be necessary as FedNow becomes operational.

Revise the daylight overdraft and the penalty fee calculations for all institutions in order to reflect the 24-hour business day in a manner that results in no overall increase in fees.

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

The post FedNow, the Faster Payment Network Can’t Come Fast Enough appeared first on PaymentsJournal.

Instant’s technology empowers millions of working Americans to receive pay immediately for hours worked, promoting financial flexibility and well-being

ATLANTA, July 20, 2021 /PRNewswire/ — InComm Payments, a leading payments technology company, today announced that it has made an undisclosed investment in Instant Financial, a leading provider of fee-free earned wage access (EWA) solutions. Established in 2015, Instant is a financial wellness company that helps employees bridge the gap between workday and payday by allowing them to access a portion of their wages immediately after their shift, simply with the tap of their smartphone.

The employment landscape remains uncertain for a large portion of the population, with upwards of 70% of millennials living paycheck to paycheck* – leaving them unsure if they’ll get paid before bills are due, or whether they’ll have to resort to high-interest payday lenders. With Instant’s EWA solution, employees have the option to access some of their own money after each shift, bypassing the wait for biweekly pay periods.

For employers, Instant is a proven solution to help organizations attract and retain talent by offering immediate access to wages and allowing staff to assume complete control over their finances. By reducing financial stress and empowering financial freedom, Instant’s solution can positively impact key organizational HR performance metrics. In fact, Instant’s clients have seen turnover and absenteeism decrease by 20-30%.

“In today’s new economic climate, organizations seeking to staff up their workforce are faced with changing employee expectations,” says Tal Clark, CEO of Instant Financial. “Workers are seeking ways to get quicker and easier access to their hard-earned wages, and Instant Pay offers this at no-fee to both employers and employees, without disrupting their existing payroll processes.”

“We’re excited to invest in a company that is transforming the modern economy by making resources available for employees when they need it the most,” said Adam Brault, Senior Vice President of Financial Services at InComm Payments. “Instant helps businesses attract and retain the best talent.”

To learn more about the financial wellness solutions that Instant provides, visit www.instant.co.

*PYMNTS.com | The Paycheck-to-Paycheck Report: The Impacts Of A Changing Economy, June 2021

About InComm Payments
InComm Payments is a global leader in innovative payments technology. Leveraging dynamic technology and proven expertise, InComm Payments delivers enhanced end-to-end payment platforms and emerging financial technology solutions that help businesses grow across a wide range of industries including retail, healthcare, tolling & transit, incentives, mobile payments and financial services. By enabling omnichannel connections to an ever-expanding consumer base in an increasingly digital ecosystem, InComm Payments creates seamless and valuable commerce experiences across the globe. With more than 29 years of experience, over 500,000 points of distribution, 402 global patents and a presence in more than 30 countries, InComm Payments leads the payments industry from its headquarters in Atlanta, Ga. Learn more at www.InCommPayments.com.

About Instant Financial

Instant Financial is leading the charge to provide financial freedom and wellness to millions of workers in the United States through its earned wage access solutions. By enabling employers to allow employees to access their daily wages immediately after their shift, Instant Financial helps organizations improve retention and reduce absenteeism while helping employees take control of their financial freedom by bridging the gap between work day and payday. Learn more about Instant Financial at www.instant.co.

The post InComm Payments Invests in Instant Financial, Establishes Strategic Partnership Supporting Earned Wage Access appeared first on PaymentsJournal.

If you need an indication that the global card networks are relying less and less on cards for future growth, this announcement posted in ThePaypers certainly cements that idea. Mastercard and their tech partner Form3 now offer services to provide connectivity to the Faster Payments network in the UK. This service is being offered to financial institutions as well as Payment Service Providers (PSPs). 

I doubt that this will be offered in the U.S. as Mastercard would be stepping on too many partners’ toes including the large core processors and a growing number of fintechs. But expansion elsewhere around the globe seems probable.

Here’s the announcement:

Mastercard has partnered with Form3 to launch a real-time payments gateway service PayPort+, according to the official press release.

The solution which provides flexible access into the UK-based real-time payments infrastructure for Financial Institutions and Payment Service Providers. PayPort+, powered by Vocalink, a Mastercard company, and Form3, a technology partner, combines the benefits of cloud native technology with the high levels of security, availability, and operational services standards. Mastercard has selected Form3 as the technology partner for the implementation of its new PayPort+ platform.

PayPort was launched in 2016 to offer financial institutions, large and small, connectivity into the UK Faster Payments network. Through this next generation of PayPort+ these institutions will benefit from flexible connectivity options, including MQ, Restful APIs, and Microservices. PayPort+ is now live with two UK financial institutions, including Nationwide Building Society, processing real-time payments into the UK Faster Payment service.

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

The post Mastercard Launches a Service to Integrate Clients to Real-Time Payment Networks appeared first on PaymentsJournal.

A corporate survey indicates a high level of interest in lowering the cost associated with connecting to multiple payment networks and solving the liquidity management problems that all these connections create. The survey indicates that 35% of corporates interviewed ranked the lack of access to real-time or intraday information as their number 1 issue while also indicating international payments as a major pain point.

While faster payment networks are rolling out in most countries these are typically relegated to in-country transactions. Major international banks have deployed cryptocurrencies as a solution to both of these problems in that they operate across borders and settle instantly (see “Cryptocurrencies: Governments and Banks Catch Up to the Adoption Curve”):

“For customers of these organisations, the two biggest pain points by far are having access to real-time or intraday liquidity management (35% ranked this number 1), and the cost of payments processing (33%). Corporate treasuries have themselves been readying for the greater impact of real-time payments on their liquidity management as caps on the value of transactions permitted over instant payments networks are increased. They are challenged to accurately forecast their liquidity management needs as real-time transacting spreads, and they expect their banks to help them with this visibility

While cost and liquidity management were the clear dominant themes bank customers are discussing with their banks, there is also significant pressure on improving the efficiency of cross-border payments. This pressure will only increase with the rise of alternative business models outside the correspondent banking network putting more focus on the cost, speed and transparency on offer.”

Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group

The post Survey Says: Payment Complexity Is Costly and Muddles Corporate Liquidity Management appeared first on PaymentsJournal.

Those working in the payments industry will likely be familiar with the ongoing transition to ISO 20022 as a global messaging standard.  The real momentum shift started occurring in the past 5-10 years with the introduction of new real-time payments rails in multiple markets across the globe. 

This carried further into the cross-border discussion and is now part of modernization projects for not only SWIFT, but domestic RTGS systems such as Fedwire in the U.S.  This brief article in AB serves as a reminder that change is underway, and banks need to be prepared for the transition during the next several years.

We of course have been commenting on the same topic through this channel and other member research for some time now.

‘The use of ISO 20022 became the key element in faster payments around the world. It was discussed early on in Federal Reserve discussions about faster payments, and became a core aspect of The Clearing House RTP network when it was launched in the U.S….ISO 20022 had its beginnings as an international standard a decade ago when the European Union began moving to the Single Euro Payments Area as a way for the continent to handle cross-border payments in the same manner….Its success in Europe led to many global corporations touting ISO 20022 as a standard that rationalized their cross-border payments — and it led to more questions about how banks could make it a global standard….Institutions handling high-value payments were fairly quick to get on board, and in the U.S the conversation became whether the ACH process should move to an ISO format. Initially, there was no business case for it.’

In the U.S. those banks that have established network connections to RTP, of which about 20% are proprietary and the remaining ones are through TPSPs, will have begun the journey.  However, eventually any institution utilizing SWIFT, Fedwire and/or CHIPS will need to incorporate the de-facto global standard into their financial operations since conversions will be occuring.

The pandemic has delayed specific deadline announcements but it’s safe to say that in three years the ISO 20022 journey will need to be an integral part of payments infrastructure execution.  The article gets into some of the benefits, etc. of the standard, which you can read about.  The bottom line is to get ready.

‘Bank executives have known for years that they need to collaborate on building guidelines for cross-border payments and clarifying the role ISO 20022. Swift created a working group of international payments experts two years ago to dive deeper into the process….Ultimately, with all of the complexities aside, bank systems and apps will have to handle more data when adopting ISO 20022. “There are a lot of downstream impacts with the ISO conversion,” Thomas said.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Why the U.S. Is Getting on Board with Global Standard for Payments appeared first on PaymentsJournal.

PayPal acquired Honey, a company that had annual revenue of roughly $100M for $4B in 2019, which raised some eyebrows.

Honey is now called Honey by PayPal and Arkose was brought in sometime last year to fight fraud on the Honey shopping and rewards platform.

“Honey, which works with retailers such as Macy’s and Sephora and with marketplaces such as eBay, has become integral to PayPal’s strategy to improve the chance of its payments app and Venmo to be the top choice of shoppers for payments.

Since Honey’s service encourages users to regularly engage to search for price reductions on e-commerce sites, there’s a “check-in” effect that PayPal wishes to promote among its users.”

Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group

The post PayPal is Making Honey Stickier appeared first on PaymentsJournal.

This indicated posting appears in The Mandarin and advises that the New South Wales government agencies will be required to adopt e-invoicing by the end of 2022. Many U.S. readers will know that the U.S. federal government gave a similar directive through the OMB back in 2015, with the M-15-19 directive that required adoption by the end of 2018 according to the following rules:

• Migration to a designated Federal Shared Service Provider (FSSP) and adoption of the FSSP electronic invoicing solution

• Use of an OMB approved electronic invoicing solution that aligns with agency mission and support requirements, or

• Cessation of any investments in new electronic invoicing solutions.

We do not have information as to the actual adoption rates but assume relatively broad given the mandate. The use of e-invoicing brings benefits to both sides through reduced processing costs (eliminating a lot of paper) as well as potentially faster payments on the supplier side.

‘All New South Wales government agencies will be required to adopt e-invoicing for goods and services worth up to $1 million, from January 1, 2022….Digital and customer service minister Victor Dominello on Tuesday said payment times, paperwork, manual errors and a ‘significant amount’ of money would be reduced as a result of the new rule….“This is great news for SMEs, who are the backbone of the economy. There is an estimated shared saving of around $20 each time e-invoicing replaces a paper invoice and around $17 each time it replaces a pdf invoice,” he said….“Based on the 4.2 million invoices across NSW government in 2019, a shared saving between the suppliers and NSW government is estimated to be $71 million. This means the government can spend more time helping customers and businesses can focus on their operations.” ‘

As we have advised before on these pages and through member research,  late payments are a particular issue for smaller businesses, who struggle with cash flow, something that has become more of an existential threat than usual during the pandemic. So the NSW government mandate has a clear goal of supporting smaller suppliers . 

The posting also suggests that the federal government in Australia has a similar effort underway.

‘Under the state government’s Faster Payments Policy, departments must pay eligible small businesses within five business days for their goods or services….Finance and small business minister Damien Tudehope said mandated e-invoicing would enhance the payments policy by ‘ensuring that the accounts payable teams in government agencies receive invoices within minutes’….“One of the biggest issues for small businesses across NSW is cashflow and we want to take steps to ensure that properly rendered invoices reach and are actioned by the right teams as quickly as possible,” he said….At the federal level, all government agencies will be required to adopt e-invoicing by July this year. The recent federal budget also committed $15.3 million help SMEs build their digital capacity and drive business uptake of e-invoicing.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post NSW Government Agencies Required to Use E-invoicing from 2022 appeared first on PaymentsJournal.

In a sign that traditional financial institutions can also innovate and adapt to the growing demand for easier, faster, and less expensive cross-border payments experiences, HSBC has announced the launch of what they are calling HSBC Global Wallet. 

The brief posting appears in altfi and indicates that HSBC customers in the U.S., U.K. and Singapore can keep accounts in seven different currencies to make local payments in those markets.  The product is targeted towards customers who may have considered and/or used fintech alternatives such as Wise and will be attracted to a bank solution, as well as new users.

‘Called the HSBC Global Wallet, the new account lets businesses hold seven different currencies, including Euros, Pound Sterling and US Dollars, and then use those funds to ‘pay like a local’ in dozens of countries around the world….“Global Wallet makes it as easy for our customers to deal with a supplier or a client on the other side of the world, as it is to deal with one on the other side of town,” said HSBC’s global head of liquidity and cash management Diane Reyes….“We’re giving our clients a virtual presence in markets around the world—where they can hold and send cash just like a local business—while also eliminating the need to use third-party platforms for international payments.”…HSBC says it plans to add new currencies to Global Wallet soon and, because payments are made using a local payments network level through the bank, they’re much faster than traditional international payments.’

We have been providing member research on longer-term developments in the space and also keeping track of the various forms of innovation that are being announced on a regular basis as cross-border scrutiny increases and banks look for ways to transition from the slow and opaque wire transfer and correspondent banking models to more competitive methods.

Much of the hoopla and new interest is related to blockchain and CBDCs, as cryptos have gained some momentum.  But as HSBC reminds us, there are still ways to deliver better experiences using existing local rails.

‘To start off with, Global Wallet is available for customers in Singapore, the UK and the US, with more markets also coming soon….As with HSBC’s earlier Global Money Account and PagoFX, Santander’s low-cost international transfer service, all are trying to shore up the traditional banks’ international payments businesses against fintech competitors like Wise and Azimo….Meanwhile, these fintechs are fighting to carve out a chunk of the SME market by offering a low-cost solution that undercuts what most banks offer.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post HSBC Lets Businesses ‘Pay like a Local’ with Global Currency Account appeared first on PaymentsJournal.

The headline of this article suggests that businesses should focus on invisible payments which raised my hackles since consumers should show intent before making a payment. As it happens the article is really discussing how B2C payments for incentives, rebates, and disbursements can be made more impactful to the recipient – which is kind of the opposite of invisible? 

All that said, Mercator has identified 40+ Payments as a Service platforms that are available to implement the services described in this article that support prepaid, debit push, and ACH:  

“Compensation is another business process that has everything to gain from invisible, embedded payments — which may come as a surprise to anyone who currently takes direct deposits for granted. For instance, freelancer payments can often be a chore for both payers and payees. Making payments outside of the payroll cycle can be administratively burdensome and costly for organizations, while 2018 research from Bill.com (via Small Business Trends) found that for over half of freelancers, payments don’t arrive fast enough. In addition, today’s workers can benefit from more flexible options, like the ability to make cross-border deposits. Companies should develop systems to enable payments in a few clicks — whether it’s a one-time virtual payment for an ad hoc project or a transfer to an international worker’s bank account.

Organizations that plan to make progress toward truly invisible payments need to first start by reimagining the customer experience. That means meeting customers where they currently are — which largely means on mobile today. As of 2020, 227.5 million people in the U.S. were online shoppers — about 69% of the current population. And as consumers increasingly relocate aspects of their lives to virtual spaces, I’ve found that they also expect to be able to receive payments like rebates, refunds and earnings through these channels. To fulfill consumer preferences, businesses should streamline and update outdated processes, like cutting checks, and offer customers their choice of how to receive payment. From an organizational standpoint, innovative firms can build out cross-functional payments teams that integrate elements of finance, operations, marketing and customer experience. These teams should be charged with leveraging payments to elevate their companies’ financial efficiency objectives while also delivering better customer experiences and lifetime value. These days, many of the tech companies, telcos and other players I’ve worked with that are seeking to build digitally-enabled customer experiences have dedicated payments teams, and I expect to see this trend continue in earnest.”

Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group

The post Invisible Business to Consumer Payments, Sure, Invisible Payments in General – Not So Fast! appeared first on PaymentsJournal.

Funding from Invictus Growth Partners and existing investors will support expansion of sales, marketing, product development and global strategic initiatives

NEW YORK, May 4, 2021 — Boost Payment Solutions (“Boost”), the leader in B2B payments optimization, which has processed over $10 billion in card payments for over 15,000 enterprises across five continents, today announced the closing of a $22 million Series C funding round led by Invictus Growth Partners (“Invictus”). The proceeds will be used to accelerate the company’s global growth across multiple verticals, including healthcare, telecommunications, manufacturing, freight & logistics and real estate. William Nettles, Co-Founder and Managing Partner at Invictus, will join the Boost board of directors.

As the only FinTech acquirer focused exclusively on the B2B market, Boost works closely with institutional and corporate buyers, suppliers, commercial card issuers, and card networks to cure the pain points commonly associated with commercial card use and acceptance.

“Boost’s unique positioning in the industry and the vast addressable market in B2B payments has led to tremendous growth that we expect will accelerate over the next several years,” said Dean M. Leavitt, Founder and CEO at Boost. “Invictus is the perfect partner for us, bringing not only capital, but also operational expertise, a broad network, and differentiated machine learning capabilities that will enhance our platforms and business. We are truly excited to have them as a partner.”

The global B2B payments marketplace is estimated at more than $120 trillion, yet it is still dominated by antiquated payment methods that are time consuming, HR-Intensive and produce inadequate reporting data for the trading parties. This large market opportunity and lack of B2B payments digitization has created significant growth opportunities for Boost as virtual card products continue to gain traction with parties looking to capture both working capital and operational efficiencies.

Boost’s technology provides a seamless, secure and cost-effective way for commercial trading partners to enable credit card transactions.  The Boost Intercept STP (“Straight Through Processing”) platform automates the entire onboarding, credit card transaction and reconciliation process for buyers and suppliers, thereby eliminating what is typically a cumbersome and manual process.

Boost also offers its customers its Dynamic Boost platform, which provides flexible pricing constructs via proprietary interchange rates, while also enforcing any acceptance rules established among the trading partners.  Boost’s groundbreaking “Acceptance on Your Terms” approach to the enablement process has changed the entire conversation with suppliers by empowering them for the first time to be part of the solution.

“B2B card payments provide many benefits for enterprises and this is one of the most attractive and fastest growing segments within FinTech,” said William Nettles, Co-Founder and Managing Partner at Invictus Growth Partners.  “Dean and his leadership team have created a world class global organization that is built to scale and lead the space.  We are honored to partner with Boost and look forward to working with them in a collective effort to achieve their mission.” 

Boost’s existing Investors, including Mosaik Partners, INGWE Capital and North Atlantic Capital, also participated in this financing round.

About Boost

As the leader in B2B electronic payments, Boost optimizes how commercial card payments are initiated, processed, received and reported. Boost’s technical innovations have transformed commercial cards into a cost effective, scalable and secure alternative to traditional checks, wires and ACH. Boost features a global footprint that serves a broad spectrum of industries across 37 countries in North America, South America, Europe, Asia and Australia. Boost was founded in 2009, and is headquartered in New York, NY. Please visit us at www.boostb2b.com.

About Invictus Growth Partners

Invictus Growth Partners is a growth equity and buyout firm which invests in bootstrapped and capital efficient, automation-enabled cloud software, cybersecurity and fintech companies which seek capital and strategic resources to accelerate their growth. The firm and all of their professionals are based in San Francisco, CA. Please visit us at www.invictusgrowth.com.

The post Boost Payment Solutions Raises a $22 Million Series C Round Led by Invictus Growth Partners to Accelerate the Use and Acceptance of Digitized B2B Payments Globally appeared first on PaymentsJournal.

Earned Wage Access (EWA) solutions that offer payroll to workers on-demand has been the hot new employee benefit in the Human Capital Management market.  In Visa’s quarterly financial announcement on Tuesday (April 27^th), the growth of Visa Direct was attributed, in part, to EWA transactions, so this is also important to the payments industry. 

Today, Fiserv’s Money Network announced that they are partnering with Instant Financial to offer their free EWA solution.   It is free to the employer and free to workers too.  This means that Money Network clients will now have the option to offer workers access to their pay before payday to help bridge the gap that can occur between the time when expenses are due and pay day arrives. 

This is an alternative to avoid costly credit card interest payments and overdraft fees that some workers use to make ends meet.  Employees can request access to earned wages through a mobile app and have funds delivered in near real-time onto a Money Network prepaid card. With the tight labor market that some employers face as activity gets back to pre-pandemic levels, EWA will be an important tool to retain and attract employees.

Here’s an excerpt from the press release:

Earned wage access gives employees the ability to access their wages as they are earned, rather than waiting for a weekly, bi-weekly or monthly payday. Businesses can empower participating employees—especially the millions of unbanked and underbanked Americans—with immediate access to hard-earned income at no cost, giving them the flexibility to access their own money for emergencies or daily expenses.

“The ability to provide faster access to wages and tips can be a significant differentiator for corporations, franchises, governments, and other types of employers challenged with attracting and retaining talent in today’s digital-first world,” said Dom Morea, senior vice president and Head of Prepaid at Fiserv. “Pairing earned wage access with the flexibility of a prepaid payroll program that incorporates budgeting tools and spending insights is a powerful example of how employers’ can help further the financial wellbeing of their employees.”

Employees that are paid via Money Network may monitor budgeting and spending online or via a mobile app, leverage a prepaid debit card to make purchases, access in-network ATMs, transfer funds, and enable a digital wallet. Employers that integrate Money Network with EWA into their time, attendance and payroll systems can easily onboard employees, calculate their on-demand pay, and disburse funds onto a Money Network card.

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

The post Fiserv’s Money Network Partners to Launch a Free Earned Wage Access Solution appeared first on PaymentsJournal.

It’s earnings season and yesterday Visa announce results that show it coming back from the trying times of 2020.  Debit transactions and faster payment solution Visa Direct were real bright spots.  Debit transactions have been growing in remote channels for the last couple of years and that really got a boost during 2020. 

Not only have transactions increased, but the average purchase amount have too.  Visa Direct, which uses the debit network for credit transactions, saw growth in part driven by B2C disbursements.  One cited use case was the use of Visa direct for near instant payouts for workers receiving on-demand payroll deposits through an Earned Wage Access solution.  Here’s some of the coverage Digital Transactions published on Visa’s financial results announcement:

Payments companies took a beating as the pandemic raged, but Visa Inc.’s top brass indicated Tuesday afternoon the big network has put the worst behind it. “We believe we are at the beginning of the end of the pandemic,” said chief executive and chairman Al Kelly as he pointed to recovering economies, rising vaccination rates, and some stronger-than-expected results for Visa. “We have bounced back to the pre-Covid trendline,” pronounced Vasant Prabhu, Visa’s chief financial officer.

Total transactions on Visa Direct, which enables nearly real-time transfers between Visa cards—and now, from Visa cards to bank accounts—increased almost 60% in the March quarter, Kelly reported, without citing absolute figures. Some 25 earned-wage access platforms are now among clients using the service, he said, while it also facilitated government distributions for pandemic relief to some 13 million accounts.

The pandemic also drove millions of consumers to e-commerce shopping, a trend that Kelly says will stick as the world enters a post-Covid stage. “We see millions of e-commerce shoppers who weren’t there before. They’re much more comfortable shopping online, [so] we believe this shift will persist even as card-present [activity] begins to return.”

With these trends has come a surge in debit card transactions. Just in the March quarter, the second period of Visa’s fiscal year, total payments volume on debit in the U.S. market rose fully 34% year-over-year, to $657 billion.

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

The post Debit and Faster Payments Propel Visa appeared first on PaymentsJournal.

Buy Now-Pay Later remains hot for both merchants and consumers alike. Online shopping growth combined with pent-up demand as the pandemic wanes are key drivers. Splitit just announced an integrated service to enable one-stop shopping for merchants seeking BNPL offers as well as card processing.

The solution is Splitit Plus which lets merchants provide installment payments with the added-value service of a payment gateway for processing. The BNPL market has a crowded field of vendors to choose from, so any differentiating features and solutions can position some to stand out in the crowd.

The following excerpt from a Finextra article reports more on the topic:

Splitit, a global payment technology company, today announced the availability of Splitit Plus, a new service enabling merchants of all sizes to offer payment installments to their customers in minutes.

Any merchant can now activate Splitit through the Splitit Plus gateway or any integrated gateway partner that Splitit supports worldwide.

Merchants can now begin accepting installment payments faster than ever before. They can sign up directly through the Splitit Plus gateway or via one of the 90-plus integrated gateway partners currently supported by Splitit worldwide. Approval is quick, meaning merchants can offer interest and fee-free payment installments to customers in minutes.

“We created Splitit Plus with a customer-first approach to provide an exceptional merchant experience with Splitit. This innovation of a payment gateway built exclusively for installments makes it a fast, simple solution for merchants of any size to begin accepting installment payments in minutes,” noted Splitit CEO Brad Paterson.

Overview by Raymond Pucci, Director, Merchant Services at Mercator Advisory Group

The post Splitit Launches BNPL Payment Gateway For Merchants appeared first on PaymentsJournal.

Board of directors unanimously vote to approve Rengachari as a new member of the board advisory group; Rengachari to speak at NACHA’s Smarter Faster Payments conference

CHARLOTTE, N.C. – April 26, 2021 – Finzly, a fintech provider of modern banking applications for payments, foreign exchange, trade finance and digital account opening, announced that the company’s CEO and founder, Booshan Rengachari, has been named a new member of the U.S. Faster Payments Council’s Board Advisory Group. In this role, Rengachari will advise the FPC’s board of directors and staff on perspectives outside those represented on the board, in addition to supporting the FPC in capitalizing on — and responding to – emerging trends in the payments ecosystem.

“The need for faster payments is long overdue, and the U.S. Faster Payments Council is actively working to establish a world-class payment system that allows any person or organization to safely and securely pay anyone, anywhere, anytime” said Booshan Rengachari, founder and CEO, Finzly. “As an original faster payment proposer and former member of the U.S. Faster Payment Task Force, I have always been an advocate for transforming the industry’s payment infrastructure. I am pleased to be part of the FPC’s Board Advisory Group and look forward to playing a larger role in the industry’s education and advancement of faster payments.”

Rengachari is also slated as a speaker for NACHA’s Smarter Faster Payments 2021 conference as part of its Remote Connect sessions. The panel session, “Embedded B2B & B2C Payments in Corporate Systems & ERPs,” will cover how technology can help FIs enable an embedded B2B and B2C payments experience, and will be held virtually on August 23 from 12-1pm ET.

About Finzly

Finzly connects financial institutions with customers through a modern digital banking experience and an efficient, real-time payment services hub. Freeing financial institutions from core system limitations, Finzly’s open, cloud-based bank operating system, BankOS, enables transformation and innovation at the speed of fintech. With freedom to adopt solutions from Finzly and third parties of choice, financial institutions can implement apps in three simple steps – subscribe, try and launch. Serving customers across North America, Finzly has been modernizing international banking and treasury management solutions since 2012. For more information, visit www.finzly.com.

The post Finzly CEO Booshan Rengachari Named to U.S. Faster Payments Council’s Board Advisory Group appeared first on PaymentsJournal.

The system aims to increase non-cash transactions in the Kingdom, supporting “Saudi Vision 2030”

ARMONK, N.Y. and RIYADH, Saudi Arabia, April 21, 2021 /PRNewswire/ — Saudi Payments, under the supervision of the Saudi Central Bank (SAMA) announced the launch of Saudi Arabia’s instant payments system ‘sarie’ in cooperation with IBM (NYSE: IBM) and Mastercard (NYSE: MA), the leading technology company in the global payments industry. This collaboration marks a key milestone for payments innovation in the region and is aligned with Saudi Payments’ aim to improve the Kingdom’s financial ecosystem, mainly through the adoption of faster payments and improvements to banking reconciliation. Today, ‘sarie’ supports all Saudi banks across the Kingdom and is available for use by their customers. 

The introduction of ‘sarie’ is in line with Saudi Arabia’s Financial Sector Development Program (FSDP) under Saudi Vision 2030, which targets achieving 70% non-cash transactions by 2030.

‘sarie’ allows bank customers to send and receive money in real-time using a wider range of services and transfer options. Customers of local banks can make instant transactions of up to SAR 20,000 (USD 5,300) through the system. Further, “sarie” users can benefit from the quick transfer service to send up to SAR 2,500 (USD 660) using aliases, such as mobile number, email address, ID number, or IBAN number.

Saudi Payments Managing Director Fahad Al-Akeel said, “The instant payments system ‘sarie’ can enable us to drive usage and engagement across the Saudi payments ecosystem of banks and businesses. It can help lay the foundation for new payments business initiatives, encouraging financial inclusion and banking reconciliation of Saudi banks. We welcome this momentous collaboration with IBM and Mastercard. It is a huge step forward that aligns with our ongoing smart solutions and payments modernization strategy, aimed towards achieving the assigned goals in vision 2030.”

Maria Medvedeva, Vice President and Country Business Development Lead, Saudi Arabia, Mastercard, said, “This is a significant milestone in our real-time payments journey and is the result of hard work. Saudi Arabia is an important market for Mastercard, and we anticipate that with this real-time payment system going live in the MEA region, many doors may soon open for ongoing innovation, both in the Kingdom and further afield. The initiative can significantly contribute towards digitizing and modernizing transactions in line with the goals of Vision 2030, and can also help increase the efficiency of the financial systems and offer consumers access to a wider range of financial services, positively impacting the Saudi economy and its citizens.”

Saudi Payments selected IBM Global Business Services (GBS), the services and consultancy arm of IBM, to lead the project as the System Integrator (SI) partner and a leading end-to-end digital payments solutions provider. IBM GBS designed and architected the solution through its complex system integration methodology, built a technical platform and integrated Mastercard’s instant payments platform into Saudi Payments’ existing infrastructure while connecting it to the IT systems of locally operating banks. Not only is this a milestone for payments innovation locally, it is the fastest end-to-end rollout globally of a digital payments system of its kind and scale.

Mastercard’s innovative and secured real-time payment technology was selected for the rollout by Saudi Payments, enabling people and businesses in the Kingdom to send money instantly. It is part of the tech company’s broader multi-rail strategy to lead payment innovation in the MEA region across all digital payment rails,  enabling people and organizations to send and receive money how, where, and when they choose, across both card and account-to-account payments rails. Mastercard’s experience of real-time payments implementations includes the launch of The Clearing House’s RTP® – the transformative real-time payment system in the U.S. – an evolution of Mastercard’s highly successful and reliable systems developed for Faster Payments in the U.K., FAST in Singapore, and PromptPay in Thailand. Mastercard is now providing real-time payments infrastructure technology for 12 of the largest 50 countries ranked by GDP.

Dina Abo-Onoq, Managing Partner, IBM GBS, Saudi Arabia, said, “In order for banks and financial institutions to remain current, they should be prepared to adapt to the changing and on-the-go customer needs, using the latest innovations. This launch is another step towards the advancement of the payments and banking landscape in Saudi Arabia and the region. The new payments solution is designed to provide the citizens and residents of Saudi Arabia with Mastercard’s real-time capabilities and help promote financial innovation.”

Saudi Payments has successfully rolled out ‘sarie’ across all banks operating locally, using the most advanced technology built on the latest ISO 20022 messaging standards. The ambitious system is expected to support local government, business, and consumer payment needs across various payment flows, creating a more convenient and accelerated economic activity across the Kingdom.

About IBM

For more information about IBM GBS, visit https://www.ibm.com/services 

About Mastercard Incorporated, www.mastercard.com

Mastercard is a global technology company in the payments industry. Our mission is to connect and power an inclusive, digital economy that benefits everyone, everywhere by making transactions safe, simple, smart, and accessible. Using secure data and networks, partnerships and passion, our innovations and solutions help individuals, financial institutions, governments, and businesses realize their greatest potential. Our decency quotient, or DQ, drives our culture and everything we do inside and outside of our company. With connections across more than 210 countries and territories, we are building a sustainable world that unlocks priceless possibilities for all.

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Payments Orchestration Used to Process Over 172 Million Transactions

DURHAM, NC — April 21, 2021 — Spreedly, the provider of a secure, agnostic, and flexible platform that welcomes all payments participants, today announced that its Payments Orchestration platform was used for over 172 million revenue transactions in the first quarter of 2021 — growth of over 100 percent compared to Q1 2020. 

“While we’ve always been proud of our role in enabling an open, agnostic payment ecosystem that results in more inclusive and fairer outcomes, this last year has felt different. We know that Spreedly is helping make a difference day-to-day and week-to-week across the globe,” said Justin Benson, CEO at Spreedly. “To be growing at 100% at this stage of our evolution further highlights all the hard work our teams do every day and the need to continually invest and scale to support the industry’s increasing need for Payments Orchestration.” 

Spreedly’s customers, direct merchants and vertical software platforms designed to help businesses accept digital payments online, have moved quickly to adapt to the new reality of payments post-COVID. Volumes for online ordering skyrocketed throughout 2020 and has continued to grow in early 2021. Industries like order ahead, digital goods, and health and fitness have experienced massive expansion throughout the pandemic as customers demanded online access and top notch experiences. This same growth trend has started to emerge in the last quarter with industries like travel and hospitality and ticketing.   

With continued focus on delivering value to merchants and merchant aggregators, Spreedly grew its new customer base by more than 35% in the past year. Benson explained, “Spreedly’s continued growth, combined with our independence, helps to strengthen our relationship with the leading PSPs as well as fuel our ability to bring a superior payments orchestration offering to market.” 

For more information about Spreedly’s Payments Orchestration platform and the business challenges it addresses, contact us https://www.spreedly.com/contact-us. 

About Spreedly

We orchestrate payments for the world’s most innovative businesses. Global enterprises and hyper-growth companies grow their digital business faster by relying on our payments platform. Hundreds of customers worldwide secure card data in our PCI-compliant vault and use tokenized card data to enable and optimize over $20 billion of annual transaction volumes with any payment service. Spreedly is headquartered in downtown Durham, NC. 

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Recent $100 million capital raise helps Sightline also recruit talented Chief Marketing Officer, Chief People Officer and Chief of Staff executives

LAS VEGAS, NV – April 19, 2021 – Sightline Payments, a dynamic Financial Technology company that is enabling the next generation of cashless, mobile and omni-channel payment solutions for the gaming, lottery, sports betting, entertainment and hospitality ecosystems, today announced it has appointed five new executives to its senior leadership team.

John Gronen joins Sightline as Chief Financial Officer of the rapidly growing FinTech provider, while Jennifer Carleton will serve as the Company’s Chief Legal Officer. Through its recent $100 million funding round announced on April 1, Sightline Payments has also appointed Muriel Lotto as Chief Marketing Officer, while Katrina Sevier will serve as its Chief People Officer and Felicia Gassen will be Chief of Staff. The executive appointments strengthen Sightline Payments’ leadership as the company scales to support rapid growth and customer demand.

“We are pleased to welcome John, Jennifer, Muriel, Felicia and Katrina to Sightline Payments. The collective expertise and proven track record that they bring from working with some of the world’s most recognized companies will play an instrumental role in managing the company’s hyper-growth and expansion,” said Joe Pappano, CEO of Sightline Payments. “In the near- and long-term, we plan to invest significant capital in recruiting diverse and expert talent to drive key Sightline priorities around market growth and innovation. Our goal is to have the most talented and diverse team in the gaming and payments industries.”

John Gronen, Chief Financial Officer

John Gronen has been appointed CFO for Sightline where he will oversee all finance operations including banking, treasury, budgeting, and reporting. His experience delivers deep value to the Company having recently served as CFO for payments processor VPay, Inc. and head of operations for VCE, a subsidiary of EMC, Cisco Systems and VMWare. Previously he held senior finance and accounting roles with Technisource, Alltel and Delta Trust and Bank.

John will also play key roles for Sightline in M&A and fundraising in support of the Company’s high-octane organic and inorganic growth strategies.

Jennifer Carleton, Chief Legal Officer

Jennifer Carleton joins Sightline having spent her entire legal career in the gaming sector. She was in-house counsel for an Indian casino and for the last 14 years an adviser to some of the premier public and private gaming and investment companies in the world.

Working in gaming for the past two decades has enabled Jennifer to develop a unique expertise in payments, mobile, internet and sports gaming, as well as an insider’s familiarity with the unique issues that arise when technology and regulation intersect. Jennifer is helping to establish an advanced Indian law and advanced gaming curriculum at the UNLV Boyd School of Law through her teaching at the law school and her work with the Dean’s Advisory Council.

Jennifer also dedicates a substantial amount of time to professional development and corporate philanthropy within her community.  She is currently the chair of the Tyler Robinson Foundation, the charitable arm of the Grammy-winning band Imagine Dragons, dedicated to raising funds for pediatric cancer families.

Muriel Lotto, Chief Marketing Officer

Muriel Lotto brings over 25 years in International Marketing to her new role as Sightline Payments’ Chief Marketing Officer. Muriel has worked in France, the United Kingdom, Switzerland and in the United States at leading companies including Nestle, Unilever, Royal & SunAlliance, Bupa and Western Union.

Muriel will lead transformative marketing strategies across audience definition and targeting, customer journeys, messaging, and media mix optimization. In her role, she will drive brand awareness and commercial results through public relations, creative, and advertising partners. 

Katrina Sevier, Chief People Officer

Katrina Sevier brings expertise around the ever-changing organizational landscape of culture and talent. Katrina will be tasked with growing Sightline Payments’ team, which will double in size this year.

Prior to Sightline Payments, Katrina led comprehensive talent strategies delivering growth and implementing change across global organizations in the financial services, technology, media, and advertising industries including Western Union and IPG Mediabrands.  

A steadfast believer that the employee and customer experiences are connected, Katrina will build and implement the company’s talent plan to support business growth. 

Felicia Gassen, Chief of Staff

Felicia Gassen has been appointed Chief of Staff to CEO Joe Pappano and the executive leadership team. She is the former Executive Director of Global Gaming Women where she managed the executive board of directors, committees, sponsorship, and global membership. Previously her work included the management of research, grants and education programs in the fields of bioengineering, biotechnology, and bioinformatics. Felicia strongly believes in collaboration, amplifying voices and building connections with people across disciplines. Felicia attended both the University of California, Berkeley and University of Nevada, Las Vegas and holds a BFA in Fine Art and Art History.

For Executive Leadership headshots, please visit: https://sightlinepayments.com/leadership/

About Sightline Payments

Sightline Payments (“Sightline” or the “Company”), is a dynamic Financial Technology (FinTech) company that is enabling the next generation of cashless, mobile and omni-channel payment solutions for the gaming, lottery, sports betting, entertainment and hospitality ecosystems. The Company has more than 1.5 million enrolled Play+ accounts across its current portfolio of more than 70 programs in 39 States, and is poised to build on this presence, commensurate with the expansion visible in the underlying markets it serves. One of the key segments the Company serves is online gaming (both sports betting and iGaming), which is expected to build from $3 billion in total revenue to $22 billion over the next five years. In addition, the Company’s digital payment solutions directly address the wider gaming industry’s opportunity to transform traditional gaming floors into cashless ecosystems, a $90 billion revenue market serving over 100 million customers annually.  Sightline is based in Las Vegas, Nevada. Learn more at https://sightlinepayments.com.

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This release on the Citi website is about a new service launch by the corporate banking giant through its Treasury and Trade Solutions (TTS) business, which they are calling Citi Service Insights (CSI).  The new solution provides both service initiation and case management features, document interaction, audit trail and a dashboard to help manage all open inquiries. 

A unique component of the new service is that it is integrated via APIs with SWIFT gpi Case Resolution through its already existing Citi Payments Insights (CPI) solution, which is in turn a component of the client facing service portal Citidirect BE.  As a result, cross-border payments servicing capabilities are greatly simplified and enhanced.

‘This new digital service provides clients with a centralized view to manage or close all their service inquiries globally and also allows clients to open several types of inquiries digitally. Previously, this was done through a combination of manual processes, which have now been digitized to increase transparency and speed for issue resolution. Additionally, with the integration of gpi Case Resolution, clients have direct access to dynamic interbank query handling across the SWIFT network resulting in faster payments resolution and settlement.’

We had the opportunity to speak with Melissa Tuozzolo, Head of Payments Financial Market Infrastructures and Industry Initiatives for Citi’s TTS, who advised that once a client enrolls with CSI, they have a seamless experience for any type of payment tracking, either domestic or cross-border, given the integration with the Citi CPI solution. “We do a lot of work with payments industry groups to contribute towards a more modern digital payments landscape. Citi was an early adopter of SWIFT gpi, and actually had a hand in the planning and development of gpi Case Resolution.  Our clients will also reap the benefits of the network effect in gpi Case Resolution as more banks adopt the solution, broadening the ability to exchange information when managing cases” said Tuozzolo. 

In out CEP Outlook for 2021, we outlined four themes for ongoing success in corporate banking and payments.  One of those themes is collaboration, a key way for banks to provide what clients are increasingly demanding – a work experience that approximates how one easily navigates through personal digital tasks. This is a big step in that direction.

‘COVID-19 has driven and accelerated demand for digital self-service tools as well as greater automation in the post payment processing space. As a part of its goal to create a digital platform for commerce, Citi has now created the capability for clients to digitally access information related to service inquiries through Citi Service Insights on its award-winning client facing portal, CitiDirect BE. Clients are now able to track payment services digitally, with a centralized view of inquiries through a dashboard and digital connectivity, eliminating the need to contact Citi Service via phone, email or SWIFT message.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

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Time is money. Now retailers can enter the world of faster payments when they pay employees and suppliers, and also when sending credits to customers. Payments platform Checkout.com announced a real-time payments solution aptly branded as Payouts. The new system is API (application programming interface) driven and enables multiple payment methods and also cross-border transactions.

Additionally, Payouts will provide merchants will real-time currency exchange rates so they know the true amount of their international payments. Merchants want their payment providers to help them run their businesses, including time-savings features when dealing with payments disbursements for international markets.

The following excerpt from a Retail Technology Innovation Hub article reports more on the topic:

Cloud-based payment solutions provider, Checkout.com, is launching a solution called Payouts. The Payouts product will enable merchants to make payouts in real-time to four billion plus cards in over 174 countries and payments to local bank accounts in around 40 countries.

Guillaume Pousaz, CEO and Founder, Checkout.com, says: “We’re equipping merchants with the technology to transform payouts from a functional component of business to a strategic growth lever to drive exceptional experiences, expand into new markets and boost profitable growth.”

“Agile enterprises are looking for ways to innovate on the payments journey. Legacy payout systems simply can’t scale with them. Our payouts solutions will give merchants the ability to facilitate the movement of money more freely.”

Overview by Raymond Pucci, Director, Merchant Services at Mercator Advisory Group

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adds some of the biggest names in tech as strategic investors to address $125T B2B payments market opportunity

SAN FRANCISCO–Routable, the simplest way to send and receive business-to-business payments, announced today that the company has raised $30 million in Series B funding. The round was led by Sam Altman, CEO of Open AI and former president of Y Combinator, and Jack Altman, CEO of Lattice. Additional investors include Flexport as well as angel investors, including Max Mullen (Instacart), Joe Gebbia (Airbnb), Aaron Levie (Box), Marc Benioff (TIME Ventures), Gokul Rajaram (DoorDash), Lachy Groom (formerly of Stripe) and Scott Belsky (Behance). Having already become the B2B payments platform of choice for fast growing mid-market companies that need to regularly send a high volume of payments, Routable will use this funding to scale its team to expand upmarket into the enterprise space.

Making B2B payments is time-consuming, costly and mostly still an arduous, manual process that doesn’t easily scale. Routable’s modern enterprise finance software combines 15 discrete AP/AR functions to automate 95% of the manual payments processes, such as updating accounting systems, processing compliance in bulk, and more, allowing companies to focus their engineering and finance talent on the tasks that matter most.

Routable’s foray into the enterprise market aims to replace internal tooling built for custom business payment flows. Since its launch from stealth in August 2020, Routable has grown revenue by 380% in addition to making strategic moves to position itself for the enterprise. The company recently hired Brian Walerius as VP of Engineering, who brings enterprise experience from previous roles at Total Expert and Open Systems International. As part of Routable’s API-first approach, Routable has already established integrations with Xero, QuickBooks, and NetSuite to support payables workflow and reduce manual intervention and will look to accelerate integrations to additional financial systems of record.

“There’s a huge market opportunity for us to address here with the B2B payments industry projected at approximately $125T, with ACH, Cash & Check representing about $122T of that market opportunity,” said Routable co-founder and CEO Omri Mor. “We’ve intentionally partnered with a new roster of investors from companies like Box, OpenAI, Instacart, Salesforce, DoorDash and more, with deep enterprise and high-growth experience. With their guidance, we will scale our team to build the best solution for high volume enterprise business payments.”

“The explosion of the gig economy over the past several years and the more recent boom in the creator economy are leading to a massive rise in the volume of both payments and payees creating a real business payment headache,” said Sam Altman, lead investor and former president of Y Combinator. “Routable has built an incredible product and team to tackle these pain points and has quickly become the backbone of some of the fastest growing businesses. With the addition of enterprise capabilities, we think this can lead to an enormous business and we’re thrilled to be supporting them as they scale.”

For more information about Routable, visit https://routable.com/.

ABOUT ROUTABLE

Routable is the simplest way to send and receive business-to-business payments. The secure invoice and bill payment platform helps companies speed up their business payments. The company was founded in 2017 by Tom Harel and Omri Mor and has raised $46 million to date. Routable is primarily a remote team, with headquarters in San Francisco and Seattle.

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LONDON, England and SAN JUAN, Puerto Rico – April 14, 2021 – Kill Bill, the open-source billing and payment platform and Wovenware, a provider of custom AI and software engineering solutions, have announced a partnership to streamline the development of new plugins for the Kill Bill open-source platform. The partnership enables companies to optimize the capabilities of the Kill Bill platform to better meet their customers’ payment needs.

As open-source software, Kill Bill is a unique solution in an industry saturated with proprietary SaaS billing offerings. The Kill Bill code is free, and its architecture is highly modularized, which gives users the freedom to customize it to their own business needs.

“Kill Bill’s number-one strength is its ability to build your business logic on top of it with plugins to create a customized billing and payments solution,” says co-founder Pierre Meyer. “It’s important to have a resource for plugin development. Clients without in-house IT resources can work with Wovenware. The company is very familiar with Kill Bill, and its stellar reputation makes it a natural choice as our plugin partner.”

Wovenware, a nearshore software engineering firm headquartered in San Juan, Puerto Rico, has received national recognition for its software engineering and AI capabilities, having been on the Entrepreneur360 list for the best entrepreneurial companies and five times on the Inc. 5000 list of America’s fastest-growing private companies.

By designating Wovenware as the go-to vendor to configure, extend, and integrate Kill Bill with internal and third-party systems, Kill Bill users can shorten the inquiry process. Furthermore, by setting standardized development costs for plugin types, Wovenware has simplified the cost- analysis portion of evaluating Kill Bill.

“With a deep understanding of the innovative Kill Bill platform, Wovenware is ready to assist those interested in using Kill Bill as their billing solution,” says Wovenware CEO and co-founder Christian Gonzalez. “We’re pleased to solidify our relationship with Kill Bill and excited to help clients with plugins and other integrations so that they can quickly and efficiently leverage the power of the billing platform.”

As one of the first projects under the integration partnership, Wovenware has developed an open-source plugin that enables Kill Bill users to use Braintree as their payment processor for credit/debit cards, ACH, PayPal, Venmo, and many other payment methods. The plugin is available on Wovenware’s page on GitHub (https://github.com/Wovenware/killbill-braintree).

For information about Kill Bill customizations via plugins, please visit https://killbill.io/customize.

About Kill Bill (killbill.io)

Kill Bill has been the leading open-source billing and payment platform for the past 10 years, helping online businesses avoid vendor lock-in with SaaS billing providers. Online businesses often place the heart of their business – its revenue – into the hands of third-party billing vendors, chaining themselves to their features and functionality and slowing their growth. Highly scalable and extensible, Kill Bill enables any type of online business, including SaaS and ecommerce, to optimize Kill Bill for their one-time or recurring billing needs. Organizations around the globe, from startups to public companies, trust Kill Bill to invoice billions every year. Visit them at killbill.io, or connect with them on LinkedIn and Twitter.

About Wovenware (wovenware.com)

As a design-driven firm, Wovenware delivers customized AI, computer vision and other digital transformation solutions that create measurable value for customers. Through its nearshore capabilities, the company has become the partner of choice for organizations needing to re-engineer their systems and processes to increase profitability, boost user experience and seize new market opportunities. Wovenware leverages a multidisciplinary team of world-class experienced designers, software engineers, data scientists and data specialists to create solutions for cloud transformation, advanced AI innovation and application modernization. Headquartered in Puerto Rico, Wovenware partners with customers across North America and around the world. Visit the company at www.wovenware.com, or connect with it on Twitter, Facebook, or LinkedIn.

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Partnership gives merchants access to flexible acquiring solutions that support innovation and growth 

London 13th April 2021 Digital payments provider, Paydoo, has partnered with technology company Tribe Payments to provide processing, gateway and POS services across the UK and Europe. Under Tribe’s acquirer processing programme, Paydoo will gain instant access to the latest technology to manage their merchants’ success and support ongoing growth.

With merchants embracing omnichannel payments, they require increasing customisation across multiple verticals. As payments become more complex and customers more demanding, there is a clear need to provide a payments-in-a-box solution; putting merchants in charge when it comes to real-time reporting and value-added services. 

“We are excited to partner with Tribe to offer our merchants the unrivalled experience and improved service levels that our customers deserve,” said Sam Kohli, Founder of Paydoo. “Since its conception, Paydoo has dedicated itself to offering Acquiring-as-a-Service; providing much-needed versatility, reliability, and transparency for payments on and offline. Our value lies in the ability to provide integrated payments for the needs of all merchants – and Tribe is enabling us to do just that.” 

“The modularity of Tribe’s technology will allow Paydoo to quickly incorporate a number of products into their offering, to enable true omnichannel payments and support options that are growing in popularity, such as subscription payments.” said Alex Reddish, Chief Commercial Officer of Tribe Payments “We are excited to partner with Paydoo as we continue to strengthen our acquiring platform.”

The payment processing element of the partnership is already live, with gateway, POS and SoftPOS services all set to follow over the next few months; helping Paydoo to deliver a full range of flexible acquiring solutions to support merchants who want to innovate and grow.

About Paydoo

Paydoo Payments is an authorised and registered E-money Institution, with its license passported across 31 European Union member states. Paydoo provides Visa and Mastercard card acquiring services in Card Not Present (CNP) and Card Present (CP) environments. As well as offering these services, Paydoo offers in-house developed technology including tools to optimise smart merchant onboarding, automated boarding logic, risk management, monitoring interfaces, and payout reporting for ISO’s, ISV’s, IPSPs. Paydoo has positioned itself as a technology company that provides integrated payment solutions offering what is called acquiring-as-a-service as its flagship product.

About Tribe Payments

Tribe Payments provides modular technology to banks, fintechs and acquirers, enabling them to offer innovative payments services without compromising on speed, scalability or quality.

Tribe’s core platform – ISAAC – supports issuer and acquirer processing and offers a range of API-led enhanced services including a proprietary 3D Secure solution, data insights fraud and risk monitoring. Tribe’s technology stack also includes its Digital Banking, Bank Connect and Open Banking solutions which give fintechs and payments companies fast, easy access to banking rails and financial services capabilities.

Tribe’s cloud-based services provide clients and partners with enhanced flexibility and rapid speed to market, along with the ability to scale, expand across borders, and work better in complex regulatory environments.

Launched in 2019, Tribe is a pioneering payment technology provider. Tribe was the first processor to allow service providers to harness the power of Open Banking without developing their own APIs. As Europe’s first issuer processor to work with Mastercard, Visa and UnionPay International, Tribe supports unrivalled connectivity for card payments. And with PCI Level 1 compliance and supported by Level 4 data centres, Tribe builds global scale, safely and securely. 

Find out more: https://tribepayments.com/

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Faster payments is an important topic that became even more important in 2020 during the pandemic. In a recent Banking Exchange webinar, Keith Gray, Vice President, Strategic Partnerships, The Clearing House (TCH); Reed Luhtanen, Executive Director, U.S. Faster Payments Council (FPC); and Mark Ranta, Payments Practice Lead, Alacriti, discussed what they expect 2021 to bring when it comes to faster payments.

So, what is a faster payment? According to the Bank for International Settlements’ Committee on Payments and Market Infrastructures:

Traditionally, it has taken a day or more (even weeks in the case of some cross-border transactions) after initiating a cashless retail payment until the funds reached the payee. Frequently, the initiation and processing of transactions has been limited to specific times during the day. These two limitations of traditional payments, payment speed and service availability, are the main features that fast payment initiatives aim to change.

Combined, these improvements provide end users with rapid availability of final funds on a nearly continuous basis and can, therefore, be used to define more formally the concept of “fast payments.” For the purposes of this report, a “fast payment” is defined as a payment in which the transmission of the payment message and the availability of “final” funds to the payee occur in real time or near-real time on as near to a 24-hour and seven-day (24/7) basis as possible

Types of Payments

The U.S. Faster Payments Council and The Clearing House both work to advance the ubiquity of faster payments. FPC is an industry-led member organization whose mission is to facilitate a world-class payment system where Americans can safely and securely pay anyone anywhere at any time with near-immediate funds availability.

FPC members include business end-users, consumer organizations, financial institutions, payment, network operators, technology providers, and others. A little history on the FPC: the Federal Reserve created a Faster Payments Task Force that called upon all stakeholders to realize the vision for a payment system in the United States that is faster, ubiquitous, broadly inclusive, safe, highly secure, and efficient by 2020. The governance framework formation team took the steps of establishing the

U.S. Faster Payments Council in 2018.

“In today’s increasingly mobile digital economy, Americans require a world-class payment system where they can safely and securely pay anyone anywhere at any time.” — Reed Luhtanen, U.S. Faster Payments Council.

Many countries around the world have had government mandates that require the implementation of fast payment services. However, the United States is taking a private sector approach, so there are a number of different solutions in the marketplace with varying capabilities and offerings. The FPC was designed to be

inclusive of all stakeholders. So they include a much broader set of payment systems underneath the faster umbrella. For instance, speeding up existing payments, such as ACH. It’s also worth noting that speed is not the only important element. Any of these new networks which leverage the state-of-the-art ISO 20022 message spec enables a much richer exchange of data between the sender and the receiver.

The Clearing House operates on a core U.S. payments system infrastructure and clears and settles approximately $2 trillion daily, which represents half of all

commercial ACH, wire, and check image exchange volume. TCH started the RTP® network back in 2017. The depository institutions, the banks, and credit unions run on top of the infrastructure TCH provides. They also run a wire transfer network, CHIPS, which is mostly high-value international payments.

About RTP

There are advantages of the network that makes the RTP network different from other payment networks in the U.S (there are about 13 of them). “We call it RTP for a reason, and the advantage of the immediacy of the payment is not just faster, but specifically immediate clearing and settlement — the main thing behind the RTP network” — Keith Gray, VP Strategic Partnerships, The Clearing House. For both consumers and businesses, the RTP network is complete predictability and visibility of the transaction on both ends.

The sender knows the payment has been sent, received, and posted. The receiver also has the same visibility into the transaction — literally within seconds. The average RTP transaction now is taking less than three seconds from beginning to end, and that is complete settlement across the transaction. So it truly is a real-time network, allowing the payer to pay exactly how much they want when they want to pay it.

The challenge of many other payment networks is the lack of visibility, which leaves questions such as: Has it come out of my account? The RTP transaction also carries not only the payment but the data associated with that payment. The information that goes back and forth is referred to as conversational commerce.

Trends and Use Cases

By the end of February, TCH had 100 financial institutions established on the network, with many more than that in the development queue that will be coming live over the next few months. Most of the FIs that are going live today happen through a technology partner relationship like Alacriti. The banks on the network now make up about 50% of the coverage across the DDA base. So 57% of the TCH accounts, both consumers and businesses, can at least receive an RTP transaction.

If you take into account those banks and credit unions, where they have the physical connectivity in place through a company, e.g., a core processor, then that number jumps from 57% to over 70%. These figures continue to escalate as more and more products are coming live on the network.

According to Keith Gray at TCH, millions of transactions clear every month across the network, and that number doubles about every quarter. The momentum of the network escalated, in the midst of the pandemic, as more and more companies and people were looking for a faster way to make and receive payments.

TCH sees a lot of account to account-based activity. For instance, moving money from your main bank account to a credit union account. On average, consumers own 5.3 accounts across all types of financial institutions, so RTP provides a huge advantage. Consumers want to know they can have access to their funds exactly where they want when they want in a matter of seconds.

TCH also sees a lot of gig economy type of volume increase over the last several months. For example, food delivery services companies like GrubHub leverage the RTP network to pay their drivers. At the end of a shift, the driver can immediately see the payment in their account. GrubHub actually actively encouraged drivers to switch to banks that are connected to the RTP network.

TCH is experiencing a growing number of business to business based volume as well. The immediacy of the payment and the data that travels with it is really conducive to corporate types of use cases. For example, the treasurer of a large company can literally manage cash flow down to the second.

For wallet transactions like PayPal and Venmo, when customers move money from their wallet into their bank account, they want it immediately. That’s accomplished by leveraging the RTP network. However, there is a fee associated with this speed of payment, 1% of the value with a $10 cap.

Another application is payroll. Instead of the three-day window required for ACH, some major payroll companies like Paychex use the RTP network for work today, get paid today, payroll. More and more companies in the service industry are moving to this model, and it’s a huge benefit to both employers and employees.

Another trend that TCH has observed is a really dramatic increase in volume is around merchant funding. With sales receipts, a small business owner can access their funds immediately. This is even more important to companies on the weekend. Companies like Alibaba and Square are using the RTP network to increase the level of service they provide merchants by providing them with faster access to their cash. That’s been extremely well-received in that industry, and more and more companies are starting to leverage that capability, especially over the past year, when small businesses have been so cash-pressed.

Faster payments can also improve bill pay. TCH bank participants have gone live with leveraging RTP for bill pay. It has the potential of reinventing the way a bank-based bill pay works for consumers and billers alike. A biller can put a request for payment on the network, and that request can include both the request for the bill payment and the information relating to it. It tremendously improves the user experience, improves the way billers process payments, and makes it work better all around. In addition, payers need not incur a late payment fee when paying bills right when they are due because funds are not immediately credited.

Perhaps the most obvious potential use case is government payments. TCH did over 100 million in ACH payments over the last six or eight months, which involved many checks. If the money had shown up in accounts immediately, it would have been a much better consumer experience.

Network Selection

There are faster payments networks beyond TCH. For instance, speeding up ACH payments to go from multiple day to same day settlement. Same Day ACH has been encouraged by Nacha rules over the last several years, with the most recent rule expanding the Same Day ACH processing window by 2 hours. Since ACH has a ubiquitous reach, Same Day ACH raised the bar for the industry.

There are also card networks and push payment models offered by Visa and MasterCard, and SHAZAM, and several FIs that offer that sort of service for push payments through their proprietary debit networks. Visa Direct and Mastercard Send use original credit transactions in their-real time payment networks that fund from a payor’s credit/debit card to a payee’s card.

The Federal Reserve plans on coming out with the FedNowSM Service, a real-time payments system, in 2023. This will work by debiting and crediting banks’ accounts with the Federal Reserve System. This too will encourage the adoption of faster payments in The U.S.

The selection of networks is a good thing — having just one real-time payments option would lead to less innovation in this space. All of the available networks fill a need, especially when it comes to cross-border transactions and the need to reach across international borders to facilitate transactions. When choosing a network, financial institutions need to consider the most relevant networks to their potential use cases, needs, and the speed they offer. Rather than one network prevailing as best above all others, there will most likely be financial institutions and businesses figuring out which networks serve their needs and work with partners, such as Alacriti, to sort out the best option.

Keith Gray at The Clearing House finds that one of the biggest misconceptions about RTP is that “it is a huge investment or a huge technical lift, to participate on the RTP Network.” He asserts that this is not the case. “One of the things we’ve really worked hard on is our partnerships with the right technology vendors, companies like Alacriti.” Integrating the network’s capabilities or messaging into the back office of the financial institution can be challenging. A partner can help make the onboarding process easy, as well as ensure that you’re able to scale without a huge upfront investment.

Strategy

Figuring out product strategy now is key. Banks and credit unions can typically go live with RTP in a couple of months. Consider questions such as: Do you want to offer services to your businesses? Do you want to update the way the loan process works? Do you want to do business to consumer type products? Have there been indicators that your customers would be interested in faster payments, such as an uptick in Same Day ACH transactions?

Do faster payments mean more fraud? To prevent fraud, TCH was designed from the beginning to make it the safest payments platform. It’s not just about faster payments but also smarter and safer payments. One of the examples of this is making it a credit push model. A lot of fraud on other payment rails comes through the capability of funds pulled out of accounts. RTP doesn’t allow that — the sender has to push the payments — you can’t pull it. Already, banks and credit unions have been making inroads into validating and knowing their customers and their routines. These efforts carry over perfectly to the RTP world. The important thing with RTP is making sure that you’re sending money to the right person and educating the end-user on the importance of doing so. In addition to that, TCH is deploying different types of fraud tools where they can provide information that a bank or credit union can plug into their systems to be able to analyze and improve on the backend. However, considering the volume, TCH has not seen a problem, and it’s been going well so far.

In a perfect world, all organizations would have solutions ISO20022 data rich, built on distributed ledger technology. However, there’s the existing infrastructure that’s 40+ years old to contend with. To kick off your transformation strategy, start by going to the Faster Payments Playbook, a collaboration between Nacha and U.S. Faster Payments Council.

You can also get guidance from TCH’s RTP Network Readiness Checklist, which is based upon what they’ve seen work for participants who are on the network now.

2021

In the webinar, the speakers weighed in on their expectations for 2021. The first thing that comes to mind for Reed Luhtanen at FPC is inclusion. The pandemic has taught us that there is a better way of doing things we were doing in person, and he expected a trend of continuation of that improvement. “And I think there are people who historically haven’t been participating in the formal financial system or in electronic or digital payments or in that digital economy who now see the value of it in a way that maybe they didn’t before.” Keith foresees other use cases for faster payments. For instance, investments accounts where you pay once a month into their brokerage accounts would benefit from instant payments. And it would be even better if it didn’t require them to go into an app every time they want to do it.

Mark Ranta from Alacriti is amazed at the rate of progress when it comes to the modernization of payments. “I’ve seen a lot of data coming out recently on trends that weren’t necessarily new. But what used to take three to five years to happen all happened in about a six-month period. So that break of the trend line accelerated the change that we’d already started to see.”

“I would say the timeline for both consumers and businesses has been accelerated over the past year. Getting paid faster or being able to pay faster has become just an expected way of doing business. And if you can’t get that service from your financial institutions, you could get it from a FinTech or some other third party. We were already moving in that direction as an economy where people expected immediate payments and they expected those payments to be interconnected with different systems or services they use — everything from the Netflixes of the world and Hulus, etc. to the ability to pay those immediately,” Keith Gray, TCH. Of course, there has been more competition in providing these services. Keith expects that a lot of the trends in the way business and payments work that we’re seeing will stay with us in the new normal.

In 2021, TCH plans to expand the capabilities of the network. They will be launching a document service where a small business owner can store an invoice and then link to that invoice within a request for payment. They are also launching tokenization capabilities within the RTP network.

Whatever path you choose, one thing is for sure, payments are getting faster and are the key to payments modernization.

The post A Look Ahead: Faster Payments in 2021 appeared first on PaymentsJournal.

Payments innovator continues to be the pioneer of real-time payments, executing on its vision by adding RTP to its payment platform

Des Moines, IOWA — April 6, 2021 — Dwolla, a modern payments platform, releases access to Real-Time Payments, an instant* payment option that can send money directly to a bank account in seconds using the RTP® Network.

Dwolla’s solution for programmable Real-Time Payments powered by Cross River Bank comes after a decade of experiences in faster payments. The company contributed to the Federal Reserve Faster Payment Task Force and Mojaloop initiatives in partnership with the Bill and Melinda Gates Foundation to truly refine a customer-centric real-time experience. Today, businesses can integrate Dwolla’s payment API to connect with RTP-enabled financial institutions and send funds within seconds to a bank account. Existing clients can change a single line of code to initiate an RTP transaction using the Dwolla API.

“Today is game-changing,” says Dwolla CEO Brady Harris. “Not just for adding real-time payments to Dwolla’s payments technology. But because of how we collaborated with a forward-thinking financial institution to make real-time payments easily accessible to businesses of all sizes. The immediacy of real-time payments will fundamentally change how businesses operate. As electronic payments continue to grow in adoption, RTP is the perfect complement to our ACH and Push-to-Debit offerings.”

By integrating Dwolla’s simplified API, businesses have the flexibility to initiate transfers across multiple payment modalities (ACH, Push-to-Debit, RTP) to their vendors and customers for an ideal experience. In partnership with Cross River, Dwolla has lowered the barrier for its clients to access the RTP® Network for instant* bank transfers that are available 24 hours a day, every day of the year.

“We are always working on ways to provide our partners with the most innovative and cutting-edge solutions to align with their needs,” said Adam Goller, EVP, Head of Fintech Banking at Cross River. “The payments space is rapidly evolving to meet customer demands and instant transactions are the next wave. We are excited to power Dwolla’s new, Real-time Payments offering, positioning us to lead the industry into the future.”

The Clearing House established the RTP® Network as the only provider of real-time clearing and interbank settlement. As one of the first community banks to join the RTP® Network, Cross River provides the ability for its fintech clients to seamlessly send, clear and settle payments instantaneously* via API with advanced messaging capabilities, while maintaining a strong focus on compliance. Real-time payments give companies a convenient option for those making consistent or larger vendor payments, while avoiding the higher payment costs that can be associated with cards.

Other benefits of Dwolla’s Real-Time Payments offering include:

• Send and receive payments that are immediately* available, 24/7/365. The RTP® Network is available whenever a business needs it.
• Bank-agnostic payments technology gives businesses an efficient and faster way to get access to RTP transfers.
• Avoid ‘in transit’ payment delays for improved cash flow.
• Greater contextual data for business operations with transactions that include remittance, invoicing information.
• Easy access to the RTP® Network after a single, simple integration with Dwolla’s payment platform.

Organizations that integrate with Dwolla’s payment API have the flexibility to configure a tailored payment solution with various pricing options, transfer speeds and support levels, depending on the needs of their customers. With various pricing options, businesses can pay per-transaction or exchange a monthly payment for a more expanded feature set and premium support.

For more information on Dwolla’s comprehensive payment solution, visit www.dwolla.com. To learn more about Dwolla’s Real-Time Payment offering for your business visit www.dwolla.com/access-real-time-payments.

The post Dwolla Unlocks Real-Time Payments appeared first on PaymentsJournal.

March 25, 2021

BROOKFIELD, Wis.–(BUSINESS WIRE)–Mar. 25, 2021– Fiserv, Inc. (NASDAQ: FISV) (“Fiserv”), a leading global provider of payments and financial services technology solutions, today announced that it has signed a definitive agreement to acquire Pineapple Payments and will continue to provide payment processing services to Pineapple Payments merchants, while enhancing its seamless delivery of an array of customer-focused, innovative solutions.

The acquisition will expand the reach of market-leading payment solutions from Fiserv, including the CoPilot partner platform, Clover® and Clover Connect, through the technology- and relationship-led distribution channels of Pineapple Payments.

Founded in 2016, Pineapple Payments provides payment processing, proprietary technology and omni-channel payment acceptance solutions for integrated software vendors (ISVs) and small and medium businesses (SMBs). The company currently serves more than 25,000 merchants.

“With Pineapple Payments already operating as a key distribution partner of Fiserv, we expect to accelerate the delivery of new and innovative capabilities to a host of new merchant clients,” said Frank Bisignano, President and Chief Executive Officer of Fiserv. “Together, we will provide

omni-channel payments technology and services to enable merchants to maximize the potential of electronic payment processing. We look forward to welcoming Pineapple Payments to the Fiserv family and continuing to provide the best-in-class solutions and service that merchants and their customers expect.”

“Pineapple Payments’ mission is to add value to the payments experience through simple, secure and scalable solutions. Based on our existing relationship, we believe Fiserv is the ideal partner to take that mission to the next level and beyond,” said Brian Shanahan, Chief Executive Officer of Pineapple Payments.

“With the scale and expertise of Fiserv, we will make commerce even easier and more accessible in a variety of different segments. We look forward to our talented teams working together as we set a higher standard of service for our clients,” added Jon Halpern, President of Pineapple Payments.

The transaction is subject to customary approvals and closing conditions and is expected to close in the second quarter of 2021. Financial terms of the transaction were not disclosed.

About Pineapple Payments

Pineapple Payments is a Pittsburgh, Pennsylvania-based payments technology company that provides payment processing, proprietary technology, and omni-channel payment acceptance solutions for merchants of all shapes and sizes. Its core payment platform, Transax, and suite of value-added payments tools are distributed by resellers nationwide, including some of the largest payment processing companies and Independent Sales Organizations. Pineapple Payments offers both API based and out-of-the-box solutions for everything from Hosted Payment Pages and Recurring Billing to online Invoice Management and integrations with QuickBooks and Salesforce. For more information, visit pineapplepayments.com.

About Fiserv

Fiserv, Inc. (NASDAQ: FISV) aspires to move money and information in a way that moves the world. As a global leader in payments and financial technology, the company helps clients achieve best-in-class results through a commitment to innovation and excellence in areas including account processing and digital banking solutions; card issuer processing and network services; payments; e-commerce; merchant acquiring and processing; and the Clover® cloud-based point-of-sale solution. Fiserv is a member of the S&P 500® Index and the FORTUNE® 500 and is among FORTUNE World’s Most Admired Companies ®. Visit fiserv.com and follow on social media for more information and the latest company news.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the timing of and ability to complete the transactions discussed herein, and the expected impact of the transaction. Forward- looking statements are subject to assumptions, risks and uncertainties that may cause actual results to differ materially from those contemplated by such forward-looking statements. The factors that may adversely impact the anticipated outcomes include, among others: the occurrence of any event, change or other circumstances that could give rise to the termination of the transaction agreement; the outcome of any legal proceedings that may be instituted against the parties or others related to the transaction agreement; conditions to the completion of the transaction may not be satisfied, or the regulatory approvals required for the transaction may not be obtained on the terms expected or on the anticipated schedule; the amount of the costs, fees, expenses and charges related to the transaction may be different than expected; the parties’ ability to meet expectations regarding the timing, completion and accounting and tax treatments of the transaction may be different than currently planned; and other factors included in “Risk Factors” in the company’s Annual Report on Form 10-K for the year ended December 31, 2020, and in other documents that the company files with the SEC, which are available at http://www.sec.gov. You should consider these factors carefully in evaluating forward-looking statements and are cautioned not to place undue reliance on such statements. The company assumes no obligation to update any forward-looking statements, which speak only as of the date of this press release.

FISV-G

View source version on businesswire.com: https://www.businesswire.com/news/home/20210325005853/en/

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The cross-border payment topic is again discussed in an article posted on Raconteur, this time with an emphasis on data as a key to greater adoption and progress going forward.  The catalyst in this case is the messaging standard ISO 20022.  The author suggests that ISO 20022 is a new standard, but in actuality it has been around for more than a decade, although adoption has been generally limited to incorporation with the 50 something domestic instant payments systems that have been launched in a number of foreign markets. 

The current U.S. version is RTP from TCH, which has been around since 2017. We recently released member research about the B2B faster payments space as well, where it is pointed out that Fedwire and CHIPS will be converted over to ISO 20022 during the next few years (exact dates TBD).

A logical ambition is for sovereign domestic instant payment systems to eventually interoperate with each other, and there are efforts already underway to achieve this, such as P27 in the Nordic region, which is a purpose-built cross-border instant payments system, and others we have previously summarized.

‘Making cross-border payments has traditionally been a cumbersome task. A typical transaction could take several days to clear while the recipient’s bank carries out the necessary compliance checks. Delays are common, sometimes payments fail. For global businesses, this can have a negative impact on supply chains and fulfilling customers’ orders….A new international payment standard currently being rolled out, known as ISO 20022, could start to change all that by harmonising payments data around the world…..“This format is the emerging de facto standard for new types of real-time payments systems that are in development globally,” says Aleks Stefanovski, vice president of strategy at Currencycloud, a cross-border payments platform. “That’s important because it enables fintechs to establish connectivity to different real-time payments systems around the world in a way that removes friction and improves the speed and customer experience of cross-border payments, reducing what, maybe ten years ago, took two or three days to just a matter of seconds.” ‘

The author goes on to discuss how exchangeable ISO 20022 data can be used, most fundamentally as part of remittance data which can speed up the settlement of funds by eliminating errors, but also provide additional data for the specific local regulatory regimes. Having a global standard is one thing, but getting everyone to agree on what data to send and how to use it when received are also challenges, so by no means is this a panacea. 

In the member research mentioned earlier, we pointed out that RTP has massively increased remittance data volume capabilities but to date the usage of this messaging feature has been minimal, so more work to be done on this part, which of course is only the domestic theatre, not the more complicated international space. The article mentions a few other things of use so worth browsing through for those interested.

‘Harmonisation doesn’t solve all the problems, but it certainly helps with the ability to accelerate innovation by making certain things easier and more consistent,….This backdrop is already creating opportunities for collaboration across the industry. Modulr, for instance, has used its payments technology to enable challenger bank Revolut to credit its customers’ salaries into their accounts a day earlier than would otherwise be possible…..“The data is only as good as what you do with it,” says Zmuda. “Businesses increasingly need a payments partner that can keep them on the front foot and have the digital infrastructure in place to benefit from these changes.”….Wider benefits of the changes also extend to merchants and consumers. Take payment initiation, a PSD2-enabled service that makes online payments more seamless and secure.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Why Data Is the Key to Unlocking Payments Innovation appeared first on PaymentsJournal.

In actuality, the bulk of this article discusses growth in existing products, including Venmo and Zoom, and then there were the checkout button and QR code payments which helped grow PayPal’s merchant services volume up 33% YoY. But future growth will come by becoming a super app which will be accomplished by adding more financial services products including banking and stock trading:

“The payments giant expects to reach 400 million global users by June, but it’s setting its sights on one day reaching 1 billion. In 2020, PayPal added 72.7 million net new accounts to reach a total of 377 million accounts globally, a 24% increase from 2019, when net new accounts increased by 37.3 million. Merchants were a driving force behind PayPal’s user growth thanks to its core products, from its one-click online checkout button to in-store innovations like its QR code payments, which helped meet consumer needs during the coronavirus pandemic. Indicative of merchant growth is PayPal’s merchant services volume, which grew 33% YoY, up from the 27% YoY growth it posted in 2019, suggesting that these offerings likely brought in new sellers.

PayPal is hoping to become a super app as it explores innovations that’ll help morph it into a “one-stop shop for all consumer financial needs.” PayPal is already moving beyond its existing offerings and inching toward other financial services, such as crypto, which it noted as a key growth area in 2021: Schulman recently said that PayPal’s new dedicated crypto unit will focus on helping increase the utility of digital currencies.

PayPal has also expressed interest in expanding into banking and stock trading. These could be the logical next steps for the payments giant considering that Square, a major competitor, is reaching into the space with new stock trading options and recently debuted its industrial bank, Square Financial Services. Doing so could aid PayPal’s one-stop financial services shop ambitions and perhaps help the company increase its user base and volume.”

Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group

The post PayPal CEO Discusses PayPal Growth Strategy appeared first on PaymentsJournal.

Lake Mary, FL, US – March 15, 2021 – Finastra announced that it has joined the Federal Reserve’s FedNow Pilot Program to support development, testing and adoption of the FedNow^SM Service. Finastra joins other progressive banks, credit unions and payments technology organizations in the FedNow Community to help shape the future of payments and develop use cases that leverage FedNow functionality.

“Finastra has deep expertise and knowledge of instant payment schemes globally, having enabled financial institutions to process payments and implement associated overlay services for instant payment schemes in 12 countries across four continents,” said Ohad Chenkin, Vice President, Product Management, Payments Product and Platform at Finastra. “We look forward to bringing our knowledge and experience to the FedNow Pilot program and to help advance instant payments in the United States.”

The FedNow Pilot program is designed to support development, testing and adoption of the FedNow Service, and to encourage development of services and use cases that leverage FedNow functionality. As a part of the FedNow Pilot Program, Finastra will help shape and provide input into the service and adoption roadmap, industry preparation, and overall instant payments strategy. Pilot firms will also have the opportunity to work with the FedNow Service prior to general availability.

Finastra’s payment solutions provide financial institutions with the tools to meet all of the challenges of new technologies and innovations in the payments space, including immediate/real-time payment schemes, open APIs, artificial intelligence, and cloud computing. With a broad suite of integrated solutions for financial institutions ranging from the world’s largest banks to community banks and credit unions, Finastra provides the technology platform to take payments systems forward on a road to modernization.

For more information on the FedNow Pilot Program and the FedNow Service, visit FedNow.org.

“FedNow” is a service marks of the Federal Reserve Banks. A list of marks related to financial services products that are offered to financial institutions by the Federal Reserve Banks is available at FRBservices.org.

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Amazon is selling the Amazon One palm reader function for use at other venues, including merchants, stadiums and office buildings. This indicates Amazon is thinking big and plans Amazon One will be used for a number of different use cases, some far afield from simple payments. Here is some idle conjecture. Amazon One may be used to identify an individual.

• It might become a person’s digital identity.
• It could be used as an access control device.
• It will certainly be used as a payment mechanism that connects to a payment network.
• Amazon could even tear a page from Kevi, that intercepts card transactions and instead routes them over a EU Open Banking infrastructure.

Those worried about privacy are already concerned regarding Amazon One, but these new potential use cases will likely increase those concerns:

“Amazon this week began expanding Amazon One to more stores beyond the two demo locations at Amazon Go locations in Seattle. The technology is still at an early stage, but is positioned as a means to do more than just shop at a single store. Amazon has invited third parties such as other merchants, stadiums and office buildings to add Amazon One. That would make the feature both an enrollment and check-in option at an almost limitless number of facilities.

Amazon One is part of a stack of technology the e-commerce giant is building to cover different options for shopping, security, marketing, payment and fulfillment. The past few years have seen Amazon add shopping cart sensors, robot delivery, automated home access and voice-directed gas payments.

If successful, Amazon One would serve as an additional enrollment method to build its base, giving Amazon more control over data, marketing and upselling. It would also allow Amazon to control check-in at multiple stores in new markets such as India, where Amazon is applying for a license to process payments domestically.”    

Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group

The post Amazon’s Ambitions: Replace NFC, Build a Payment Network, Create Digital IDs and Enable Access Control appeared first on PaymentsJournal.

In line with the ever-expanding move away from manually organized corporate payment processes, this announcement in CPA Practice Advisor reviews an expanded partnership between Sage and CSI for delivering automated payables. The offering embeds the CSI payments platform capabilities into Sage Intacct, a cloud-based financial management system.  

The growing use of APIs makes these types of integrations more commonplace, improving the end-user experience into a single environment, allowing the best features of each system to interact in a seamless manner. 

‘From processing automated clearing house (ACH) batches to printing and mailing checks, the accounts payable (AP) process is often time-consuming and costly. Finance teams end up jumping between multiple systems or getting bogged down in manual processes to deliver and reconcile vendor payments. With the new Sage Intacct Vendor Payments powered by CSI, businesses can streamline and automate their payments process. This solution brings together Sage Intacct’s best-in-class cloud financials and the trusted payments platform from Corporate Spending Innovations to deliver a seamless payments experience. The new offering enables customers to pay vendors quickly, speed up reconciliations, and offer more ways to pay – all while reducing payment transaction costs.’

We recently released some member research on the topic of cash cycle digital convergence, of which this partnership is a good example. Across the spectrum of financial operations, more and more is being provided through combining separate solutions into a more integrated experience. Benefits to automation include cost efficiencies and improved flexibility around working capital, among other things, including generally happier suppliers. Another reminder that things are rapidly changing and laggards should pay attention.

‘Vendor Payments powered by CSI streamlines existing workflows, so customers can process everything from bills through reconciliation without leaving the Sage Intacct experience. Automating payments and eliminating manual processes, as well as the opportunities for errors, frees up significant time to focus on more strategic activities. Users submit their payments in Sage Intacct and Vendor Payments handles the rest.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Sage Expands Partnership with CSI for Automated Vendor Payments appeared first on PaymentsJournal.

Supporting Diversity and Connectivity for the Entire Payments Ecosystem 

DURHAM, NC — March 2, 2021 —Spreedly, the provider of a secure, agnostic, and flexible platform that welcomes all payments participants, today announced the creation of a new partnership program built for gateways and other Payment Service Providers (PSPs). 

The Partnership Program was created to further support a vision for a diversified and inclusive payments ecosystem — one offering connectivity and flexibility for all players, including payment service providers globally. Through Spreedly’s unique position as the leading payments orchestration layer — and building on its over 120+ available integrations — this program will help drive faster customer acquisition, stronger revenue growth for its participants, and increased value to merchants, platforms, and other shared customers.

The Partnership Program includes a strategic level of relationship, the Preferred Partner tier. Spreedly and Preferred Partners engage closely to build better, more holistic payments solutions. By partnering with Spreedly, PSPs further extend their global reach and accelerate the onboarding of new merchants and platforms — cutting the time to transaction to days from weeks. 

The Partnership Program provides gateways and other PSPs with access to a variety of resources depending on their participation level including technical support for integrations to the Spreedly Payments Orchestration Platform, marketing initiatives, and sales engagement. More details about the Partnership Program are available here. 

The program’s inaugural Preferred Partners include PayPal and Stripe.

“To maximize their revenue, digital businesses are looking for best-in-market payments services that support their commerce strategies. And these payment services want to connect with these large and fast-growing merchants, platforms, and marketplaces,” Malik Velani, vice president, global business development with Spreedly. “We’ve long-served as the industry “connector” between merchants, platforms, and marketplaces and their payment services. The partnership program supports these connections, helping to bring together digital businesses and payment services.”

About Spreedly

We orchestrate payments for the world’s most innovative businesses. Global enterprises and hyper-growth companies grow their digital business faster by relying on our payments platform. Hundreds of customers worldwide secure card data in our PCI-compliant vault and use tokenized card data to enable and optimize nearly $20 billion of annual transaction volumes with any payment service. Spreedly is headquartered in downtown Durham, NC. 

The post Spreedly Launches New Partnership Program for Payment Service Providers appeared first on PaymentsJournal.

Brazil’s market for payments is now becoming what many call a revolution. This word is certainly powerful and, of course, there is a long path ahead, but the technology recently launched in the country also gives me the same expectation. I am talking about Pix, the instant payment system created by Brazil’s Central Bank and which makes it possible to transfer money between people and companies in up to 10 seconds, 24 hours a day, seven days a week.

Besides the fact it is an innovation designed by a regulatory agency (and not a chimerical start-up with ground-breaking formulas, as most of us would expect these days), there are three facts about Pix that should move us headstrong into this so-called revolution: wide-reaching access to technology, the dramatic cost reduction for transfers, withdrawals and payments, as well as implementing new features in e-commerce.

First, however, let me explain how the technology works to better understand the steps toward such a market change. Imagine that a friend has paid for dinner, and you need to pay him back. Instead of asking for all his bank details (account number, branch number, full name etc.), all you need to ask is: what is your Pix code? All your friend will need to do is give you one of the following pieces of information: his cell phone number, his individual tax identification number (known as a CPF in Brazil), his e-mail, or a random number generated by the system.

Now, imagine the same dynamic between an individual and a company. When it comes time to pay for a product, a consumer can open their cell phone, scan a QR Code, and make payment in a few seconds, since all the information about the purchase will appear automatically on the screen of their phone. Soon, users will also be able to withdraw money in regular stores. With this feature, cash is handed over by the cashier in a store while the consumer scans a QR Code with his cell phone, similar to the payment process.

The logic is based on practicality, and here is my first point: the entire population will have access to this technology. By February 12, Pix was already plugged into the platforms of more than 738 institutions in the country,including large-scale banks, small fintechs, and even financial sites of companies in the fuel and foodstuff sectors.

This means that Pix will be everywhere. To use this technology, consumers just need a Pix code that is registered in any of these institutions – as well as a smartphone, of course, which does not seem to be a problem in a country where 88.5% of cell phone owners have access to the Internet on their handhelds, according to the Information and Communication Technology numbers presented in IBGE’s Continuous National Household Sample Survey (PNAD Contínua TIC) in 2018. That is quite a number, considering that close to eight out of 10 Brazilians over the age of 10 have a cell phone.

This is an important step toward including those outside the banking system, which was close to 30% of Brazil’s population, according to the most recently available study conducted by the World Bank in 2017. This number is certainly smaller today, after the requirement to open a digital account in order to receive the emergency aid from the government during the new coronavirus pandemic. But we can say we are still talking about millions of citizens who operate mainly in cash payments and who conduct very few banking operations – if any at all.

You may be bewildered by this scenario, given the variety of cost-free accounts offered by the digital banks and fintechs in the country. How is it possible that there are so many outside the system? Well, besides the fact that using a cell phone to do your banking is still just catching on, it is important to point out that not all the operations in these institutions, despite being digital, are free of cost. Charges on transfers, withdrawals and cards is still a constraint.

Pix is here to change the rules of the game. It will no longer be necessary to pay for a money transfer (DOC or TED, the two forms of transfers used in Brazil) to send money to someone or to make a payment. Also, withdrawing cash to make purchases will no longer be needed, as Pix will be in all retail stores in the near future. In this same vein, debit cards can become obsolete. And, if a retailer pays a fee on card transactions, why wouldn’t he encourage consumers to make payment using Pix, which will cost the retailer less and be instantly paid into his account?

This takes me to my second point: the dramatic reduction in costs for all those on this playing field (consumers, retailers, banks, fintechs etc.). Ten transactions received from Pix will cost institutions one centavo of the Brazilian real (BRL$ 0.01). This is much less than the current DOCs and TEDs, which can cost between thirty and fifty centavos per digital transaction (BRL$ 0.30-BRL$ 0.50). In a physical environment, these operations are even more expensive – much more. An express wire transfer (TED) done with a teller can cost close to one hundred Brazilian reais (BRL$ 100.00) for a bank, and this includes the costs for a brick-and-mortar structure needed to serve customers.

Essential utility companies, such as providers of water, electricity and phone lines, should also save billions, according to market estimates. They just need to invite customers, using a QR Code on their bills, to make payment using Pix. The potential for reducing the number of unpaid bills is staggering. Given the 24/7 availability of the service, a debt can even be paid on the weekend.

With this, surcharges become cheaper. Consider that the telephone companies in Brazil alone fork out close to one billion Brazilian reais per year to issue invoices to partner companies, such as lottery stores and commercial establishments, so they can receive the commission payments for credit put on pre-paid cell phones. Pix will cut such intermediary costs from the system.

It is important to remember that low costs mean even more competition. The less paid to conduct transactions, the more start-ups will be able to offer financial services to the population. You may be thinking, “so banks, up until recently, dominated the market with no bother; they probably won’t like this.”

I believe that this new reality is beneficial to everyone, or at least to the majority. The more citizens that are familiar with the digital world, the better. For those already in the market, there will be savings. For newcomers, it is an opportunity to captivate new customers and to grow.

More people with the ability to open a digital account and more confidence to conduct financial transactions this way is a momentous step forward. Once they feel at home with the digital dynamics, the next step for them will be to evaluate which bank or fintech best meets their needs. In this competition, the company with the best offer and which can prove their worth to the consumer will reap the rewards.  

The third factor that denotes a revolution in the market is the use of Pix in e-commerce. With this, invoices, which is one of the most popular methods of payment used by Brazilians, will no longer make sense. This is great news. Invoices are trouble. They give buyers close to two days to make payment, which is enough time for half the people to simply not make the purchase. This means that retailers are obliged to reserve merchandise in stock for 48 hours or even longer. This is an eternity compared to what Pix offers.

Pix will allow instantaneous payment for e-commerce purchases. It will be much better for retailers and those who use invoices, who often have to wait a few days for payment to be cleared. Merchandise will leave the stock more swiftly and will arrive in the hands of the consumer much faster than before.

Expectations are that Pix will encourage more people to make on-line purchases, boosting Brazil’s already extraordinary upward curve of e-commerce even more. On-line retail sales reached 14,4% in November 2020, compared to 9,6% in November 2019, according to IBGE. The pandemic, obviously, played a significant role in this. 

I believe that Brazil will not be the only place to acknowledge Pix as a crucial innovation in the financial sector. The whole world will share the same opinion. Back when the express wire transfer (TED) was launched, in the early 2000s, that was the consensus. On that occasion, we presented a system in which a money transfer took place on the same day, within an hour (up to 5 p.m. on business days). It was really cutting-edge. The most common transactions in the foreign markets were the standard money transfer (DOC), in which the amount was only cleared and deposited into the account on the next business day, and checks, now completely discarded.

Now, Brazil presents Pix, not only with instantaneous, low-cost transactions (anytime, anywhere), but also extensive access to the population and simplified use via a pin number or a QR Code. The user experience, without a doubt, will be much better. And what is more revolutionary than delivering the best experience to the largest number of people possible?

The post Why Pix is the Revolution of Consumer Experience in Brazil appeared first on PaymentsJournal.

One-click checkout is where online sellers need to be. Shopify reports that it’s giving Facebook and Instagram users exactly that. Consumers want streamlined and faster checkout especially as they spend more time online. Shopify has amassed a sizable merchant base which it continues to leverage for additional services, such as a fulfillment network and in-store payments. Shoppers are used to seeing single click payment options from Amazon Pay and PayPal, but will be seeing more of Shopify during 2021.

The following excerpt from a Social Media Today article reports more on the topic:

Shopify has announced a new integration with Facebook which will enable Shopify users to purchase items via its ‘Shopify Pay’ payment system when buying in Facebook and Instagram Shops.

Similar to Amazon’s One-Click purchase process, Shop Pay is an accelerated checkout solution, which enables Shopify customers to save their email address, credit card, and shipping and billing information in the app so that they can complete their transactions faster whenever they’re directed to the Shopify checkout. Shopify Pay already sees significant usage, facilitating more than 137 million orders in 2020.

Given this, the integration with Facebook and Instagram shops could be a major advancement for Facebook’s eCommerce push, providing more ways for users to revert to a transaction process that they trust when buying through its platforms.

Facebook is looking to tap into the rising reliance on in-home shopping, accelerated by the pandemic, as a means to expand its utility, while in-app transactions could also play a crucial role in the platform’s expansion into new regions.

Overview by Raymond Pucci, Director, Merchant Services at Mercator Advisory Group

The post Shopify Expands Shop Pay To Facebook and Instagram appeared first on PaymentsJournal.

This article utilizes a £700,000 Barclay case to prove its point but reading the terms and conditions for Zelle and Venmo would be an easier proof point.

Zelle for example states “Neither Zelle nor the Network Financial Institutions shall have any liability to you for any transfers of money, including without limitation, (i) any failure, through no fault of Zelle or the Network Financial Institutions, to complete a transaction in the correct amount, or (ii) any related losses or damages. We recommend that you send money only to friends, family and others that you know and trust.” This article describes how a user should protect themselves in executing a push payment:

“Given this, it is perhaps worthwhile reminding people of the basic precautions you need to take.

1. If your bank picks up what it thinks might be a fraudulent transaction on your credit card or bank account, it will usually block the transaction and contact you to verify the transaction before allowing it to go ahead. This will usually be by Text and/or Email but may also be by telephone. If the bank thinks that your password or PIN has been compromised, they will probably tell you to change your password or PIN but they will NEVER ask you for your PIN or Password. If someone ask you for your PIN or Password irrespective of who they say they are DO NOT GIVE IT TO THEM, hang up.

2. If you are ever contacted by someone claiming to be your bank, the police or a fraud department make a note of what they say and tell them that you need to verify who they are. A real bank will raise no objection to this, a fraudster may. Either way telephone your bank’s fraud department, the telephone number is on you Bank card, DO NOT use the phone that you were originally contacted on, the fraudster may keep the line open and your call to the fraud department will in fact be a call back to the fraudster. Use a different phone, if need be ask your neighbour if you can borrow their phone.

3. If you ever receive an unexpected Bill or demand for payment, particularly if you receive it by email or via a call to your mobile phone assume that it is fraudulent until you are sure it is not. Consider telephoning the organisation that sent you the bill, do not use the telephone number shown on the bill, if it is a fraudster that will be his number. With email check the email address of the sender, for example HMRC would not email you from a Hotmail account, nor would they email you from an email account based in Russia.

4. Equally if you receive an email notice of some wonderful bonus, two common examples are the fact that you are due a refund from HMRC, or that a long lost relative has died in Singapore and that you are due to receive an inheritance of half a million dollars (these scams are commonly denominated in US$ rather than £) then it is probably too good to be true. HMRC will not contact you by email or via a recorded phone message. These scams can often look very realistic, we have seen examples of the inheritance scam which have apparently come from Herrington Carmichael, but a little bit of research has shown that the phone numbers given or the originating email address are not ours.

5. If you are ever offered an investment opportunity that sounds awfully good then the chances are that something is wrong with it. Do some research, look on the internet to see if you can find out anything about the proposed investment, if it is genuine it is likely that there will be a number of analysis reports, consider speaking to a financial adviser unconnected with the person trying to sell you this investment or contact the Financial Conduct Authority. Bear in mind that if the seller tries to tell you that the idea is secret or not available other than to specially selected individuals such as yourself the chances are that it is a fraud.

6. Beware that quite often the scammer may already have personal information about you, sometimes this can include such things are bank account details, birthdays etc, sadly this information is not as private as you think, often making it easier to claim that he or she is from your bank or the police.

One thing that stands out about almost all the scams is that the fraudsters will usually prey on one or other of two fairly basic human instincts, fear and greed. Before you pay anyone or give out any important information. STOP AND THINK. Is there any chance that this could be a fraud?”

Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group

The post If You Weren’t Aware, Know That Banks Have No Liability for Fraudulent or Mistyped Push Payments appeared first on PaymentsJournal.

Deliver drivers provide fast service for restaurant meals, so it’s only fair to give them fast pay. Now, Canada’s big food delivery player, SkipTheDishes, steps to the table. They’re partnering with Stripe’s Instant Payouts and Visa Direct to make faster payments happen.

Gig economy workers as well as the QSR (Quick Service Restaurant) vertical have become sweet spots for real-time payouts. Companies find lower staff turnover while workers get better access to their hard-earned cash.

The following excerpt from a Business Insider article reports more on the topic:

It is more important than ever for workers in the gig economy to have fast and easy access to their wages. In a recent Visa survey of gig workers, 70% said they would work additional shifts for quick money when needed if they could be paid in real-time. Today, Visa announced a new offering with SkipTheDishes, Canada’s most popular food delivery network, to enable real-time funds disbursement to their independently-contracted couriers across Canada.

The new feature, called SkipTheDishes Fast Cash, is facilitated by Stripe’s Instant Payouts product, made available through Stripe’s financial institution partner and powered by Visa Direct, Visa’s real-time push payments platform, and is now live and available to tens of thousands of SkipTheDishes couriers across Canada.

“Visa Direct’s real-time funds disbursement capability allows funds to be available to individuals in minutes – including nights, weekends, and holidays – providing flexibility and choice for gig workers to access their earnings,” said Brian Weiner, Vice President & Head of Product, Visa Canada. “Faster access to money is critical during this time, and Visa Direct is uniquely positioned to help companies like SkipTheDishes provide this unique offering.”

Overview by Raymond Pucci, Director, Merchant Services at Mercator Advisory Group

The post Stripe and Visa Dish Payments To Canadian Delivery Drivers appeared first on PaymentsJournal.

The Fed, as promised, is beginning to roll out its FedNow Instant Payments network through a pilot program. Yesterday they named names and issued a list of the willing participants in their press release. They describe the purpose of the pilot as follows:

Through their involvement in the FedNow Pilot Program, participating financial institutions and processors will help shape the product’s features and functions, provide input into the overall user experience, ensure readiness for testing and be the first to experience the FedNow Service before its general availability. In the initial advisory phase, participant input will help to further define the service and adoption roadmap, industry readiness approaches and overall instant payments strategy.

Of particular importance in my mind is the list of processors who will be working to develop the integration tools to help their financial institutions with the technology requirements to connect to FedNow and take advantage of the opportunities of real time payments.  Processors involved in the pilot include ACI Worldwide, Finastra, Finxact, Fiserv, Jack Henry, and Shazam among many others.  A full list can be found here.

ACI, who supports real-time payment platforms around the world including much of the UK’s Faster Payments volume, solutions in Malaysia, Singapore, Australia as well as The Clearing House RTP and Zelle here in the U.S., issued their own press release on the matter.  They commented:

ACI Worldwide will help shape the FedNow Service’s features and functions, provide input into the overall user experience, ensure readiness for testing and be the first to experience the FedNow Service before its general availability. In the initial advisory phase, participant input will help to further define the service and adoption roadmap, industry readiness approaches and overall real-time payments strategy.

“ACI is committed to the advancement of real-time payments in the U.S., and we look forward to helping the Federal Reserve develop its first major new payment system in four decades,” said Craig Ramsey, head of real-time payments, ACI Worldwide. “The consumer demand for speed, convenience and simplicity with payments will continue to increase, and we are eager to work with the Fed and other pilot participants to drive the successful implementation, adoption and monetization of real-time payments in the U.S.”

The importance of the technology providers’ participation will be to connect financial institutions that without the help of processors would not have the where-with-all to handle the complexities of an integration which can take many months and millions of dollars to accomplish otherwise. They will also play a key role in insuring that there is interoperability between the Fed’s FedNow and The Clearing House’s RTP.

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

The post The FedNow Leaps Forward with a Large Pilot Group of Processors and Financial Institutions for Real Time Payments appeared first on PaymentsJournal.

SOUTHAMPTON, P.A., Jan. 6, 2021 – BOLT ON TECHNOLOGY, a leading supplier of technology solutions for the automotive aftermarket, has teamed up with Global Payments Integrated, a top worldwide electronic payment processing company, to give auto repair shops, dealer service centers and other aftermarket sectors access to Global Payments Integrated’s scalable payments and credit processing technology, and thus offering a convenient, safe payment option to vehicle owners.

Text to pay is included in BOLT ON Pay, one of BOLT ON’s most popular features. Available in both the company’s Mobile Manager Pro and NextGear cloud-based offerings, Text to pay gives repair shops the capability to get paid fast and securely. They can also reclaim valuable counter time, normally spent collecting the customer’s credit card information, to sell or schedule future services.

Drivers increasingly prefer to conduct business on their smart phones or other mobile devices, and paying by text is one more way to ease the pain of getting their vehicle serviced. With seamless payment options, shops have yet another way to bolster customer loyalty and increase profits. And during the pandemic, text payment provides an added level of safety for both the customer and shop staff with contact-less vehicle pick-up.

The biggest payment processing platform in their space, Global Payments Integrated provides custom, scalable and fast payment solutions, accommodating the swiftly shifting ways consumers pay for goods and services. Their multi-layered approach to security, utilizing encryption and tokenization, protect customer data and help prevent costly data breaches. Repair shops that opt for Global Payments Integrated to accept payments will also receive a PIN-enabled credit card processing pad from Ingenico® if they subscribe by Feb. 28, 2021. Additionally, through the BOLT ON Pay dashboard, shop owners can view real-time transaction reports.

“The shops that rely on our technology are focused on improving the vehicle owner experience and shop operations, which is why they’re using BOLT ON software to begin with. By building in payment processing from Global Payments Integrated, the industry leader, we can give them one more powerful tool to streamline the payment process, improve cash flow, and add convenience for their customers,” said Mike Risich, founder and CEO of BOLT ON TECHNOLOGY.

Text to pay offers many specific benefits, including:

• Added convenience: Customer pays from their mobile device wherever they are
• Faster payment: Shop staff don’t have to wait until the end of the day for customers to show up and pay in person
• Streamlined checkout: No more long lines for vehicle pick-ups right before closing time; drivers can grab their keys and go
• Get paid faster: Service advisors no longer have to chase customers for payments, or handle payments at the counter
• Security: Demonstrates shops’ commitment to the very highest payment security standards
• Tech Savviness: Shows customers that the shop is on the cutting edge of technology
• Seamless Integration: Shop management software marks ROs as paid – automatically

To learn more about BOLT ON Pay, visit BOLT ON TECHNOLOGY or call 610-890-3240 to speak with a customer service advisor.

The post BOLT ON TECHNOLOGY Partners With Global Payments Integrated to Facilitate Easy Text Payment for Auto Repairs appeared first on PaymentsJournal.

The use of contactless cards and mobile wallets for payments has experienced expedited growth during the pandemic thanks to consumers’ wish to avoid grimy POS terminals. Mercator Advisory Group data finds that consumers have been switching to contactless as a new way to pay and those who used contactless prior to the onset of the global pandemic are using it more in recent months. One area where contactless use has shown great adoption is with transit. Who wouldn’t want to avoid the turnstiles or payment points on trains and buses? 

While far fewer individuals are commuting through public transportation these days, the Metropolitan Transportation Authority in New York took the opportunity to upgrade all of their subway stations throughout the system and their thousands of buses to accept contactless tap-and-go technology with the assumption that ridership will someday return to more typical, pre-pandemic levels.

Here’s what The Verge had to say on the topic:

The Metropolitan Transportation Authority announced Thursday that it had completed the rollout of tap-to-pay scanners at all subway stations and on all of its buses throughout the city. The MTA has been installing the system, called OMNY, since May 2019 as part of a modernization effort to phase out the plastic MetroCards that have been in use since the ’90s. The new tap-to-pay system is available at 472 stations and on 5,800 buses in total, the MTA said.

Tap-to-pay is supposed to speed up entry into buses and subways and reduce costs throughout the transit system, officials have said. It’s also just meant to be simpler and more modern

You need a phone or card that supports contactless payments in order to use the OMNY system. Later in 2021, the MTA will begin selling OMNY tap-to-pay cards — an important addition since not all riders have a smartphone or credit card. Support for reduced fares for senior riders and riders with disabilities will come at some point this year, too.

Overview by Sarah Grotta, Director, Merchant Services at Mercator Advisory Group

The post Contactless Payments to Replace New York’s MetroCard by 2023 appeared first on PaymentsJournal.

Admittedly, this is not new news, but in researching a report regarding debit payments in Asia, an article in ITNews from June caught my eye. Australia is considering collapsing some of its national payment networks into a single organization. The objective is to create one, unified and efficient organization that would direct where investments in payments are made. 

Australia, and other countries want their national payments capabilities to adapt more quickly and fend off competition from Tencent and Ant Group in China plus take market share from Mastercard and Visa.

The networks under consideration for consolidation includes:

• BPAY: Financial institution based, bill pay network with online and mobile access. 
• Eftpos: National point of sale solution
• NPP: New Payment Platform offers real time payments domestically.

Some key points from the article:

Both the Commonwealth Bank of Australia and the ANZ Banking Group have lodged submissions with the Reserve Bank of Australia’s review of payments regulation saying the current menagerie of payments schemes and infrastructure needs to be reviewed with a view to an industry-wide platform.

Any final decision to consolidate – which is still a couple years away – would have massive ramifications for literally tens of billions of dollars of bank-owned systems initially rolled out in the 1980s, predominantly on IBM’s zSeries (or earlier) running COBOL and dozens of bespoke and proprietary legacy applications that linger to this day.

Having taken more than a decade of regulatory biffo to come to life – a core skill of Australian banking oligopoly is its capacity to disagree on any common technological innovation unless it’s forced upon institutions – the gradual but relentless growth of the NPP ultimately creates some technological redundancies.

Both BPAY and EFTPOS, which the direct entry system underpins, are the two most obvious low-cost transaction behemoths affected by any consolidation that could potentially see their functions rolled across onto the underlying NPP architecture.

And like the NPP, EFTPOS and BPAY are essentially owned by the main banks and other institutions, hence the ultimate disinclination to keep running three sets of infrastructure.

Overview by Sarah Grotta, Director, Merchant Services at Mercator Advisory Group

The post Australia Plans to Combine its Primary Payment Networks appeared first on PaymentsJournal.

Marius Galdikas, CEO at ConnectPay, highlights the most prominent predictions about what solutions will shape the industry throughout the coming year.

December 7, 2020. This year has been a rollercoaster for the payments industry, as it had to adapt to new challenges posed not only by the ever-changing needs of the consumer but by the pandemic as well. To shed some light on what the future has in store for the industry, Marius Galdikas, CEO at ConnectPay, has shared his insights about what trends and solutions are likely to thrive in 2021.

BaaS will continue gaining traction

Banking-as-a-service, or BaaS, offers the provision of banking processes, meaning, it allows to embed financial services into any company. Using BaaS enables to focus on product innovation, rather than infrastructure development, as the required banking stack can be integrated via API-driven platforms. Sometimes referred to as “embedded finance”, the service creates an opportunity for any tech company to become a fintech in a shortened timeframe.

“Embedded finance paves the way for creating financial products, as companies do not have to start the process from scratch: build a banking infrastructure and only then start innovating. For some, BaaS is the only way they could start developing products in the first place, as laying the groundwork before that requires a solid investment. In both cases, BaaS allows to delegate a lot more resources towards product innovation,” explained M. Galdikas. “The interest in BaaS will continue to grow, as it could help tech companies to gain a significant advantage against their competitors.”

Market players in-pursue of more regulation

Companies operating in under-regulated sectors have started to appeal to policy makers for increased regulation. A good example of the phenomena in the payments market is the crypto industry, which has voiced its concerns, hoping to receive clear and unified standards that would help them mitigate some of the market resistance.

“Having a clearly defined regulatory framework would help industries, currently viewed as more ambiguous, to position themselves as reliable allies and pave the way for stronger partnerships with other market players. Not to mention it would help to diminish associations with fraudulent activities, reassuring current and potential clients,” said Galdikas.

He also noted that the drive towards stricter regulation is likely to arise from other industry players as well, which is a quite welcome change, as it could bring more harmony into the entire payments’ ecosystem.

Decreasing third-party reliance

Data breaches due to external vendor vulnerability, as well as a few widely escalated incidents that called into question their reliability in general, are forcing companies to re-think the risks of having third-party suppliers. This has encouraged payment providers to search for solutions that would help take matters into their own hands, e.g. move more operations in-house, and lessen dependency on any intermediaries.

“Such incidents give an incentive to reconsider having third-party suppliers,” said M. Galdikas. “Setting up capable in-house solutions allows to retain more transactional control and increase overall fund security, as fewer parties are involved in the payment process.”

Enhanced use of biometrics

Using biometrics to confirm the buyer’s identity and approve transactions are among the rising trends in the market that are expected to evolve throughout the coming year.

“For consumers, the option to approve purchases by face, palm, or fingerprints would allow avoiding password overload, as all payment services in-use could be secured by a single personal feature. It would make the entire process faster, too,” said Galdikas. “Moreover, this provides an extra layer of security, as personal features are harder to replicate by scammers.”

In addition, a recent study revealed that 56% of shoppers would prefer using a biometric sensor on their payment card instead of a PIN, hinting at the increasing appeal of such solutions for consumers as well.

Increasing payments flexibility

As consumers are unsure about what the future holds, market players are bending over backwards to mitigate their pandemic-related concerns, thus offering flexible solutions to better accommodate their expectations. This has led major market players, such as PayPal and Chase, to step into the new “buy now, pay later” market, which gives customers the option to pay off a purchase over a period of time with zero-interest and fixed-rate monthly installments.

The concept of flexibility encompasses not only delayed payment options but the rise of new payment platforms as well. For instance, WhatsApp, commonly known as a messaging app, is working on launching a payments service in India to increase inclusion in the digital economy, while Google is laying the groundwork for Plex – a mobile-first bank account integrated into GooglePay.

“There is no doubt that consumer needs are constantly evolving. That said, the pandemic has greatly influenced which aspects have grown in importance throughout the past few months,” explained Galdikas. “Going cashless acted as a springboard for novel payment platforms, while future income worries encouraged providers to introduce pay-by-month model. With a fair amount of uncertainty expected to carry over to next year, this is only the beginning of novel solutions, designed to adapt to consumers‘ changing habits.“

The post Future of Payments: 5 Expert Predictions about What will Shape Market in 2021 appeared first on PaymentsJournal.

X9 Inc., a non-profit organization accredited by the American National Standards Institute (ANSI) to develop and maintain standards for the financial services industry. They are a U.S. based organization, but have a global view when developing their technical standards.

  Finextra highlighted X9’s recent initiative to form an industry group to study what can be done to create interoperability between and among faster payment solutions. Here’s how the article summarized their effort:

Today the Accredited Standards Committee X9 Inc. (X9) announced the formation of a new study group focused on faster/real-time payments. The study group will review real-time and faster payments activity in the financial industry, with the intent to become X9’s central point of contact for all related and supporting X9 technical standards and to coordinate related work within X9.

X9 perceived a strong need for the new study group. There are already multiple providers offering real-time payments. However, comprehensive adoption depends on interoperability, and for that technical standards are required. Basic payment messaging standards exist, as well as some standards for Electronic Data Interchange, including ISO 20022 and X9 BTRS/BAI2 standards, but additional standards will certainly be needed.

That makes sense. Just because many of the faster and real time payments networks are based on ISO message standard 20022, it doesn’t mean that they can exchange payments or messages. As an example, X9 pointed out how a unified approach could be helpful to the healthcare market:

Healthcare payment standards exemplify the issue. Healthcare payments currently end in paper checks 95% of the time, and healthcare represents 17% of U.S. economic activity. Widespread faster or real-time payments in the healthcare sector, enabled by new or improved standards, could result in significant cost savings and increased efficiency, benefiting consumers as well as industry stakeholders.

Perhaps efforts like this will also lead to clearer path for international interoperability. 

X9 is looking for people to join the study group.  If that of interest, you can sign up here.

Overview by Sarah Grotta, Director, Merchant Services at Mercator Advisory Group

The post Group Forms to Define Real Time Payments Standards, Supporting Interoperability appeared first on PaymentsJournal.

OMAHA, Neb. – Dec. 3, 2020, In response to an increasingly complex payment processing environment – both in terms of volume and payment type — BHMI, a leading provider of payments software, confirmed its Concourse Financial Software Suite^® supports all payment types, including traditional, card-based and non-card transactions as well as alternative payments options such as digital wallets and open banking payments.

Payment volumes are beginning to rebound from the pandemic’s initial impact, and digital transactions fueled by card-not-present (CNP) debit and other non-card payments are becoming more prevalent. A recent study commissioned by PULSE showed CNP debit transactions had increased by 21% in 2019, with account-to-account (A2A) transfers being the fastest growing category of debit, doubling over the same period. The study suggests this growth is likely related to both increased online shopping and use of P2P transfers through apps such as PayPal, Venmo and Zelle.

This underscores the need for solutions that can easily handle account-based transactions and suggests the industry could benefit from a richer, more detailed approach to ISO 20022 protocols. In response, many companies now recognize the need to “future-proof” their infrastructure to ensure it can handle more varied payments types as we head into 2021. BHMI’s Concourse allows them to leverage improved payments logic, interface easily with all payments and transaction types, and transfer between each quickly and seamlessly. Additionally, this integration allows card-only consumers to easily add payments to their portfolio, providing greater flexibility.

BHMI is constantly updating its Concourse Financial Software Suite to meet the needs of a rapidly evolving payments ecosystem. In 2019, the company announced Concourse’s support for ISO 20022 payment format standards, allowing financial institutions to overcome semantic and syntax barriers often associated with cross-border payments. The software’s most recent enhancements allow financial institutions to better support current and future infrastructure changes as the payments industry continues to evolve.

“As alternative payment options become increasingly popular, it is vital that companies not only adapt to meet the current market, but also consider how future changes – and challenges – of the payments landscape will impact their infrastructure,” said Dr. Lynne Baldwin, President of BHMI. “Concourse has been designed with this in mind, ensuring our clients can solve the issues of today while having the capability and flexibility to adapt to what may come next.”

About BHMI

BHMI is a leading provider of product-based software solutions focused on the back office processing of electronic payment transactions. The company is best known as the creator of the Concourse Financial Software Suite^® – a unique integrated collection of back office products allowing companies to quickly and easily adapt to the rapidly changing world of payments. Concourse is a cohesive and integrated package, including settlement, reconciliation, fees processing, and disputes workflow management, that reduces the cost and complexity of back office processing. Concourse’s continuous processing, near real‑time architecture and powerful rules engine is ideally suited for new payment initiatives like P2P and enables companies to perform back office processing for any type of payment transaction. To learn how your company can benefit from the power and flexibility of Concourse, please visit www.bhmi.com.

The post BHMI’s Concourse Financial Software Suite “Future Proofs” Payment Processing With Equal Level Support of Card-Based, Non-Card and Alternative Payments appeared first on PaymentsJournal.

Pay4It™ integrates physical and digital payments that unlock immediate opportunities to drive revenue, loyalty and customer acquisition

PLEASANTON, Calif. – Dec. 1, 2020 – Digital payments transformation has accelerated in 2020, driving massive adoption and expansion of digital wallets, mobile apps and contactless payments. Helping to drive this payments revolution, Blackhawk Network today announced a global suite of solutions for merchants and retailers that meaningfully connects physical and digital payments. The result: a truly seamless, omnichannel payment experience for consumers; more revenue, new customer acquisition channels and enhanced loyalty for partners.

“Retailers’ and merchants’ businesses changed instantly this year, and Blackhawk has responded with a product suite that brings once-disparate physical, digital and stored value payments together, keeping brands and consumers connected in a seamless way,” said Helena Mao, VP of global product strategy at Blackhawk Network. “As a global leader in bringing brands closer to consumers with innovative payment experiences, Blackhawk continues to innovate its digital payment platform through our Pay4It™ suite of solutions that provide our partners with a complete end-to-end, omnichannel experience for their customers.”

The new suite of solutions addresses key pain points in the payment experience today. More importantly, it provides expanded payment choice to customers and can improve partners’ ability to acquire and retain customers:

• Bridging the gap between cash and digital payments by digitizing cash transactions for merchants with underbanked, unbanked and cash-preferring customers. This service provides cash customers with a simple connection to the digital world by allowing them to easily add cash to a digital wallet, mobile app or account, or make payments for digital goods with cash.

The demand for a cash transition solution is strong; 230 million private-sector workers did not have bank accounts and received wage payments in cash in 2019[1]. According to a recent report[2], 69% of survey respondents from eight countries say that the ability to use cash is one of the most important factors to consider when paying for things. And many digital wallet users (49%) would welcome the ability to add cash to it at a physical retail store. Another study[3] reported that if shoppers were able to add funds to a digital wallet in store, 68% of them would shop in the store more often than they normally would and 57% said they would spend more money at the store than they normally would.

• Giving consumers complete access to their spending power by enabling additional digital wallets for omnichannel checkout and transforming loyalty points, rewards and other assets into purchasing power. This service provides customers with more choices to pay regardless of where and how they shop. Merchants can gain access to new customers, untapped balance and incremental revenue.

Mobile payments at point of sale are expected to grow by nearly 20% over the next four years[4]. Additionally, six in 10 shoppers surveyed said they would like to pay for things in store by using points they’ve earned in their loyalty programs using their smartphones[5]. Blackhawk’s new solution offers a way to help consumers unlock their payment options from a wide variety of places including myriad digital wallets, loyalty programs, or other types of rewards and points by turning them into something immediately usable in store. This first-of-its-kind solution helps brands drive revenue through their branded ecosystems, foster greater customer affinity and acquire new customers.

• Expanding acquisition channels for digital gift cards. This solution affords retailers the luxury of a gift card selection that is not constrained by physical space. It provides merchants the ability to engage their customers at every touchpoint and offer a variety of digital gift card content for purchase. And most importantly, it gives customers access to a broader selection of digital content and a convenient purchase experience.

The global gift card market is expected to grow by more than 15% over the next seven years[6] and the growth of digital cards is far outpacing growth of physical gift cards around the world. Blackhawk’s new suite of solutions allows consumers the option to buy an assortment of digital gift cards from non-traditional locations, creating an “endless aisle” during their in-store experience, and even out of store.

“The Pay4It suite emphasizes how the power of payments can help our partners create true engagement and added value for their customers,” said Mao. “Businesses know they must invest in their digital platforms and ensure payment option parity across their physical and digital channels, while also delivering a seamless, truly omnichannel experience. It’s exciting to support our partners to meet this moment.”

There is an unprecedented level of urgency for merchants to embrace digital payment options as customer preferences have shifted seemingly overnight. Blackhawk is powering payments in select branded ecosystems among its expansive network. This shift helps to meet customer demands by enabling cash-in options and seamlessly transferring money and stored value across physical to digital channels.

To learn more about Blackhawk Network’s suite of innovative payment solutions, please visit our website.

[1] “The Role of Digital Financial Inclusion in Preparing for Older Age and Retirement” was published by World Bank and the Better Than Cash Alliance in July 2019.

[2] “BrandedPay™: How People and Brands Connect Through Payments” is based on the findings of an internet-based survey conducted by Leger on behalf of Blackhawk Network between February 12 and March 17, 2020. The sample size included over 12,000 respondents in eight countries.

[3] “Emerging Payments” is an online survey conducted by Leger on behalf of Blackhawk Network in October 2019. The sample size included 2,219 American respondents.

[4] “Mobile Payments Forecast 2020” was sourced via Statista in July 2020.

[5] The “Consumer Loyalty Verticals” research is an online survey conducted by Leger on behalf of Blackhawk Network February 5–15, 2018. The sample size included 1,500 American respondents.

[6] “Global Opportunity Analysis and Industry Forecast, 2020–2027” – Gift Cards Market by Card Type (Open Loop Gift Card, Closed Loop Gift Card) and End User (Retail Establishments, Corporate Institutions).

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We saw this release at the Wells website announcing the launch of what the bank is calling the WellsOne Virtual Card Payments Service. Most readers who follow the space will know that virtual cards have been growing at a rapid pace for the payables use case during the past five years given their relative safety and utility within A/P flows.

Since the pandemic began the demand for electronic payments has accelerated and with that market demand the acceptance of virtual cards by suppliers has also increased. Wells has been issuing virtual cards for more than ten years so we contacted them to learn about more about what the new offering provides.

We spoke with Mary Mazzochi, Wells’ Head of Global Commercial Card Payments, who elaborated a bit on the new platform. The solution includes a new user interface (UI) which provides easy navigation, integration with the user ERP and dashboards for instant analytics. In addition, suppliers can access the platform and choose how to get paid given the push, pull and API-based card options.

“With this new platform we focused on streamlining and simplifying the workflow experience for both buyers and suppliers.  Focusing on both surfacing actionable items to the buyers and facilitating options for suppliers on how they want to receive virtual card payments, enabled the platform to deliver a more frictionless payment experience and improve the value of the card payments process” explained Mazzochi.

We had provided member research earlier this year about the trajectory of commercial card spending for 2020, which of course was not a pretty picture. However, despite the policy driven recession and disappearance of business travel, we still expected virtual cards use to maintain a level of growth over 2019 spend. We have just completed the series of Q4 virtual industry events (that typically occur on-site) and the overwhelming consensus is that the digital shift in financial operations will be a permanent trend, therefore good timing for Wells.

‘Wells Fargo also offers an automated, straight-through processing option, in which customers send virtual card payments directly to their suppliers’ banks. This process bypasses the need for any manual entry or interaction with suppliers, and gives customers control over payment timing as they are not dependent on suppliers to process the payments….The WellsOne Virtual Card Payments service helps make it easier to track, reconcile, and remit payments. Its intuitive dashboard with responsive design quickly surfaces items needing action while enhanced reporting identifies exceptions, monitors credit balances, and flags items that require repair. Other features include a robust audit trail, expanded search options, and access to 24 months of reporting data. Additionally, the WellsOne Commercial Card Supplier Analysis and Onboarding service helps customers engage suppliers and determine the best accounts to pay by card…TheWellsOne Commercial Card is a purchasing tool used by businesses of all sizes for procurement, travel and entertainment, account payable invoices, and transportation expenses.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

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More information is beginning to emerge about Brazil’s recent launch of their national real-time payments platform called PIX. Here’s a quick run-down of some of the salient points:

• PIX is a real-time settlement system available 24X7X365
• It is run by Banco Central do Brasil (BCB) 
• All banks will offer the service and it is mandated to be offered by the largest financial institutions
• While it officially launched on November 16, it has been in pilot mode and has already processed 1.9 million transactions and over BRL 780 million (USD 144 million) in value
• It utilizes ISO 20200
• There are no transaction limits
• It also has launched with an alias directory with 71 million Pix aliases registered already

A Reuter’s article has this to say:

Brazil’s central bank on Monday launched an instant payments platform that will speed up and simplify transactions, as well as foster financial sector competition and lure in new players such as big techs Facebook Inc and Google.

The move by Brazil’s central bank aims to increase competition in a highly concentrated banking system, with its top-five lenders, such as Itau Unibanco Holding SA and Banco Santander Brasil SA, holding roughly 80% of total assets and deposits.

As the central bank sets low prices for money transfers and payments via Pix, the regulator believes competition will increase. Itau’s card processor, Rede, said on Monday it will not charge merchants using Pix for the first six months.

Some 750 companies have signed up to Pix to accept and offer instant payments. Uber Technologies Inc said it started to accept Pix payments, hoping to add unbanked clients. In the future, Pix will add new functionalities, such as cash-back and preprogrammed payments, which are currently offered mainly through credit cards.

Overview by Sarah Grotta, Director, Merchant Services at Mercator Advisory Group

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M&A dealmakers are working overtime in Europe. While 2019 was the year of the mega-mergers in the U.S. market, payments players across the pond are not sitting idly by. Italian payments processor, Nexi, announced a deal to buy Nordic payments player, Nets, for a cool $9.2 billion.

This comes after the ink was not even dry yet on a deal for Nexi to buy Italian rival, SIA. Meanwhile, the acquisition of Ingenico by Worldline just closed for a reported $8.6 billion. Looks like European firms are bulking up in order to be serious competitors on the global payments landscape.

The following excerpt from a Barron’s article reports more on the topic:

Nexi has clinched another deal in its drive to create a paytech leader in Europe. The Italian payments processor is buying Nets, a Nordic payments provider, for $9.2 billion. The transaction comes just weeks after Nexi agreed to buy SIA, a rival Italian payments company, for $5.4 billion.

The all-stock deal values Nets at €7.8 million ($9.2 billion), including €1.5 billion in debt, a statement said. Nets shareholders will receive 406.6 million shares of Nexi and own 31% of Nexi-Nets-SIA. The transaction includes an earn-out of up to €250 million, payable in 2022 that is contingent on Nets 2021 earnings before interest, taxes, depreciation, and amortization, or Ebitda, performance.

“We are creating a company with a very large scale in the European paytech market that is present in most attractive markets,” Paolo Bertoluzzo, Nexi’s CEO, who will be CEO of the combined companies, said on a conference call Monday announcing the deal.

In October, Nexi and SIA culminated months of merger discussions when they agreed to combine in a $5.4 billion deal. With Nets, the combined companies will be a leading merchant acquirer as well as a top card processor, Bertoluzzo said on the call.

Overview by Raymond Pucci, Director, Merchant Services at Mercator Advisory Group

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The headline states, “Facebook claims its proposed payments network is 7 times faster than Visa’s,” yet the article doesn’t really indicate that. In fact, putting aside the ridiculous headline, I’d argue that the last paragraph re-printed below from the article clarifies everything:  

“FastPay aims to solve this by enabling authorities to jointly maintain account balances and settle prefunded retail payments between accounts. The researchers claim it supports “subsecond” latency confirmation appropriate for physical point-of-sale payments while providing capacity comparable with peak retail card network volumes and real-time gross settlement. “FastPay eliminates counterparty and credit risks of net settlement and removes the need for intermediate banks, and complex financial contracts between them, to absorb these risks,” the coauthors write. “FastPay can accommodate arbitrary capacities through efficient sharing architectures at each authority.”

The researchers say that building a test implementation of FastPay on Amazon Web Services required about 2.5 months of work for three engineers, with a server containing 96 virtual processors across Intel Xeon Platinum 8175 48 physical cores and 384GB memory. In experiments, they claim FastPay supported up to 160,000 transactions per second under a total load of 1.5 million transactions across the 48 cores — about seven times the peak transaction rate of the Visa payments network — while running on commodity computers that cost less than $4,000 a month to run. And in a test of latency, the coauthors say that FastPay was performant during both transfer and confirmation orders; the latency was under 200 milliseconds for a client on the U.S. West Coast and about 50 milliseconds for one in the U.K.

The researchers admit their experiments represent the best-case performance and a Facebook spokesperson told VentureBeat via email that FastPay is strictly experimental payments protocol research. But in the interest of transparency, they’ve open-sourced their implementation of the FastPay system, support scripts, and measurements data.”

I wonder how Visa’s infrastructure would perform in a similar network construct using debit transactions. My guess is that it would perform as well or better.

Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group

The post My Imaginary Payment Network Is 1,000 Times Faster Than Visa’s appeared first on PaymentsJournal.

Payments industry M&A activity marches on. The latest finds Lightspeed acquiring ShopKeep in a medium-sized deal that combines two players in the retail POS market. ShopKeep’s sweet spot is the small to medium retail and restaurant sector that uses its iPad-based checkout system. ShopKeep’s software solutions add business tool features helping shop owners with operational details such as data analytics and inventory management. This deal will bulk up the size of Lightspeed and provide more competition to big players such as Fiserv’s Clover and also Square.

The following excerpt from a ZDNet article reports more on the topic:

Point-of-sale vendor Lightspeed is acquiring rival ShopKeep in a $440 million deal that signals further consolidation in the industry. Lightspeed said the acquisition will accelerate its growth as an emerging category leader following its recent initial public offering. Both Lightspeed and ShopKeep develop POS technology for small and medium sized businesses, with portfolios geared toward retailers and restaurants. 

Lightspeed offers specialized point-of-sale systems for restaurants, retail, and e-commerce operations. Its cloud-based software lets businesses manage inventory and marketing, monitor sales, manage employees, and process payments. The software also works with third-party platforms for additional marketing, customer loyalty, and employee management capabilities. 

“ShopKeep’s commitment to enabling independent businesses to dream big and rise above industry and economic challenges is deeply aligned with our own mission to power the future of commerce,” said Lightspeed CEO Dax Dasilva. 

Overview by Raymond Pucci, Director, Merchant Services at Mercator Advisory Group

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And the cross-border stories just keep on coming. In this posting on Cision PR Newswire, we see that the 2011 London-based startup named NOIRE uses Visa Direct to solve for certain cross-border use cases.

NOIRE provides merchant payment services and gateway solutions. Visa Direct is one of the faster payments solutions that we discussed in a recent webinar on that topic. The solution aims to overcome the friction and opacity associated with traditional cross-border payment methods, an area under intense scrutiny.

‘As cashless transactions begin to dominate more of everyone’s lives, it’s easy to assume that the framework for transferring funds effortlessly is already firmly in place….This might be the case in a single market, but in April 2020, the G20 group of countries published a report – ‘Enhancing Cross Border Payments’ – which set out the complexity of the many current arrangements for cross border paymentsConnecting merchants to emerging markets…According to the report, some transfers between jurisdictions can still take as long as 10 days and cost as much as 10% of the value of the transfer….It also found that payments sent from the UK to certain territories had to pass through four currencies and five banks and that out-dated technology, such as telex machines, was still being used….Furthermore, despite advances in technology, 6 out of 10 cross-border payments still require manual intervention, each one of which takes as long as 15 to 20 minutes.’

We covered cross-border in a member Viewpoint earlier this year, including B2C scenarios, which are associated with insurance payouts, international payroll, and individual contract staff in foreign locations, as well as B2B use cases such as e-commerce, invoiced payables for trade goods and services rendered, as well as traditional and alternative trade finance payments.

B2B use cases dominate the cross-border transaction landscape, but also continue to be executed through traditional methods, so they are the most in need of innovative approaches. There have been a number of ongoing innovations in the space, and no doubt we will see more in the next couple of years as real-time systems begin to interoperate.

‘At NOIRE, we integrate Visa Direct seamlessly and deliver an effective solution, in a way which is simple to use at every point of contact….Where payments to debit or prepaid cards could take as long as 5 business days to reach an account, those made with NOIRE, land within 30 minutes. Therefore, we enable our customers to send and receive funds between literally billions of worldwide accounts in a seamless and highly secure manner….Using Visa Direct via a payment service provider gives merchants a competitive advantage in their industry as they can send real time payouts to their customer’s cards.”…Saving time and therefore money is just one part of the equation, since Visa Direct also enables businesses to access hitherto inaccessible markets, trading at speed across borders, thousands of miles, multiple languages and a range of global currencies.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post NOIRE Improving Cross-Border Payments with Visa Direct appeared first on PaymentsJournal.

An article from PaymentsSource points out that the new Nacha WEB Debit Account Validation rules may help reduce fraud in the age of faster payments but that much more can be done if the “commercially reasonable fraudulent transaction detection system” also validates other important aspects of the transaction. This includes payment history, particularly NSF or chargeback history; ownership, including matching ownership to the payment originator; and PII, including name, address, phone number, and email:

“Currently, ACH originators of web debit entries must use a “commercially reasonable fraudulent transaction detection system” to screen WEB debits for fraud. The supplemental requirement explicitly requires “account validation” to be a part of that detection system.

Many businesses, however, are not even deploying account validation measures — a basic and critical component of securing faster payments. This is unfortunate and likely to result in avoidable returns and losses.

The first step to reducing losses is to embrace the Nacha rule change as a welcome step in reducing unnecessary returns, which will in turn enhance fraud protections.

Second, to effectively reduce risk, businesses need to go beyond simply confirming whether an account number is valid.

While not explicitly detailed in Nacha’s account validation requirements, businesses that want to truly mitigate payments risk need to also validate status; payment history, particularly NSF or chargeback history; ownership, including matching ownership to the payment originator; and PII, including name, address, phone number, and email. These validations should occur prior to setting up a payment account, and initiating the first payment, as well as at every subsequent customer touchpoint, throughout the customer life cycle.

Adding this extra layer of validation will be critical to protecting payments as the number of transactions and volume over the network continue to increase.

By adding additional layers to the account validation process, businesses can better understand who they are distributing money to as well as calculate risk. These measures will also help businesses prevent some of the most prevalent fraud tactics, including identity fraud schemes, business email compromise and other social engineering scams.”

Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group

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Visa and PayPal announced that they are extending their existing partnership to provide consumers and small businesses with faster payments through the debit push payments, which is a credit transaction across their debit network. This partnership extends across several brands including not just the flagship PayPal product but also Hyperwallet, Venmo, Xoom, Braintree, and iZettle. 

Domestically, PayPal also uses The Clearing House RTP real-time gross settlement system for instant payments, but as this system is still building out its reach, debit push payments can reach consumers and business where RTP can’t. Visa also has global capabilities with built-in FX solutions which can be used to transfer funds to other consumers and to pay businesses.

TearSheet’s article on the topic has this to say about the cross-border, cross-currency capabilities:

While digital is crucial for domestic money movement when senders and recipients are physically distanced from each other, digital channels for cross-border money transfers are just as critical. To power faster access to funds around the world, Visa and PayPal recently announced the extension of their global partnership for consumers and small businesses sending or receiving money via PayPal, Venmo, Xoom, Braintree, Hyperwallet and iZettle. This includes expanding PayPal’s Instant Transfer service globally, using Visa Direct’s real-time payment capabilities. Through this collaboration, eligible merchants and consumers can now receive money more quickly and easily, eliminating the friction and delays associated with traditional channels. 

You can also view a recent survey Visa conducted called Visa ‘Back to Business’ Report.

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

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COVID-19 has moved digitization to the forefront, and property and casualty (P&C) insurance is no exception. Insurers are looking to protect employees, answer policyholder demands for improved payment experiences, and reduce costs. To do so, they are turning to push-to-card solutions as a way to offer a new level of flexibility and speed to insurance payouts.

To learn more about the P&C space and why the time for digital transformation is now, PaymentsJournal sat down with Silvana Hernandez, SVP of Mastercard Send, North America at Mastercard and Sarah Grotta, Director of Debit and Alternative Products Advisory Service at Mercator Advisory Group.

Register for the upcoming webinar, Transforming Property & Casualty (P&C) Insurance Claims, for a more in-depth discussion.

Debit push payments are gaining traction for insurance payments   

Faster payments in the market are gaining traction in the U.S. across a slew of industries. The markets seeing the most success are those that have benefits for multiple players during the payments experience.

“One of the most successful use cases that we’re starting to see are insurance payments,” noted Grotta. Insurance companies still largely rely on checks, but there is now traction toward debit push payments. Push payments are a significant improvement for both insurance companies themselves and their clients.

Grotta attributed insurers’ move to debit push payments to four key reasons:   

1. They provide a better customer experience.
2. They can be dispersed to a broader range of consumers.
3. They offer cost savings over non-digital payment forms.
4. They enable a quicker resolution of insurance claims.  

In the COVID-19 era, consumers want peace of mind…

Consumers have had to rethink their behavior across nearly every aspect of their lives. “The pandemic has impacted the way we work, the way we dine, the way we go to school, the way we go to the doctor, and the way we interact,” said Hernandez.

“When it comes to payments, consumers have had to really quickly move to methods of paying and being paid that make them feel safe and allow them to observe social distancing and shelter-in-place measures,” she added. What people want more than anything is peace of mind during these unprecedented times. 

COVID-19 has also brought economic uncertainty to consumers across the globe. As a result, cash flow management, access to cash, and the ability to receive payments instantly have become even more crucial than before.

…Further legitimizing the necessary shift away from manual processes

The insurance industry still relies heavily on manual and paper-based processes, methods that become difficult and counterproductive to execute in situations like COVID-19. Mailing checks, shipping delays, and unreachable recipients become barriers when paper checks are the only option.  

Digital, near real-time push-to-card disbursements are essential in a world where people need easier and faster access to their money anytime, anywhere. When navigating COVID-19 and other natural disasters, having real-time push-to-card payments can make a huge difference in time, security, operating costs, and customer satisfaction.

An overview of the property & casualty insurance market

Property & casualty insurance, a broad and growing category that represents around one-third of premiums in the insurance market, protects and covers what people own. “It includes personal lines, like car insurance, home insurance, or even travel, but it also includes commercial aspects,” explained Hernandez. This includes “property insurance for small businesses or workers, workers’ compensation, business continuity, and certainly professional lines, like malpractice and coverage for directors and officers.”    

Processing costs account for 28.5% of operating costs in the P&C sector. Just like other areas of the insurance industry, P&C still heavily relies on inefficient non-electronic payments. A recent survey by Mastercard partner VPay found that among surveyed consumers, 60% reported receiving their last claim payment by check.

The survey also found that 50% of those consumers had to wait three or more days to access their money. These experiences are no longer acceptable in a world where consumers are surrounded by convenient, immediate digital experiences. It is apparent that it’s time for the P&C insurance vertical to embrace digital transformation.

How P&C companies benefit from a digital transformation

Even insurance companies that have been slow to adopt digital processes are now beginning to embrace them. This is partially due to sheer necessity. Insurers who relied on in-office employees to print and mail physical checks before COVID-19 were negatively impacted during shelter-in-place orders. Insurance companies with real-time digital payment capabilities, however, could provide policyholders with their funds whether their employees were in-office or remote.

There are also other compelling advantages of going digital. “The insurance companies that go through these [digital] transformations are going to see not only better consumer satisfaction and more loyalty—which are important—but will also see cost efficiencies that will allow them to better navigate the economic uncertainty and challenges,” said Hernandez. Further, digital payments enable improved security measures like tokenization as well as easier access to and usage of data.

Beyond operational advantages, digital transformation helps insurers keep up with consumer demands and remain competitive. Another VPay study found that more than 80% of survey respondents said that ease and convenience of claim payment, speed of payment, and quick funds accessibility are all factors that impact their satisfaction with their insurer. In fact, 90% of Gen Z and 68% of millennial respondents said they are willing to switch insurers to gain access to instant insurance claim payments.

Near real-time push-to-card payments meet consumer expectations

Push-to-card payments via a mobile platform are a clear opportunity for P&C insurance companies to improve their claim processes times, reduce costs, improve operational efficiencies, and better serve customers. Mastercard Send, Mastercard’s push-to-card solution, is one avenue that interested companies can take to do so.

Mastercard Send “allows an insurance company to be able to send funds to any debit card in the U.S., consumer or small business, and deliver those funds in real time,” explained Hernandez. Mastercard Send has already partnered with VPay to modernize payment solutions by eliminating the significant costs of issuing claim checks and transforming the customer experience.

“Another winner in this process would be debit card issuers,” said Grotta. “Financial institutions are going to want to ensure that their consumers and businesses have debit cards not just for typical payment transactions, but also to ensure that they’re able to receive these types of payments.” Hernandez agreed, adding that issuers have already done the work to enable their cards to receive such payments. With the infrastructure in place by issuers, it’s insurers’ turn to take action.

The takeaway

COVID-19 is the tip of the iceberg when it comes to opportunities for near real-time payments and push payments, which can transform industries like P&C insurance.

On October 29, 2020 at 1 PM ET, PaymentsJournal will be hosting a webinar featuring speakers from Mastercard Send, VPay, and Mercator Advisory Group. During the webinar, the speakers will have an in-depth discussion on the insurance claims payment ecosystem and the benefits of push-to-card payments in the P&C insurance space.

Click here to register for the upcoming webinar, Transforming Property & Casualty (P&C) Insurance Claims.  

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This piece was dropped in The Record and highlights a white paper that Microsoft released at the recently completed Sibos 2020 virtual event. As readers and members will know, Mercator Advisory Group closely follow the real-time and generally faster payments space pretty closely, including a recent pre-pandemic member report that summarizes progress through qualitative discussions with early adopters. 

There is no doubt that real-time is a desired capability, which will become increasingly evident to banks that do not have a solution. However, many institutions don’t know how to describe the value proposition (or sell it internally). This paper provides some further insight on how to describe benefits of RTP.

‘“RTP is a big win for customers,” said Microsoft. “It enables a more frictionless banking experience with fewer holds, moving payments with the same quick gratification that customers have come to expect from other modern services, such as instant messaging, video streaming, and one-hour delivery.…“But RTP may be an even bigger win for banks. That’s because once you’ve modernised your core infrastructure to handle RTP – even partially – you start to unlock a whole new world of potential products and revenue streams.” ‘

Mercator recently conducted a webinar on this very subject with regards to U.S. adoption progress, and, in some sense, there are institutions that will simply take a bet since it moves them in the direction of modernization. Momentum has picked up tremendously since the pandemic hit, since digitalization has blasted through inertia across various industries and demand for faster and better methods has jumped the priority queue. 

This was a main theme across the various sessions we attended at the Sibos event. Benefits are not all clear bottom line winners, but the value can be described outside of dollar signs.

‘“Banks don’t need to move everything to the cloud at once,” said Microsoft. “Modern cloud technology can begin to collect siloed solutions into a central point, logging quick wins and starting a cloud adoption process that can get you to RTP on your schedule.”  ‘

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Microsoft White Paper Underscores How Real-Time Payments Drive Innovation appeared first on PaymentsJournal.

FIS has published its annual report on the evolution of real-time payments throughout the world. A copy of their “Flavors of Fast” report can be found here. The report reviews the existing 57 real-time payment systems and provides some detail around the impact of real-time payments in India, which, in my mind, is fascinating given the impact that real-time payments and overlay services like P2P and mobile payment apps have played. 

When the government in India decided in 2016 to rather abruptly discontinue the use of some denominations of its currency, this had the desired reaction of pushing the population towards more forms of electronic payments, including the use of real-time payment applications. The recent pandemic has further instigated its growth. They are experiencing 20 – 30% growth year-over-year, conducting billions of payments each month.

Here’s what an article from CNBC had to say on the topic:

According to the report released on Wednesday, six other countries also saw more than doubling of their real-time payment transactions year-over-year, while four saw at least a twofold increase in transaction value. But in terms of the growth rate, the list is topped by Bahrain with 657 per cent growth, followed by Ghana clipping at 488 per cent, the Philippines growing at 309 per cent, Australia at 214 per cent, and Poland at 208 per cent. India’s growth was 213 per cent, handling 41 million transactions a day, according to the report.

India leads global real-time payments, processing 41 million real-time transactions per day, more than any other country in the world, says the report, adding the country continues to innovate with the launch of extensive business services on the real-time rails including IPO subscriptions, mandate management and invoice-in-the-box. South Korea reported the highest number of real-time transactions per capita, with 75 transactions annually processed. In the US, over 130 financial institutions are currently implementing real-time payments, a five-fold increase since September 2019.

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

The post Transforming a Market Through Real-Time Payments appeared first on PaymentsJournal.

In late March, with COVID-19 spreading rapidly and the economy coming to a grinding halt, Congress passed the CARES Act. As part of this enormous piece of legislation, the government sent nearly 160 million payments to Americans to help them weather the impending economic disaster. By the end of August, the government had distributed $270 billion in funds for these stimulus payments.

However, the process had several challenges. The government struggled to reach those eligible who had not filed taxes—as of September, an estimated 9 million people have not received their payment. Some payments were made to deceased people, while other payments accidently went to foreigners living overseas. Even a small number of those who eventually received funds had to wait months before the funds reached them.

As of late July, 120 million of the payments had been sent through the ACH Network. Some critics complained that ACH was too slow and that instant payments were needed. However, while there are valid arguments in favor of instant payments—criticisms about the speed of the ACH Network are misplaced. 

To understand how the ACH Network delivered stimulus payments on time, PaymentsJournal Editor-in-Chief Ryan McEndarfer sat down with Jane Larimer, President and CEO of Nacha, the organization that oversees ACH.

Direct Deposit worked as it should

The idea that the ACH Network is the cause of slow dispersals stems from confusion over the many steps in the process. Specifically, there is a conflation between the time it took for the IRS to determine eligibility and the time it took for payments to hit people’s bank accounts once eligibility was confirmed and the payments sent.

Larimer explained that it took a couple of weeks for the IRS to determine who was eligible based on income requirements stipulated by the CARES Act. To make electronic payments, the IRS also had to determine whether people had deposit account information on file. For those who were eligible and had account information on file, the IRS made Direct Deposit payments using the ACH Network (as all Direct Deposits do).

This extended verification process makes sense given how much money the government was about to discharge to people. “The government is not going to issue funds without knowing the individual on the other end,” noted McEndarfer.Once these payments were made, the ACH Network worked as expected, delivering an unprecedented 81 million stimulus payments on a single day. Crucially, this is exactly what the IRS had instructed.

“The IRS said that payday for Direct Deposit was to be April 15. And on the morning of April 15, citizens woke up and found the money available for their use, just as intended and as instructed by the IRS,” said Larimer.

Instant payments would not have provided funds faster

Since the payments were scheduled for April 15, an instant payments system would have delivered them on April 15, not sooner. This means even if the IRS had decided to disperse payments through an instant rail, the outcome for providing funds would have been exactly the same. As McEndarfer succinctly put it, “payday is payday.”

Further, the use of instant payments would not have addressed the other problems surrounding eligibility determination and the dispersal of stimulus funds. Consider all the funds that went to deceased people.

“The real-time payment systems operate, in some ways, the same way the ACH Network does in that they will not know before making that payment whether that person is deceased or not; that’s not an attribute of the system,” explained Larimer. McEndarfer agreed, noting that the type of information needed to make a payment through the ACH Network and any real-time alternative is relatively the same.

This is not to say America should not invest in real-time rails. Larimer explained that Nacha favors payment choice and believes payers should choose payment methods that best suit their unique needs. For its part, Nacha offers Same Day ACH, a service that enables payments to be posted and settled on the same day (regular ACH generally posts and settles on the next business day). Those who need to make payments even faster should have the ability to do so, said Larimer.

“The industrial strength of the ACH Network”

The criticism that the speed of the ACH Network slowed down stimulus payments, misguided as it is, misses the fact that the rail performed extraordinarily well. In a single day, the ACH Network supported 81 million payments without issue, in addition to its regular payment volumes.

While 81 million payments may seem like a staggeringly large amount, the ACH Network routinely handles such volumes. For example, Direct Deposit, one the most common ways for employers to pay employees, goes through ACH. Direct Deposit also handles almost all Social Security payments; of the 63.2 million Social Security payments made in August, 99.1% were through Direct Deposit.

On any given day, in fact, the ACH Network averages 100 million transactions. “That’s what we call the industrial strength of the ACH Network,” said Larimer.

The post The ACH Network Delivered Economic Impact Payments on Time appeared first on PaymentsJournal.

Outside the U.S., where payments are often managed centrally and through a government organization, the next wave of real-time payment system deployments is beginning to ignite. Countries are eager to offer real-time payments, but building a secure, always on, payment infrastructure that serves the needs of banks and end users is likely not something that they have experienced before.

Vocalink (a part of Mastercard) and ACI have partnered up to help central banks streamline the implementation process. With approximately 20 countries and regions considering their next steps, there’s plenty of interest. Here’s more from their joint press release:

“…the combination of Mastercard’s central infrastructure and ACI’s payments access and real-time message transformation technology delivers an unmatched end-to-end offering. The new joint solution delivers key benefits including:

• Flexible deployment options — Mastercard and ACI collaboration provides deployment options that range from a fully managed service in the cloud, to supporting on-premise software for government, central bank and system operator-owned platforms
• Ability to support existing local market requirements — the joint solution reduces the amount of time to onboard participants and provides flexibility to accelerate real-time adoption
• ISO20022-first approach — joint real-time capabilities support organizations today and tomorrow, and provide translation to and from existing standards
• Digital services — further capabilities to support new digital services such as request to pay, proxy services and biller services
• Global proposition, local expertise —Mastercard and ACI collaboration brings together global reach, international experience and the local market knowledge

Looking ahead, I think it will be interesting to watch the evolution of real-time cross-border and cross-currency activity. I have to imagine that those countries on the same technology base can make that a reality more efficiently.

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

The post Mastercard and ACI Partner to Launch Real-Time Payments Globally appeared first on PaymentsJournal.

In a recent press release through GlobeNewswire, the New York-based fintech Payoneer, which specializes in cross-border payments, announced a program called Payoneer for Banks. There has been a slew of innovation activity in the cross-border payments space, which Mercator Advisory Group has been tracking for some time and also updated members around B2B use case scenarios in April research.

A combination of approaches have been launched to improve sender and receiver experiences. These approaches have included blockchain rails and networks, push-to-card account solutions, SWIFT gpi, and proposed transactional expansion, as well as impending real-time cross-border solutions such as P27 in the Nordic region. 

The Payoneer approach is to make its widely adopted platform and unique experience available to banks through APIs as a primary cross-border offering to business banking clients. Here’s an excerpt from the press release:

‘The program already includes partnerships with ten banks and eWallets in ten countries, with many more in the works. Payoneer for Banks shares the fintech’s global capabilities with traditional financial institutions and eWallets via simple API integrations. These capabilities include secure, low-cost international payments in real-time and access to Payoneer’s ecosystem of leading global marketplaces, all available to customers from within the banking platform they already use.…Payoneer’s bank partners include challenger and incumbent banks and eWallets, in both emerging and developed markets, that share an interest in serving digital entrepreneurs.’

A prime bank target for the Payoneer solution would be SMBs and gig economy freelancers, who find traditional cross-border solutions too expensive, opaque, and slow, especially in a time of cash flow interruptions. In speaking with Payoneer’s Eyal Moldovan, General Manager, SMBs, we received a clear picture of the flexibility the platform provides through a global presence, registered accounts that easily interact with the company or individual’s bank and currency management capabilities allowing payers and recipients to transact in a preferred currency.

Another feature is the cost transparency, again something that traditional cross-border payment methods have not provided. So this becomes an opportunity for banks to easily provide a modern solution to a previously underserved business segment. We will continue to track this dynamic space.

‘Partnering with Payoneer is a win-win for financial institutions and their customers: Banks can embed Payoneer’s services into their portals, adding value to existing and new customers by providing them with a one-stop payment shop. SMBs and freelancers can quickly and cost-effectively send, receive and manage cross-border payments with marketplaces, international clients and suppliers.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Payoneer Announces Program to Help Businesses Make Cross-Border Payments appeared first on PaymentsJournal.

The US payments industry is undoubtedly ripe for change. Before the unprecedented shock of COVID-19, digitization and payments transformation initiatives had been organic, piecemeal and predominately the preserve of the largest banks.

Now, increasing pressure means that financial institutions of all sizes are working to define a digital strategy to unlock new opportunities, drive business value, and stay competitive. But beyond the immediate impact of COVID, what underlying trends are accelerating digitization in the US?

1) Real-time payments – the stimulus for change  

Real-time payments have been met with a degree of caution by US financial institutions. Risking traditional profit generators in return for potential revenues down the line is a gamble many have not been willing to take. But immediate payments are coming to the US whether banks like it or not.

Major payments infrastructure providers, including NACHA and The Clearing House (TCH), have moved to encourage immediate payment adoption in recent years. But the Fed, frustrated with a slow rate of progress, has announced that it is pressing ahead with the implementation of its FedNow system (despite significant industry objection). Although the Fed’s true intentions are open to interpretation and this may just be a play to accelerate private initiatives, it is a clear signal that they mean business.

This means holdouts risk their own ‘Kodak’ moment if they miss the huge opportunities in front of them by fixating on traditional revenue streams. Banks are in a position to support innovation across entire industries such as healthcare, which could be released from the constraints of paper-based bureaucracy and slow, expensive transactions.

Another opportunity that can be unlocked via instant payments is ISO 20022 (used in the TCH RTP system). It is the future of payments messaging standards and can greatly enhance various payments processes through increased data-carrying capabilities. More importantly given the current climate, citizens reliant on federal or state support can benefit from RTPs combined with additional data to immediately access emergency funds.

2) The kids are growing up

The US is getting older. Consumers who were 10 when the iPhone first launched are now 23. This means we are seeing a ramp-up of digitally native Gen Z consumers (roughly those born between 1995 and 2010) accessing banking services.  

Demographics are an inexact science and not perfect predictors (there are technophobe college students and 100-year-old Instagram influencers), but we can detect noticeable trends.

Younger customers don’t usually choose a bank because there is an ATM in their neighbourhood, a slightly better interest rate or an advert in the newspaper. Rather, a strong digital presence, personalised tools, rewards and experiences, and the trusted recommendations of friends and family, will have a more significant impact on customer acquisition.

Banks must look at the effect this will have on their longer-term digitalization strategy and be able to segment what this emerging customer base might want and how they will interact in years to come.

3) Checkmate? Evolving corporate requirements

Corporate treasurers are people and their experience of seamless, immediate payments in their personal lives shapes expectations in the workplace. Although check usage for business-to-business (B2B) transactions is still the norm in the US and barriers remain, corporates are increasingly demanding the ability to transact in a real-time, omnichannel environment, 24×7.

The benefits are clear. Corporate treasurers stand to enjoy enhanced liquidity management and transparency, greater control over payments and enhanced data for reconciliation purposes. And for consumers, alternative digital payment options such as buy now pay later promote choice and flexibility.

4) Increasing competition

A significant consequence of emerging consumer and business demand for digital offerings is the increase in competition from fintechs, technology giants and other third-parties. Traditionally, incumbent banks have enjoyed the advantage of consumer trust to offset more limited innovation. But as consumers become more comfortable entrusting their financial transactions to non-banks, banks must differentiate and digitize to remain competitive.

Data is where the technology giants excel, and their ability to personalise experiences and emotionally connect with their users is unprecedented. Banks need to learn from the positive aspects of this model to better understand their users and deliver meaningful, useful products and services.

For data to become the cornerstone of a banks’ customer relationship and take services to the next level, breaking the channel silos and extracting value from a comprehensive dataset will be decisive. But with only 18% of banks reporting that they are in the process of shifting from a transactional revenue model to a data-driven revenue model, this work has some way to go.

Taking customer propositions to the next level

Customers now expect services that work for them, not their banks. All banks, no matter the footprint, need to move quickly to offer a broad digital service platform that adds value to both the customer and the bank.

By defining a robust payments transformation strategy, banks of all sizes can remain fiercely competitive by rapidly lowering costs, unlocking revenues and promoting innovation.  

To learn more about accelerating payments transformation and defining a digitization strategy, download our whitepaper here.

The post A Sleeping Digital Giant Wakes? 4 Key Trends Accelerating Payments Transformation in the US appeared first on PaymentsJournal.

Years ago, the European Central Bank began to push the market to develop a payment network to rival the U.S.-based card networks. The Europeans want this for control and, I suspect, a bit of regional pride. While the central bank has been chasing this dream for a while, it has yet to materialize.

A recent article in Forbes details the reasons why an alternative payment network has yet to arrive, including:

“…economies of scale, competition authorities’ pressure on interchange means and finally, and most importantly, the people who run banks couldn’t care less about it.”

But, the world has changed and the recent attempts may succeed thanks to the pandemic, according to this article:

EPI (European Payments Initiative) is the latest European attempt to build a scale rival to Visa and Mastercard (and perhaps, in the future, WeChat and Alipay). They’ve tried before and it’s gone nowhere. This time it might work because the pandemic will accelerate the transition to contact-free, in-app, omni-channel payments.

Originally backed by twenty French and German banks, the idea was that EPI would build a unified pan-European payment system, offering a card for consumers and merchants across Europe, a digital wallet and P2P payments. The banks backing the project (BBVA, BNP Paribas, Groupe BPCE, CaixaBank, Commerzbank, Crédit Agricole, Crédit Mutuel, Deutsche Bank, Deutcher Sparkassen- und Giroverband, DZ BANK Group, ING, KBC Group, La Banque Postale, Banco Santander SAN, Société Générale, UniCredit) are all serious players and can put muscle behind the initiative so unlike so previous attempt at a third scheme, this one has legs.

The unified real-time payments network in Europe may, in fact, provide the infrastructure to support a new way to pay, but the same hurdles still exist: a new network’s supporters will need to build scale, a lack of revenue opportunity is a real distractor, and I am not sure the market really cares yet.

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

The post Europe’s Plans for a Card Network of Its Own appeared first on PaymentsJournal.

This PaymentsSource article describes how SWIFT expects to pivot into more transactional services beyond financial messaging in order to support the more modern demands of the banking community. This is especially designed for enhancing the cross-border use cases, where lots of innovation has been underway for several years. 

Some readers may recall the various public challenges over the past few years regarding the use of blockchain networks in trade situations. It has yet to materialize into anything scalable but nonetheless continues to gain traction.

‘Swift’s latest strategy comes four years after it established the Global Payments Innovation service to address the need for all banks in the network to follow similar standards, communication procedures and preparations for technology advancements. In many ways, GPI was Swift’s way of saying it was time to get the most out of legacy systems, so that new technology and procedures could operate in tandem….“We are innovating the underlying infrastructure that financial institutions use to make transactions run even faster end-to-end, and at the same time further reducing costs for the community through industry-shared services in the areas of cyber, fraud and compliance,” Swift CEO Javier Perez-Tasso said in a Thursday press release. “We will introduce data innovation that embeds risk and control elements expected from Swift, creating peace of mind for business-critical operations.”

Mercator Advisory Group recently covered the B2B cross-border space in a member viewpoint and, of course, we discussed the SWIFT gpi initiative, as well as the transition to ISO 20022, along with various other industry innovations. We have not received a briefing on this announcement, which is rather general in nature, but the direction seems logical and comes at a time of management transition, so it makes sense to us.

‘Last year, Swift expanded the GPI service to corporations, allowing those businesses to initiate and track payments across multiple banking partners from a single source….“Citi is very supportive of this new path that Swift is embarking on,” Manish Kohli, global head of payments and receivables at Citi, said in the release. “With its new platform strategy, Swift is evolving from just making incremental improvements to its traditional store and forward messaging capabilities and towards truly transformative change based on API dynamic connectivity, a vastly improved data model and extremely relevant ‘payment orchestration’ services.”…The “reimagined Swift platform” builds on the progress of GPI, and moves network banks toward payment ubiquity with the ability to make frictionless and instant cross-border payments across the network, Kohli added.

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post SWIFT Pivots To Transactional Services Beyond Financial Messaging appeared first on PaymentsJournal.

Although the Federal Reserve made waves last summer when it announced it was developing FedNow, a real-time payment platform to compete against The Clearing House’s RTP, there were few specific details about the upcoming service. This changed last month when the Fed provided more information on FedNow, including core functionality and details related to the release date.

To help unpack the Fed’s announcement, PaymentsJournal sat down with Dr. Jack Baldwin, Chairman of BHMI, and Sarah Grotta, Director of Debit and Alternative Products Advisory Service at Mercator Advisory Group.

The Fed is trying to release FedNow as quickly as possible

In the announcement, the Fed revealed that FedNow is still on track to be released in 2023 or 2024, “with a more specific time frame to be announced after additional work is completed.” Although it is notable that there have been no delays, this news disappointed many who hoped for a quicker release.

With severe COVID-related economic disruption gripping the nation, some wondered if the Federal Reserve would release FedNow even sooner. The thinking went that another rail supporting real-time payments could help companies as they rapidly transition to digital payments, as well as the government as it moved to disburse emergency payments to shore up the economy. But as the Fed’s recent announcement indicated, the service will not come out any sooner.

“I’m not sure that the Fed is going to go any faster,” said Baldwin, pointing out that since the Federal Reserve solicited feedback from the industry, it is well aware that many financial institutions, especially smaller ones, are interested in real-time payments and want FedNow to come out as soon as possible.

As a result of this feedback, the Fed was already working to roll out FedNow on an expedited timeline.

FedNow will be rolled out in phases, with more functionality added later

When the Fed first revealed it was building its own real-time rail, it listed a set of functions and features that it intended to have as part of the overall FedNow functionality. But in response to the requests to roll out FedNow as quickly as possible, the Fed will release a more limited product at first, and then roll out additional features later.

In the most basic sense, FedNow will be exactly what the Federal Reserve promised: an instant payment platform that allows users to transfer funds within seconds. (The Fed prefers to use the term instant payments rather than faster or real-time payments, two terms that often get mixed up). Crucially, once the payment has been successfully completed, it is irrevocable.

Here are the other central aspects of FedNow when it launches:

• Available 24 hours a day, 7 days a week, 365 days a year: This means that many smaller institutions will likely have to use 3^rd parties to support business demands outside of normal banking hours.
• Credit push payments, not debit pull payments: A potential receiver of a payment cannot reach into the payer’s account to withdraw the money. Instead “each individual payment transfer needs to be authorized by the payer,” explained Baldwin.
• Request for payment functionality: Although FedNow will not allow receivers to pull transactions, it will support request for payment functionality. This allows the receiver to send a message to the potential payer asking for money; the prospective payer can accept or reject the request. Baldwin and Grotta explained that much of this messaging capability will be built by 3^rd parties.
• Must have an account with the Federal Reserve: Only banks that maintain a reserve account with the Fed will be able to use the platform.
• Liquidity tools: While the details are still a little hazy, FedNow will allow a bank with deficient reserve funds to get a bank with surplus reserve funds to transfer funds into its reserve account, “thereby getting the deficient bank above the minimum requirement for reserve levels,” explained Baldwin.
• Fraud tools: FedNow will provide data to user banks to help them identify fraud trends. However, the onus of stopping fraud still resides with the banks.

There are some notable features missing

While the initial launch does have some capabilities beyond merely facilitating instant transactions, other features are conspicuously absent.

• No proxy directory: Since inputting bank account information can be challenging, some platforms allow users to find and pay others by using other types of information, including telephone numbers or email addresses. FedNow will not allow for this at first, although the Fed has stated this could change in later iterations of the platform.
• No APIs: Service providers will be unable to provide overlay features and functionality because, at least at first, FedNow does not have an API.
• No interoperability: The FedNow network will not be able to communicate with and transact across The Clearing House’s RTP network.

The lack of interoperability is important (and hopefully temporary)

Both Baldwin and Grotta highlighted the lack of interoperability as very important. “I think [this] is the biggest thing that’s not going to be there,” said Baldwin.

Once FedNow goes live, there will be two major real-time payment rails but they won’t be able to work together. Although the Federal Reserve wants to facilitate interoperability, The Clearing House “is not interested,” explained Baldwin. Until the two sides are able to negotiate through their differences, it will be up to 3^rd parties to step up and offer products that allow users to transact across the two rails.

“We absolutely as a payments industry need to figure that one out collectively,” Grotta said.

The post The Fed Announced More Details on FedNow. Here’s What You Need to Know. appeared first on PaymentsJournal.

One of the markets hard hit by the global pandemic has been international remittances. This graph from World Bank and Pew Research Center makes that point:

But that hasn’t stopped market participants from developing and enhancing solutions. One example is the partnership formed by PayPal and several of its brands with Visa and the Visa Direct global push payment network. Visa Direct and also Mastercard Send have been growing domestically for person-to-person payments and business-to-consumer disbursements, but as more faster and real-time payment options become available at less expensive price points, focusing on cross border and cross currency markets makes sense. 

These debit networks have a clear advantage with already built global networks and foreign exchange capabilities.

This article on Yahoo Finance provides the announced details of the partnership:

Whether sending money to a family member in another country or obtaining same-day access to earnings, fast and secure digital payments have become an essential part of how the world pays and gets paid in the wake of COVID-19. Visa Inc. (NYSE:V) and PayPal (NASDAQ: PYPL) today shared details about an extension of their global partnership, which will expand real-time access to funds for consumers and small businesses that are sending or receiving money via PayPal, Venmo or Xoom. This collaboration expands PayPal’s Instant Transfer service, which leverages Visa Direct for real-time payment capabilities, to global markets and enables fast domestic and cross-border digital payments.

The global partnership will also enable PayPal to extend global white label Visa Direct payout services through PayPal and its Braintree, Hyperwallet and iZettle product solutions. This expansion follows the successful launch of the Instant Transfer service across North America and other markets in Asia Pacific and Europe.

Real-time access to earnings has become a critical component of improving cash flow for small and microbusinesses. Seventy-six percent of U.S. SMBs have reported struggling with cash flow shortages in the last few months³, with 91 percent expressing interest in real-time settlement capabilities⁴. Through Visa’s collaboration with PayPal, eligible PayPal, Braintree, iZettle and Hyperwallet merchants will be able to access their money quickly and efficiently, eliminating the need for paper-based processes that can delay quick access to funds.

For more information, visit the Visa Direct page and PayPal’s Instant Transfer page.

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

The post PayPal and Visa Partner for Faster Remittances appeared first on PaymentsJournal.

PNC announced this week that it is offering business clients the ability to send payments to consumers though Visa’s debit push payment solution, Visa Direct. While PNC is not the first bank to integrate push payments into a cash management offering, it does represent the growing adoption of faster payments and the value of an account alias or proxy. 

A business using this service can send a payment to a consumer’s account without knowing the checking account details; instead all that is needed is consumer’s more readily available debit card number. Interestingly enough, PNC also supports The Clearing House RTP solution for real-time transactions. 

Here’s more about this product launch from Finextra:

“PNC remains committed to expanding our digital payment capabilities and ultimately, transforming the payments industry with solutions that keep business moving,” said Chris Ward, executive vice president and head of product & operations, PNC Treasury Management. “This push-to-debit card payment capability is complementary to our other offerings and will provide convenience, immediacy and payment choice based on our clients’ needs.”

Built through a collaboration between PNC and Visa, through Visa’s real-time2 push payments platform, Visa Direct; Direct to Debit Card looks to bridge the gap in business-to-consumer payments by providing businesses with an easy, convenient way to pay consumers without using bank account numbers or third-party payment apps. This solution routes payments to consumers using their 16-digit debit card number, which are processed in real-time. Companies can utilize Direct to Debit Card for a multitude of business needs, including traditional payroll processing, paying on demand and independent contractor payments.

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

The post PNC Expands Its Payments Solutions with Visa Direct appeared first on PaymentsJournal.

Account validation is one of the most important, yet least discussed, aspects of the payments lifecycle. Having the ability to verify an account prior to approving the transaction reduces the likelihood fraud will occur. An effective account validation protocol can also decrease the amount of chargebacks and other costly mistakes that eat into a merchant’s revenue. Yet despite the benefits of being able to verify an account before approving a transaction, not all merchants have a protocol in place to do so. How will new ACH network rules affect this?

For merchants utilizing the ACH Network, this will soon change. Nacha, the organization overseeing the ACH Network, currently requires originators of WEB debit entries to use a “commercially reasonable fraudulent transaction detection system” to screen for fraud. But beginning on March 19, 2021, the rule will change to explicitly require “account validation” to be part of the fraud detection system.

Merchants relying on fraud solutions without account validation capabilities should learn more about the rule change and pursue ways to ensure compliance. For these merchants, GIACT’s white paper “Securing Faster Payments: Addressing the Account Validation Rule” is great resource to start with.

Faster payments create opportunities for fraudsters

GIACT’s white paper notes that Nacha’s rule change comes as faster payment services, including Nacha’s Same Day ACH, have seen a significant uptick in traffic recently. For instance, Same Day ACH volume grew 37% in the second quarter of 2020 compared to the same period in 2019. As Same Day volumes have grown, so, too, has the dollar amount of transactions, up 33% in the second quarter of 2020 compared to the year prior.

Experts point out that this increase in faster payment volumes increases the risk for fraud.

“With faster and real-time payments beginning to enter the mainstream of the U.S. payments industry, the risk of fraud is increasing in tandem,” said Sarah Grotta, director of Debit and Alternative Products Advisory Service at Mercator Advisory Group. “This is because bad actors are looking to take advantage of untested networks, processes, and the inherently shorter timeframes for identifying problematic transactions.”

All merchants will be impacted

Because of how critical account validation is when it comes to stopping fraud, Nacha is making it a mandatory capability for merchants. For those working to fight fraud, the change is a welcome one.

“The latest rule change from Nacha is a welcome step when it comes to strengthening fraud protections,” said Kimber Johnson, EVP, Strategic & Client Relations at GIACT. The change will specifically impact Article Two, Subsection 2.5.17.4 (Additional ODFI Warranties for Debit WEB Entries).

When the changes take effect, any payment originator (merchant) that processes WEB debits will need to have some form of account verification. All merchants using the ACH network will be obligated to do so, regardless of their size or industry. Everyone originating WEB debits, from insurance companies to loan providers, will need to comply with the rules.

Since such a large assortment of companies use the ACH network, a whole range of use cases may be impacted by the new rules. While the list is by no means exhaustive, here are some key payment examples that GIACT identified, specifically if account information is being collected by the originator:

• Insurance company payments
• Contributions to Individual Retirement Accounts, SEPs, 401Ks
• Point of sale purchases
• Utility payments
• Tax payments
• Charitable donations
• Installment loan payments, including car loans, credit cards, mortgages, HELOCs
• Membership payments

Some solutions are more effective than others

Fortunately for merchants who need to change their fraud evaluation platforms to comply with the rule change, there are many ways to do so. However, not all the solutions are equally effective at stopping fraud or working within a faster payments context.

One solution is an ACH prenotification, commonly referred to as a prenote. It is a zero-dollar transaction that an originator sends to the issuing bank prior to an actual debit or credit. It is meant to validate the routing and account number at the issuing bank before sending through the actual transaction.

While the prenote is effective at confirming the account number, it does not offer any information about the account itself, including the activity levels, status, or ownership. It also takes up to three days to complete, rendering it unhelpful for faster payments. Another salient problem is that the issuing bank is only required to respond to the prenote if the account does not exist, meaning that payments can still be sent to the wrong account so long as it’s a valid account number.

Trial deposits, also called a micro deposit, are another solution. The trial deposit approach consists of making a small deposit to the receiver’s account prior to the actual transaction in order to verify the account. However, there are issues that should be considered. First, it takes one to two business days for the trial deposit to be deposited in the account, making it incompatible with faster payments. Second, it only validates that the account can accept a payment, not who owns the account.

The white paper also explores solutions called account aggregators, which are third parties that are provided with the username and password of an account in order to login to the system and verify the account is open. When considering this solution, it is important to note that the account owner must trust a third party with their sensitive data. Furthermore, this approach can only confirm that an account is open; it does not determine the account’s standing with the financial institution.

So while these three solutions may result in a merchant being compliant with the new rules, they come with a range of problems. GIACT identified four areas that an effective verification system would validate:

1. Account status
2. Payment history, particularly NSF or chargeback history
3. Ownership, and matching ownership to the payment originator
4. Consistency of PII, including name, address, phone number, email and more

Merchants interested in having a robust fraud detection system should consider looking for solutions that meet these four criteria. One solution is offered by GIACT called the EPIC Platform. It can be implemented using a single API and covers these four areas. It also works in real-time, allowing merchants to provide a seamless experience to their customers.

If you’d like to learn more about NACHA’s rules or the EPIC Platform, you can read the white paper by filling out the form below.

The post ACH Network Rules Governing Account Validation Requirements Are Changing. Here’s What Merchants Need to Know. appeared first on PaymentsJournal.

One of the most buzzed-about trends in the payments industry is the rise of real-time and faster payment options. In recent years, more and more consumers and businesses have used novel payment methods to send and receive money faster than traditional payment options have allowed. Interest in real-time and faster payments grew further when the Federal Reserve announced last summer that it was developing FedNow, a real-time payment rail to provide an alternative to The Clearing House’s (TCH) RTP rail.

Despite all the news about faster and real-time payment methods, there is a lot of confusion on the topic. While many use the terms interchangeably, there are different payment types across the spectrum. Moreover, many people are unsure of how common faster and real-time payments are, or even what the use cases consist of. Finally, banks and other financial institutions are often unsure of how to approach using these emerging solutions.

To help the public better understand faster and real-time payments, PaymentsJournal sat down for a discussion with Sarah Grotta and Steve Murphy, two experts from Mercator Advisory Group. Grotta is the director of Mercator’s Debit and Alternative Products Advisory Service and Murphy is the director of Mercator’s Commercial and Enterprise Payments Advisory Service.

During the conversation, Grotta and Murphy discussed the difference between faster and real-time payments, the state of real-time payments in the U.S. by use case, and how banks should be approaching these payment methods.

Confusion in the market and the need for clarification: Faster payments vs. real-time payments

“Many in the industry will use the terms faster and real-time fairly interchangeably, and certainly I’m guilty of that,” said Grotta. “But I think that really just points to a bit of the confusion in the market and the need for clarification.”

Put simply, real-time payments are not the same as faster payments, but they are similar. According to Grotta, the best definition of faster payments is laid out by the Federal Reserve’s Faster Payments Task Force.

According to the task force’s definition, a faster payment solution is “a ubiquitous, safe, faster electronic solution for making a broad variety of business and personal payments, supported by a flexible and cost-effective means for payment clearing and settlement groups to settle their positions rapidly and with finality.”

In other words, a faster payment is a payment method that posts and settles payments faster than traditional payment rails. Examples of faster payment solutions include Nacha’s Same Day ACH, Zelle, and debit push payments. “They’re all fast, but they don’t necessarily settle in real-time,” explained Grotta.

In contrast, real-time payment solutions do settle in real time; payments are initiated and settled almost instantaneously. A prominent example of a real-time rail is The Clearing House’s RTP Network. The Federal Reserve’s FedNow will also be a real-time solution.

To summarize, while real-time payments are a form of faster payments, not all faster payments are real-time.

Over half of U.S. bank accounts are connected are accessible via real-time rails

Even with the confusion around terms, real-time and faster payment methods are rather common. Murphy explained that the latest information from TCH indicated that 28 banks are directly participating in the RTP network.

“What that means is that they are connected to the network and can at least receive real-time payments,” said Murphy. He also noted that there are 19 third party service providers (TPSPs) that are connected to RTP and are capable of providing some level of service to depository institutions. An additional 13 banks are accessing RTP through these TPSPs.

While these numbers may seem low, the amount of bank accounts involved is quite large. By the end of 2019, the RTP Network was reaching nearly 50% of all U.S. bank accounts, according to TCH. The organization predicted that by the end of 2020, almost all bank accounts would be connected.

However, Murphy reasoned that this goal may not be attainable due to COVID-related slowdowns. He estimated that only about 65% of bank accounts are capable of being accessed through RTP at this time. 

The many use cases of real-time and faster payments

The most common use case for faster payments is P2P transactions. Platforms such as Zelle and Venmo have been immensely popular among consumers looking to quickly send and receive money. In fact, P2P transactions had been growing around 50% year-over-year prior to the pandemic, said Grotta. Now with COVID-19 disrupting traditional ways of life, P2P volumes will likely rise further.

P2P payments are also becoming real-time as well. Grotta explained how Zelle has integrated with TCH’s RTP, meaning that financial institutions that have integrated into RTP can receive and settle Zelle P2P transactions in real time.

Another use case is in business-to-consumer (B2C) transactions. The most common B2C faster payment use case is insurance payments. Grotta also highlighted a growing number of rebates and refunds being made along faster or real-time rails, in addition to payroll solutions, especially for gig workers. Consumer-to-business (C2B) transactions along real-time or faster rails are much less common but on the rise nonetheless.

Similarly, business-to-business payments along real-time or faster rails is relatively uncommon. Back in March, Murphy and Grotta published a report detailing the different RTP use cases in the B2B space based on extensive interviews with product managers at various banks. They found that the use cases were limited, although some companies were using these rails to fund payroll accounts and make last-minute invoice payments.

Update on FedNow

The Federal Reserve recently provided an update on FedNow that offered more details about the proposed real-time rail. Grotta noted that based on this announcement and her own research on the topic, it appears as though FedNow will offer the same capabilities as TCH’s RTP network.

This is important because ideally, FedNow should be interoperable with RTP. While there are no plans to make them interoperable initially, Grotta is hopeful that the similarities between the two rails will make interoperability easier to achieve in the future.

When it first debuts, FedNow will offer features including simple fraud management tools and some liquidity management capabilities. The initial launch will not include a directory, though Grotta noted it could be added in the future as The Federal Reserve updates and expands FedNow.

FedNow is still on track to go live in 2023 or 2024.

Banks should start exploring faster and real-time payments now

“Many FIs are still really unclear as to what the various faster payment systems do,” pointed out Murphy. Many do not even know what the RTP rail entails. Therefore, “the first thing to do is make sure that you know what the RTP messages are and what capabilities the network provides; what can that bring to your institution on behalf of clients?” he continued.

Because faster and real-time rails are so new, it can be hard to determine the level of interest among customers. Grotta recommended that banks look at how many of their accounts are receiving payments from these payment methods to determine interest levels. For example, an uptick in Same-Day ACH transactions could be an indicator that a bank’s customers are interested in faster payment capabilities.

Then banks should consider how demand will change in the coming years as more fintechs and competitor banks offer real-time payment capabilities. If a bank decides to wait, it may miss out. As a result, Murphy recommended that banks try to stay up with the curve rather than fall behind.

Those interested in learning more about faster and real-time payments should register for Mercator Advisory Group’s upcoming webinar on the topic. You can register by filling out the form below.

The post The Distinctions Between Faster Payments and Real-Time Payments appeared first on PaymentsJournal.

This release was in GlobeNewswire and announces a new service called Pay Direct from Bottomline Technologies, the New Hampshire-based payments technology company. The release’s title and some content seems to indicate that the product is being positioned as a receivables tool, however both buyers and suppliers can benefit. The solution is available in the U.K. at present.

Here’s more from article:

‘As an Open Banking payment initiation service, Pay Direct enables online businesses to receive funds directly from the payer’s bank account via Faster Payments. Using Pay Direct, the payer initiates the payment from their trusted bank application whilst remaining in the business’s online journey, ensuring a consistent brand and user experience. This way of processing an online payment offers an attractive alternative for merchants looking to reduce card fees, benefit from quicker settlement and improve reconciliation.’

Mercator Advisory Group has not received a briefing on this particular solution, but through the open banking initiative across Europe, third parties can initiate payments while remaining in the buyer workflow using APIs for a seamless execution. In this case, Pay Direct accesses Faster Payments, the U.K. real-time rails, and settles immediately with an online merchant/supplier. It is another option versus direct debits and card-based payment tools. The release does emphasize the cash collections side of things so we assume that is where major adoption efforts will be targeted.

“This is a great example of Open Banking giving merchants the ability to receive instant payments from their customers,” said David Beardmore, Ecosystem Development Director, Open Banking Implementation Entity (OBIE). “It is encouraging to see that despite these challenging times, we have companies like Bottomline in our thriving ecosystem who are leveraging Open Banking technology to deliver greater value and improved choice.”

We also assume further geographical expansion since real-time payment systems and open banking initiatives are fairly widespread at this time across the globe.

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

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The evolution of the payments infrastructure now brings us to an era where convenient, secure, and agile payment solutions are revolutionizing the way money is exchanged and business gets done. That evolution was progressing in a predictable path, pre-COVID-19. Given the new realities of the current COVID-19 crises and the likely liquidity and risk management challenges to follow, the value of real-time payments will only increase while its spread accelerates.

For those in the payments space, 2020 began with the conversation increasingly focused on what banks, businesses, and consumers can do in real time, as well as continuing the shift from cash to digital methods. 2020 will end with immense pressure to enable real-time payments along with multiple adjacent value-adds.

One such solution high on the payment industry’s roadmap is Request to Pay; referred to as RTP in the U.K., Request 2 Pay (R2P) in Europe, Request for Payment (RfP) in the U.S., and UPI payments in India. This new payment solution is set to positively change the direction of all payments, including digital. Why? Because the reason for the request from the payee is central to the transaction, and communication between payee and payor is the key to unlocking widespread adoption.

Messaging meets payments

Back in the 90s, when text messaging was introduced, few thought that one day short messaging services would become the world’s favorite mode of communication. The current popularity of platforms such as Slack, Facebook Messenger, and WhatsApp is an indicator of the change in social behavior and it shouldn’t come as a surprise that payment transactions are now taking place on these messaging platforms.

Peer-to-peer payment services integrated with messaging platforms, such as Venmo in the U.S. or Tikkie in Europe, are growing in popularity. But in these cases, two separate platforms are used: one to create the payment link or invoice and another to share the link using a messaging platform. Request to Pay is a big improvement in this regard. It is a messaging platform that includes billing and payments capability, all rolled into one unified platform that enables an end-to-end audit trail.

The potential for a thriving payment ecosystem

Request to Pay will be a new, flexible way for bills to be managed between people, organizations, and businesses. It has been created to complement the existing payments infrastructure with messaging services and gives payees the ability to send a ‘request’ message (with details or attachments) for a bill rather than simply sending an invoice. For each request, customers will typically be able to pay in full, pay a partial amount, request an extension, decline, or contact the payee.

Not only does Request to Pay offer a great customer experience, it also relieves various pain points for both individuals and businesses. And it works on an open standard, which means that the solutions developed and maintained are done via a collaborative process to facilitate interoperability and easier data exchange among different products or services. This should simplify the continued rollout of Request to Pay and enable widespread adoption.

Benefits to individuals, businesses, and banks      

Flexibility and control for individuals

For individual payors, Request to Pay brings the convenience and the flexibility of partial or even split payments (when applicable), offering an increased level of financial control. In instances when payors are short on cash, they have the option to communicate and ask for an extension or to make a partial payment. This not only helps individuals avoid fees, it also offers a greater level of control over managing their credit score and banking relationships.

Clarity and cash flow for businesses

Request to Pay provides a well-rounded solution designed to help businesses overcome various challenges. First and foremost, with Request to Pay, businesses can improve the speed of payments (straight through processing) and have visibility over the entire audit trail – from sending bills and invoices and minimizing errors in managing payments, to getting insight into cash flows with partial or delayed payments and hassle-free reconciliations. By analyzing data on this end-to-end audit trail, businesses can gain a greater understanding of their liquidity, giving them the opportunity to optimize operations or course-correct when need be.

According to a report by Pay.uk, billers in the U.K. will save up to £1.3 billion per year in billing costs alone. Additional efforts around chasing late payments, sending follow up statements, awaiting replies, and other time delays add up to staggering amounts. A Request to Pay solution can curtail these costs with its clear audit trail, and reconciliation also becomes easier for the same reason. Lastly, the visibility afforded by capturing customer preferences enables businesses to take preemptive measures and create programs or services that offer a better customer experience, which may help improve brand loyalty.

New opportunities for financial institutions

Request to Pay creates opportunities for FinTech companies and other financial institutions to provide overlay services. Banks can provide revenue-generating micro loans to customers who are falling short on cash and have a fast-approaching deadline. And third-party providers could also offer aggregation services using open banking APIs (e.g. Yolt), providing users with a view of all pending payments associated with their linked accounts. Such a feature would create opportunities for better cash forecasting and other value-added services like recommendations (e.g. cancelling unused subscriptions), as well as hints and nudges (e.g. cash availability projections based on bill payment dates).

Request to Pay can also provide rich data about customers such as their spending habits and preferences. This data can then be used for cross selling new or preferred products or services, which creates the potential for new revenue streams.

The impact of COVID-19

An immediate and direct effect of the COVID-19 pandemic on payments has been the reduction of cash, check, and even card transactions while people practice social distancing. The implications of this event will be long-lasting, and the economic landscape may change significantly in the light of the forecasted recession to follow. Request to Pay seems to offer an even greater value-add given this new reality.

Another factor to consider is the changing nature of work. Many people experience irregularities in working patterns, especially as we see self-employment and hourly gig-work on the rise. This all leads to inconsistent cash flows, which we are likely to see more of in the near future. For the second half of 2020, as businesses strive to stay afloat, liquidity and solvency are going to be all the more important.

Request to Pay may prove an easy-to-adopt and convenient solution for businesses and individuals alike. Given the unique needs brought about in these unprecedented times, the global push for continued digitization, and the emergence of its extended value propositions, Request to Pay is poised to see the mass adoption that was promised and hoped for. And with that, its popularity should increase around the world.

The post Request to Pay: A Revolution in Digital Payments appeared first on PaymentsJournal.

MetaBank^® today announced it has joined the U.S. Faster Payments Council (“FPC”). MetaBank, N.A. (“Meta”) is committed to leading the enablement of payments technology, and this announcement marks its latest expansion within the faster payments space. Meta is a federally chartered bank, a subsidiary of Meta Financial Group, Inc.^® (Nasdaq: CASH) and a leader in providing innovative financial solutions to consumers and businesses throughout the country. The Faster Payments Council is an inclusive membership organization devoted to advancing faster payments in the United States.

A leading provider of payments services, MetaBank launched its faster payments platform in 2019. The platform has since grown to include Visa Direct and Mastercard Send alongside ACH origination, wire transfers and more. As a member of the FPC, Meta will have the opportunity to work with other industry leaders to influence the path to faster payments ubiquity.

“We are excited to join the Faster Payments Council, and to work alongside its members to drive the future of faster payments,” said Sheree Thornsberry, Meta EVP and Head of Payments. “We know faster payments are truly a win-win for businesses and consumers. For our partners, faster payment methods have created real opportunity, ultimately enabling businesses to grow, be more efficient and issue payments more quickly, while responding to consumer demand. In fact, we recently conducted research showing that 47% of consumers would be more willing to do business with a company that offers faster payment options.[i]”

Through this membership, Meta’s partners will gain access to the latest faster payments news and information, implementation support and education, and benefit from Meta’s participation on work groups and committees as well as from its role in shaping the future of faster payments.

“A key goal of the Faster Payments Council is to make ubiquitous faster payments a reality for all,” said Reed Luhtanen, FPC Executive Director. “Meta has a robust legacy in payments and is a known leader in providing innovative financial solutions to consumers and businesses. We are thrilled to have Meta join the Council to collaborate with other industry leaders as we work to grow faster payments awareness and adoption.”

About MetaBank, N.A.

MetaBank^®, N.A., a federally chartered bank (“Meta”), is a subsidiary of Meta Financial Group, Inc.^® (Nasdaq: CASH), a South Dakota-based financial holding company. Meta is a leader in providing innovative financial solutions to consumers and businesses in under-served niche markets and believes in financial inclusion for all. Meta’s commercial lending division works with high-value niche industries, rapid-growth companies and technology adopters to grow their businesses and build more profitable customer relationships nationwide. Meta is one of the largest issuers of prepaid cards in the U.S., having issued more than a billion cards in partnership with banks, program managers, payments providers and other businesses, and offers a total payments services solution that includes ACH origination, wire transfers, and more. For more information, visit the MetaBank website.

About the U.S. Faster Payments Council (“FPC”)

The FPC is an industry-led membership organization whose mission is to facilitate a world-class payment system where Americans can safely and securely pay anyone, anywhere, at any time and with near-immediate funds availability. By design, the FPC encourages a diverse range of perspectives and is open to all stakeholders in the U.S. payment system. Guided by principles of fairness, inclusiveness, flexibility, and transparency, the FPC uses collaborative, problem-solving approaches to resolve the issues that are inhibiting broad faster payments adoption in this country. For more information, please visit FasterPaymentsCouncil.org.

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One of the big questions about the growing market for real-time payments is whether solutions that attach themselves to these payment methods will replace card transactions at the point of sale and online. The European Central Bank has fostered the idea that a rival to the U.S.-based card networks should be an objective for Single Euro Payments Area (SEPA), something that has yet to materialize in a significant way. There are a few solutions that have seen some success in digital channels, particularly in countries where direct checking account debits are a more common way to pay.

PaymentsSource considers this topic in an article titled Could FIS use open banking to pry merchants away from card networks? Here’s a brief excerpt:

Merchants finally have a range of alternatives to accepting payment cards in Europe, thanks to open banking initiatives. But switching to instant payments is no easy decision, even if it’s cheaper on paper.

Interchange rates — at least in Europe — have steadily declined in recent years under regulatory and legal pressure, so the cost of accepting cards is lower than it was years ago when merchants began their fight for alternatives. Card networks have also stepped up their technology game.

Merchants considering switching to the cheaper, account-to-account payments must weigh the benefits against the costs of upgrading existing technology and changing internal processes to support an open banking-driven payment method.

Among providers looking to bring instant payments to merchants, FIS says it’s hit on a solution bridging these dilemmas by combining its legacy bank services with the retail-centric perspective gained in its $35 billion merger last year with Worldpay.

Still moving rather cautiously in its relatively new role as a global fintech, FIS last month rolled out Worldpay Open Banking Hub, enabling consumers to make purchases directly from their bank accounts for participating merchants in the U.K.

As the article points out, there are a lot of “wins” for merchants. They get paid immediately, fees are likely lower than card payments—even in regulated interchange markets—and transactions are final, meaning there are no chargebacks. But what’s in it for consumers? 

A network of acceptance locations hasn’t yet emerged so instant purchases are not available with consistency.  No chargebacks means consumers don’t have a consistence structure to contest transactions, unless a merchant decides to develop their own practices. And rewards and benefits that are offered through many cards are not available with real-time direct debits unless a merchant decides to develop their own. With such lopsided benefits, I suspect that real-time consumer payments will not expand much beyond the current use of direct debit volumes in e-commerce.

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

The post Real-Time Vs. Card Payments for Consumer Purchases appeared first on PaymentsJournal.

Payments transformation has emerged as perhaps the single biggest opportunity for banks. But getting payments transformation right is no easy task. With only 9% of banks nearing completion in their transformation efforts, many organisations are reporting a lack of information across strategy and best-practice. Myths and misconceptions about payments transformation can stall progress and hamper innovation; here are my thoughts on how to avoid common pitfalls and seize new opportunities.

Myth 1 – Instant payments are the end goal for payments transformation

While the first wave of instant payments adoption was largely concerned with the implementation of the system itself, the focus is now on leveraging instant payment rails to deliver value-added services to customers at speed.

‘Request-to-Pay’ (R2P) is potentially the most valuable of the new services, promising to deliver the autonomy, convenience and flexibility increasingly demanded from financial products. Similarly, QR code solutions built on real-time payment rails has the potential to revolutionise bill, physical and online payments. The potential of leveraging the ISO 20022 data standard to deliver data-driven products and services is also huge.

But to differentiate themselves from the competition, banks must do more than patch-up legacy infrastructure to keep the lights on. Expect future banking leaders to build a foundation for innovation now to enable them to seize new opportunities to their full extent in the future.

Myth 2 – Payments can’t be profitable

Payments profitability is undoubtedly challenging, but not impossible.

First things first. Banks must dramatically reduce the ever-increasing total cost of ownership (TCO) by upgrading legacy platforms. Streamlining back end systems using Cloud and Open Source, to create more responsive and cost-effective platforms, should be a cornerstone of any transformation strategy.

In the long-term, this will only take banks so far and it is true that the days of making money just processingpayments have gone.  With traditional transactional-based revenue model under existential threat, data-driven approaches must be considered.

Banks must also assess the strategic role of payments to their own organisation beyond ‘just’ processing. Outsourcing may be an appealing short-term proposition to boost overall profitability, but the long-term importance of payments should not be underestimated.

Myth 3 – The cloud is too risky for payments

With outages making the headlines all too regularly, Cloud platforms have come under regulatory scrutiny as a source of ‘systemic risk’. This is something of a fallacy. Operational resiliency issues are mainly caused by creaking legacy infrastructure, not cloud systems. And when banks look to upgrade, poor change-management has often led to high-risk migrations.

In contrast, Cloud providers’ business models are dependent on maintaining security and resilience. Consequently, they dedicate significantly more time, money and brainpower than banks ever could.

Of course, due-diligence is required to deliver the necessary resilience, security and agility. Repurposing on-premise solutions for the cloud has limitations, in contrast to Cloud-native solutions which are specifically built for the environment. In parallel, multi-cloud models are preferable to mitigate damaging dependencies and guard against a single point of failure.

Myth 4 – The only choice is in-house or outsourced

When working on mission-critical infrastructure, building in-house can seem the ‘safer’ option. Meeting the demands of payments transformation is a daunting task however, and can lead to exposure and high-risks, spiralling costs and interminable delays.  

Yet, outsourcing also creates challenges. Under pressure to move quickly, monolithic solutions from a single vendor can leaves banks reliant on expensive and rigid approaches that cannot deliver the independence, long-term flexibility and customisation demanded by modern bank customers.

Rather than think solely in the binary terms of in-house and outsourcing, hybrid ‘smart sourcing’ approaches can deliver control and flexibility.  Collaborative platforms that leverage best-of-breed products and services can help expand offerings, reduce costs and accelerate time-to-market.

Complexity, simplified

Ultimately, myth-busting payments transformation means simplifying complexity. Financial services organisations armed with simple and practical transformation plans that get to the heart of their own business strategy are perfectly positioned for success. With the right expertise, they can enable innovative new customer experiences, at lower costs and with reduced risk, to get ahead of the competition.

To learn more about myth-busting payments transformation, download this e-book.

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IT World Canada reported that Payments Canada is making progress to achieve the launch of a real-time payments platform they call Real-Time Rail (RTR). The payments modernization effort is targeting 2022 to launch, joining the already 50+ real-time networks in operation around the globe.

This article notes that Canada is in the process of selecting their technology partners and is beginning the building process. In addition to catching up with the rest of the major economies, Canada sees real time as an important capability to support the needs of fintech organizations. 

There is also an opportunity to connect to one or both of the real-time networks in the U.S. to support the hundreds of billions of dollars in cross border, cross currency exchanges that occur each year. Cross border connections of real-time platforms are being accomplished in other parts of the world, but the level of volume and associated efficiencies that could be created between the U.S. and Canada would be incredible. Here’s an excerpt from the article:

Payments Canada is forging ahead with its efforts to modernize the core payments infrastructure so it can keep up with the arrival of fintech innovations in the Canadian market.

This modernization project began in mid-2015 with consultations with more than 100 organizations within the Canadian and global payments ecosystem. From that consultation came the vision of a payments system that is fast, flexible, and secure, promotes innovation and strengthens Canada’s competitive position. It includes addressing pain points such as cross-border payments, faster, easier payment options, and transaction transparency, while providing activity-based oversight, open and risk-based access, and a platform for innovation.

Canada will be joining over 54 other countries that currently have live real-time payment systems, many of whom have selected prime contractors such as DXC, Accenture, or IBM to manage an underlying real-time payment service such as Vocalink, Equensworldline, SWIFT, or ACI. Payments Canada is now in the process choosing its suppliers for RTR.

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

The post Canada Gets Closer to Launching a Real-Time Payments Platform appeared first on PaymentsJournal.

Instant payments are the ‘new normal’. The last decade saw a ramp-up in adoption as regulation, customer expectation and technology dovetailed to create immediate, 24/7 demand for financial services.

1. Request to Pay for more control

Perhaps the most valuable new way to leverage instant payment rails is Request to Pay (R2P). R2P is an umbrella term for various scenarios in which a payee takes the initiative to request a specific payment from the payer.

Corporates have two key challenges in that they only receive funds when a customer wants to pay them, and they only receive the information the customer chooses to provide. This makes reconciliation difficult and can even negatively impact workflow and working capital.

However, the R2P options for bill presentment and payments solve these problems, significantly reducing operational cost, liability for chargebacks and fraud risk, as well as improving reconciliation and liquidity. A secure R2P service also has the potential to simplify managing receivables and reduce processing costs.

R2P also benefits consumers. As they are presented with a payment request rather than funds being debited automatically, they can enjoy more autonomy and control over their money across various channels.

As a result, several solutions have emerged under the R2P banner, such as the IDEAL scheme in The Netherlands and PromptPay in Thailand. Further traction will be gained, with EBA Clearing gearing up to launch a pan-European R2P solution in 2020. Certain banks in the US have also begun to go live with The Clearing House ISO 20022 R2P messages using instant payments infrastructure.

2. Amplify the power of QR codes

QR code solutions have surged in popularity in recent years as a simple, low-cost alternative payment method, offering consumers and merchants more choice at checkout.  

We are now seeing various banks and payments industry players reviewing their strategies to take full advantage. QR code-based solutions, combined with instant payments rails, can extend utility beyond the physical point-of-sale to include online and bill payments.

Thailand, India, China, Singapore, Malaysia and Hong Kong have all established payment services that leverage QR codes to initiate real-time payments. And although Europe and the US have been slower to adopt QR codes,  some European countries such as Sweden and Switzerland have already embraced the technology with country-wide schemes for both retail and corporate payments. In the US, adoption is market-led with several retailers such as Target and Walmart implementing proprietary QR code payment systems.

3. Leverage valuable real-time data with ISO 20022

While instant payments does not inherently provide enhanced data opportunities, most of today’s instant payments systems are built using the ISO 20022 data standard. This is due to the extended data-carrying capabilities and the added value this messaging standard can offer banks’ customers. For data to be truly valuable, it needs to be machine-readable, consistently structured and standardised – ISO 20022 enables all that.

However merely collecting data is not enough. Mining and extracting value from this data will be a decisive differentiating factor for banks and other players looking to take their customer propositions to the next level.

The good news is that banks and PSPs are well-positioned to collate and leverage data to deliver tailored interactions, unlocking new revenue opportunities while remaining compliant to stringent regulation.

4. Deliver convenience for corporates

The combination of instant and enhanced data-carrying capabilities is extremely attractive to large corporates, and in turn, greater corporate usage of an instant payment system will increase volumes and lower costs.

Instant payments give corporate treasurers greater control over their payments, allowing them to make on-the-spot payment decisions and hold on to liquidity for longer. Instant payments enable informed and timely views on cash positions, enabling management of treasury risk. ISO 20022 data- carrying capabilities also allow corporates to attach invoice data to a payment, allowing for more efficient reconciliation.

Benefits are not only limited to corporate treasurers, but also B2C treasury departments. Instant payments offer new ways to make payments to customers. As mentioned, R2P can also lower cost, reduce risk of fraud, and increase information around each transaction, all of which are key requirements for modern treasury departments.

Moreover, as domestic instant payments schemes grow, there is an opportunity to line these systems together to deliver cross-border real-time movement of both funds and data for corporate and commercial transactions.

5. Embrace new channels

As payments become increasingly embedded in our daily lives and interactions, it is inevitable that instant payments will become more ingrained in the social media experience.

This is already the case across many Asian countries, but momentum is slowly building in Europe and the US as well. For example, First Direct’s Fdpay service allows customers to make P2P payments within social media apps. In addition, Instagram, WhatsApp and Facebook are all actively exploring instant payments and checkout options. Watch this space.

Building on strong foundations

It is clear that building a foundation for innovation now will enable banks to create points of differentiation and tap into new revenue streams through R2P, QR codes, leveraging enhanced data, corporate instant payments and new channels.

But to fully realise the return on investment, banks will need to overcome the legacy payment environments many are encumbered with, and will need to develop a powerful transformation strategy to ensure their payments landscape is equipped to fully harness the benefits.

To learn more about how to maximise the value of investments in instant payments, download our white paper.

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The Expanding Role of ACH in the Area of Faster Payments

Contents

The American Economy Runs on ACH... 3

ACH Excels in a Diversity of Use Cases for Large and Small Transactions ... 4

Business-to-Business Channels .... 4

Government Channels ... 5

Business-to-Consumer Payroll Direct Deposit ... 5

Consumer-to-Business Bill Pay ... 6

Several Key Attributes of ACH Position It for the Next Generation of Payment Form Factors ... 7

Ubiquity or the Network Effect ... 7

Transaction Speed Through Same Day ACH ... 7

Efficiency ... 9

Nacha Governance ... 10

Never Standing Still ... 10

Supporting the Future of Payments, ACH Moves to an “Always On” Mode ... 12

Endnotes ... 11

Download the Report

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Request–to-Pay (R2P), (sometimes called Request-for-Pay (RfP)) is a product wrapped around real time and fast payments that adds value to both the sender and receiver.  It has been the focus of recent product development around faster payment platforms.  In short, R2P is the ability for a user, usually a business, to send a message to another user, typically a consumer, requesting a payment through a digital channel.  The most frequent use case is for bill payment.  As an example, my credit card issuer could send me a message requesting payment.  I select how much I want to pay and which account to use for funding all through a mobile app. My bill payment is compete and funds are transferred.

An opinion piece in PaymentsSource notes the benefits beyond payment speed to billers:

Corporates have two key challenges in that they only receive funds when a customer wants to pay them, and they only receive the information the customer chooses to provide. This makes reconciliation difficult and can even negatively impact workflow and working capital.

However, the R2P options for bill presentment and payments solve these problems, significantly reducing operational cost, liability for chargebacks and fraud risk, as well as improving reconciliation and liquidity. A secure R2P service also has the potential to simplify managing receivables and reduce processing costs.

It is interesting to note that Visa recently announced its pilot of a R2P solution in the UK.  More on that from an article in IBS intelligence:

Visa has completed the first request-to-pay message sent and received using PayUK’s standards, in a pilot ahead of the full commercial service launch later this year.

The request-to-pay service aims to settle transactions between businesses, organisations and individuals, designed to complement existing payments infrastructure, Visa said in a statement.

The biller will be able to directly request funds rather than sending an invoice, while the receiver is asked whether they would like to pay in full or in part, request an extension, communicate directly with the biller, or decline to pay.

Throughout the pilot project, which included more than 400 companies, Visa tested over 100 biller and consumer use cases, as well as 40 exceptions, to leverage multiple payment initiation channels and deliver a comprehensive end-to-end test.

Overview provided by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group.

The post More Than Speed, Request-to-Pay Adds Value to Faster Payments appeared first on PaymentsJournal.

When disaster hits, access to cash is critical. While there are many reasons the insurance industry should move toward real-time claim payment models, it is in the arena of calamity where the greatest urgency exists. 

Insurers recognize the difficulties people face during such unexpected events as a home fire or natural catastrophes such as floods, hurricanes and tornadoes. They help people navigate these challenges daily. Yet, the following anecdotal example is still an all-too-common experience for today’s policyholders: 

A family is out of town, and an electrical mishap causes a fire in the home while they are away. By the time neighbors realize what is happening, the fire has progressed and destroys nearly everything the family owns. Upon return, the family must immediately secure housing and attend to physical needs such as clothes, food, and daily living supplies—not to mention the emotional trauma individual family members may be experiencing. Then, when they contact their insurance company, they learn it will take several days for an adjuster to visit the site and review their claim. After the assessment, it may take weeks to receive payment. Because the family is cash poor, they are forced to use credit cards and take out loans for expenses. 

In a digital age, consumers expect better. A recent Engine Insights and VPay survey underscores these expectations: More than half of respondents said they would be willing to switch insurers to gain access to instant claim payment, including more than 90% of Gen Z and 68% of millennials. It’s why some leading insurers have already stepped up their approach by simplifying processes to require only a debit card and email address or mobile number for text to receive funds transfer within hours. In addition, technological advancement in the form of drones is emerging as a viable method for quickly determining preliminary damage estimates and initiating cash transfers quickly. Simply put, the era of real-time claim payment for disaster claims is inching ever closer. 

These movements represent good steps forward, yet research suggests that most insurers’ approaches to digital payment—including payment for disaster claims—are still lacking. The J.D. Power 2018 Insurance Digital Experience Study found that while policyholders want more digital touchpoints with their insurers, the majority fell short, especially in the area of claim processing. Automating claim payment processing is a necessary element of digital claim transformation. 

The last experience a policyholder has with an insurer is the one they will remember most. For this reason, the last mile of claim processing—payment—is a critical component of strategies aimed at improving policyholder retention and satisfaction. This becomes even more important when disaster strikes and policyholders need cash quickly to get their lives back on track. Here are three key considerations for modernizing claim payment offerings and developing a more immediate approach to disaster response. 

1. Offer more digital touchpoints and payment options. 

The landscape of digital payment technology is rapidly evolving, and consumers increasingly expect access to a variety of options. From automated clearinghouse (ACH) payment to push-to-debit and mobile epayment, insurers are wise to consider strategies that draw on the advantages of multiple electronic claim processing offerings to expand their portfolios.  

For example, ACH transactions, while popular, may delay payment for a couple of days and require that consumers provide bank account information. In contrast, mobile epayments are much faster, on average, with payment processed at the point of transaction and sent directly to a consumer’s bank account. Push-to-debit, which takes about 15 minutes or less, also ensures expedited claim payment through same-day electronic disbursement.  

In addition, allowing policyholders to process claims from any mobile device following a disaster is essential, as they may lack access to other options for communication. Knowing the status of a claim in real-time can also go a long way toward giving consumers peace of mind during a crisis.  

2. Personalize the payment experience. 

A bird’s eye view of insurance industry trends confirms that policyholders want to receive their claim payments faster, especially when faced with a crisis. In tandem with this expectation, though, consumers also want personalized experiences and control over how they receive their money. Consequently, insurers must recognize the importance of building trust through choice and acknowledge that payment preferences may vary greatly across generations.  

When funds are available for distribution, a personalized payment experience allows policyholders or service providers to select their preferred form of payment, whether it’s a digital offering or paper check. With a text or email alert, consumers can quickly indicate their preferences, which can be applied to the current payment as well as all future disbursements, if desired.  

3. Optimize security strategies. 

When it comes to electronic payment, insurers are well aware of the risks. Nearly half of insurers dealt with significant cybersecurity events in 2017, and the sophistication of bad actors is growing by the day.  

When faced with a crisis, the last thing policyholders need to worry about is whether their personal or bank account information is compromised. Insurers should design comprehensive cybersecurity strategies that consider people, processes and infrastructure. It’s a tall order for today’s lean insurance environments, and many find that the business case for engaging third-party fintech partners is an easy one to make. Companies that focus all their energy on the payment process have the expertise to not only streamline administration of payment, but also optimally protect data.  

Innovation in Times of Need  

The age of consumerism has infiltrated the insurance industry in recent years, and few situations bring heightened expectations around payment to the surface more than a crisis. Outdated claim payment methods result in highly-fragmented policyholder experiences and low satisfaction. Forward-looking insurers are taking hold of the promise of innovative digital payment technologies to respond to consumer demands and improve claim payment processes when disaster strikes.  

The post Disaster Response: The Promise of Real-Time Claim Payment appeared first on PaymentsJournal.

This referenced news release should come as no real surprise for those who follow commercial payments, especially if you have been reading postings on PaymentsJournal for awhile now, since we commented on the original announcement back in late 2019. Now, we have the next step in the process for expanding services related to Mastercard Track beyond the initial trade platform that addressed identity and compliance.  This announcement is about the official commercial launch of the Mastercard Track Business Payment Service. 

‘This launch brings improved efficiency and working capital management to Buyers and Suppliers of all sizes, which is necessary in the current economic environment more than ever. Track Business Payment Service enables Buyers and Suppliers to manage their payments more efficiently – resulting in better outcomes for both parties. Suppliers can systemically manage how they get paid for different invoices for different Buyers. Buyers can optimize and automate efficiencies in paying Suppliers with improved reconciliation to manage cash flow and capture early payment discounts.’

So the logical question is what does this new service do and where does it fit in the ecosystem? Essentially, the service is a digital platform using API-driven architecture for the exchange of information between counterparties in commercial trade transactions.  The Business Payment Service facilitates better payments choices and easier reconciliation to satisfy needs for both buyers and suppliers. If fits where banks and other third party service providers wish to utilize it in the their respective cash cycle product offerings.

In order to gain a bit more insight, we managed to have a word with  James Anderson, executive vice president of Global Commercial Products at Mastercard.  Mr. Anderson shared that the new service will be marketed through partners mentioned in the press release as well as Mastercard’s traditional bank distribution network.  This initial launch in the U.S.A. offers card payments, with ACH and real-time payments rails following on in the near future. When asked about the true value of the service for these third party providers, Mr. Anderson indicated that scaling up their own products and services for a broader global base is a major benefit. 

One of the key features of the Business Payment Service is the ability to draw upon both buyer and supplier preferences for situational payments, thereby utilizing a combination of data and analytics to provide intelligent payments choices according to variable circumstances. There is also a provision of rich data for reconciliation purposes on both sides of the transaction.  Mr. Anderson was clear that a great deal of Mastercard’s thinking in developing the Business Payment Services was done through the lens of suppliers, a shift from the traditional buyer-centric solutions approach.

“What we’re building with our partners is a fully digitalized and extremely efficient way for businesses to pay and get paid using multiple payment rails so that Buyers and Suppliers each capture new and demonstrable value from their payments activity,” Anderson said. “It gives businesses a way to maintain control, manage cash flow better and be more operationally efficient – all things that are incredibly important for companies navigating today’s economic challenges.”

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Mastercard Track Improves B2B Payment Efficiency and Working Capital Management in U.S. appeared first on PaymentsJournal.

The Federal Reserve Banks today announced the formation of a FedNow Community group for their upcoming instant payment offering, the FedNow Service. Despite the challenges that have come with the coronavirus, work on the FedNow Service remains on schedule for a 2023 or 2024 service launch.

“While we work to support the industry and our customers during this difficult time, we want to ensure that our collaboration with industry stakeholders on FedNow features and functionality continues on a virtual basis,” said Kenneth C. Montgomery, Federal Reserve Bank of Boston first vice president and chief operating officer and FedNow program executive. “The FedNow Community will help influence FedNow Service design and our development roadmap by providing input on desired service features, technology and implementation plans.”

The Federal Reserve seeks active participation from a variety of organizations that will represent the key constituents of the FedNow Service ecosystem. The FedNow Community is open to individuals who are interested in committing time and expertise to contribute to the success of the FedNow Service. Interested individuals should submit the FedNow Community participant profile form, detailing relevant experience, expertise and their organization’s role in faster payments. Over the course of developing the FedNow Service, the Federal Reserve will call upon the group, either the entire membership or specific members with needed expertise, to provide insights via focus groups, work groups, conference calls, virtual meetings, surveys and other channels. Even after gathering and traveling are safe again, face-to-face meetings are expected to be limited to key strategic milestones. Enrolled members will receive an invitation to the FedNow Community kickoff online webinar planned for this summer.

About the FedNow Service

The FedNow Service will support financial institutions’ provision of end-to-end faster payment services to their customers by allowing real-time, payment-by-payment, final settlement of interbank obligations through debits and credits to financial institutions’ balances in their accounts at the Reserve Banks. The service will incorporate clearing functionality into the process of settling each payment, allowing financial institutions to exchange the information needed to make debits and credits to customer accounts and notify customers of completed (or failed) payments. Access will be provided through the Federal Reserve’s FedLine^® network, which serves more than 10,000 financial institutions directly or through their agents. For more information, visit FRBservices.org.  

The post Federal Reserve Announces FedNowSM Community appeared first on PaymentsJournal.

Everyone’s saying it, but it continues to ring true: we are living in unprecedented times. At the time of writing this article, there have already been over 56,000 deaths and more than one million confirmed cases of COVID-19 in the United States–and these numbers are still rising.

In an attempt to contain the pandemic, state and federal governments have ordered businesses to stop in-house operations and consumers to stay at home, bringing economic growth to an abrupt stop. Of course, hitting the brakes on the economy comes with its own consequences, as millions of Americans are out of work and unemployment claims soar.

To counteract some of this economic damage, the federal government recently passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The $2 trillion economic relief package, which includes paychecks to around 150 million Americans, was signed into law on March 27, 2020. By mid-April, millions of eligible Americans began receiving their checks via direct deposit.

The stimulus package hasn’t come without challenges, however. A major challenge associated with the stimulus payments is how to quickly put money into the hands of those that don’t already have direct deposit information set up with the Internal Revenue Service (IRS).

Who’s Eligible for a Stimulus Check? 

Most economic impact payments are based on tax-paying recipients’ income, which is determined using information from tax returns filed in 2019 (or 2018 if a 2019 tax return hasn’t been filed yet). Consumers with bank account information already on file will have their stimulus funds deposited directly into their account, no action needed.

The stimulus checks are as much as $1,200 per individual (or $2,400 per married couples), plus an additional $500 per dependent child. Consumers with an adjusted gross income under $75,000 (or $150,000 for married couples) are eligible for the full $1,200, with tapering off amounts of stimulus funds available for incomes up to $99,000.

The Internal Revenue Service (IRS) has an online form on its official website for eligible tax non-filers to enter direct deposit information and avoid the lengthy wait anticipated for paper checks.

The stimulus plan isn’t perfect. If a consumer’s income has dropped since filing taxes due to a reduction in hours or a lost job, their stimulus check won’t reflect that. This may keep some workers above the income threshold, thus ineligible for a stimulus check, even if that no longer applies. Additionally, newborn babies that weren’t listed as dependents on the 2019 tax return won’t be counted, leaving some parents out of their extra $500. There are other exceptions regarding eligibility as well.

Over Half of Stimulus Checks Have Been Dispersed, but Millions Won’t See Theirs for Months

Even with these instances of people falling through the cracks, around 150 million individuals are expected to receive stimulus funds. As of April 24, 2020, the IRS has distributed stimulus checks worth $157.9 billion to 88 million individuals, according to Forbes, with another 62 million people waiting for their payments, including many that urgently need the extra funds.

Others won’t see their funds anytime soon; the process of distributing paper stimulus checks is anticipated to extend into September. Lower earners will have their checks mailed first, with weekly rounds of stimulus checks until the highest eligible earners receive their payments sometime in September.

Unbanked Households are Particularly Vulnerable

Particularly concerning, those without bank accounts, or unbanked individuals, will have to wait longer because they simply don’t have direct deposit information to provide. Yet common reasons cited for not having a bank account are not having money to keep in an account or an inability to pay bank fees, highlighting the urgent need of unbanked Americans to receive their stimulus funds.

According to a study conducted by the Federal Deposit Insurance Corporation (FDIC), which identified that 14.1 million adults and 6.4 million children were unbanked in 2017, unbanked rates are “higher among lower-income households, less educated households, younger households, black and Hispanic households, working-age disabled households, and households with volatile income.”

Clearly, it’s important that a faster solution becomes available to get stimulus checks into the hands of those that need them the most. This is especially true with the possibility of a second round of stimulus funds.

A Single Stimulus Check Won’t Cut it for Many Americans…

Additional rounds of stimulus funds would be invaluable to millions of Americans. The reality is that a single $1,200 payment is unlikely to make a significant dent in counteracting the devastating economic consequences of COVID-19. The Motley Fool recently calculated that a $1,200 stimulus check won’t cover a single month’s rent and utilities for the average American, with the average national rent for a one-bedroom apartment at $965 and average utilities just under $400.

Even as some states tentatively begin lifting social distancing and stay-in-place mandates, millions of individuals are filing for employment every week as businesses struggle to remain profitable during this economic squeeze. 26.4 million Americans filed for unemployment in the five weeks ending on April 18, 2020. Based on that data, the U.S. real-time unemployment rate is over 21%, the highest level since the Great Depression.

… But Subsequent Payments Could Be on the Horizon

It is important to note that even if a better solution isn’t put in place soon enough to correct for the drawn out process of this initial round of stimulus checks, improvements could be made for any additional rounds of stimulus funds that may be dispersed by the federal government. If additional funds are made available,, the clear pitfalls of this initial round of stimulus payments can be addressed to make subsequent rounds more efficient.

Lawmakers have yet to come to an agreement on what should be included in a CARES Act follow-up, but discussions are ongoing. Included in these discussions are not only debates regarding how much money–if any–Americans will receive for subsequent checks, but also how to improve the process of dispersing them faster. A recurring theme? Going digital.

 Will the U.S. Adopt a Digital Dollar to Distribute Funds Electronically?

Getting trillions of dollars of stimulus funds into the hands of American consumers is an enormous undertaking. In the words of Sarah Grotta, Debit and Alternative Products Advisory Service at Mercator Advisory Group, while “many have approached Treasury with new options for delivering funds electronically, there’s no word on whether any of these options are a real consideration right now.”

One suggestion has been for the U.S. Federal Reserve to create a “digital dollar” distributed through FedAccounts, which could speed up future stimulus checks. But this would likely be a time-consuming process that ultimately results in more delays. If a series of checks is to be expected, however, it may very well be a worthy investment of resources.

Receiving Stimulus Payments via Fintechs and Digital Banks 

Beyond the hypothetical possibility of a digital dollar, fintechs have largely stepped up to enable unbanked consumers to more quickly receive the relief money they desperately need. Here are a few examples of companies already speeding up the process:

• Chime: The biggest digital bank in the U.S. is piloting a way for its users to instantly receive their stimulus checks using a feature called SpotMe, which lets customers go negative in their accounts for no fee. The digital bank is taking on risk by using its own capital to front up to $200 in stimulus money to 100,000 consumers in need until government payments trickle in over the next few months. This program could expand in the future. 

• Netspend: Netspend is letting its customers load checks to their accounts through the Netspend Mobile App. They can then use their Netspend prepaid debit card when the funds become available in their account, which in many cases is within minutes.

• PayPal: PayPal is offering a service that lets consumers cash checks and have the funds credited to a “Cash Plus” PayPal account, which is free to do and immediately accessible. This means unbanked individuals can instantly access stimulus check funds when their payments come in the mail.

• Square’s Cash App: Cash App is offering its customers account and routing numbers like a bank so they can deposit stimulus payments directly to their Cash App balance. This circumvents the need for a bank account, allowing customers to set up direct deposit with the IRS, thus avoiding that long wait for a paper check.

Conclusion

The federal government’s stimulus checks are a good start, but are unfortunately unlikely to put a substantial dent in people’s financial crises—especially if they can’t access the money needed now for weeks or months.

Whether a government digital currency project (like China’s) will be taken on by the U.S. government remains unclear. Regardless, digital banks and fintechs have stepped into the space to offer electronic payment platforms that make stimulus payments easier and quicker to access by those who need it.

In any potential subsequent rounds of stimulus checks, these platforms may be even better prepared to help Americans navigate the financial hardship of the COVID-19 era. 

The post Millions of Americans Won’t See COVID-19 Stimulus Checks for Months—Digital Payments Could Change That. appeared first on PaymentsJournal.

NEW YORK, April 27, 2020 /PRNewswire/ —Volante Technologies Inc., a global provider of payments and financial messaging solutions to accelerate digital transformation, today announced that it has officially joined the U.S. Faster Payments Council (FPC), a membership organization devoted to advancing faster payments in the United States. As a member of the council, Volante will be joining as a voting member in the Technology Providers segment to further address issues that inhibit the adoption of faster payments.

In the U.S., Volante is known as the enabler of the first real-time payment over The Clearing House RTP^® network, and has been an active participant within the Faster Payments Task Force. Internationally, the company has been a driving force in payments modernization, helping banks of all sizes process real-time payments, as a service in the cloud or on-premise, for regional frameworks such as UK Faster Payments, Mexico SPEI, and EU SEPA instant. Recently, the company launched its free RTP as a service program, eliminating the onboarding and service costs typically associated with connecting to new payments rails.

“As an independent, solution-agnostic member organization, the FPC is in a unique position to work with all industry stakeholders and tackle challenges that may be more difficult to address through bilateral cooperation alone,” said Reed Luhtanen, executive director, Faster Payments Council. “We look forward to leveraging Volante’s expertise in payments innovation and transformation across the bank spectrum.”

Ganesh Srinivasan, Director Global Head of Partnerships and Alliances, Volante Technologies, said, “We’re on the verge of a transformation in how we make payments in the United States. Rapid technology innovation, cloud adoption, and the demand for smarter, faster payments, present a huge opportunity – and not just for the large banks. We want to give the smaller banks an equal opportunity to participate in the real-time revolution and build a sustainable competitive advantage as well.”

He continued, “As a new member of the U.S. Faster Payments Council, we are looking forward to sharing our knowledge to help the community define best practices and standards to help further drive the adoption of faster payments. We are fully committed to this initiative and we look forward to collaborating with our fellow members.”

The post Volante Technologies Joins U.S. Faster Payments Council appeared first on PaymentsJournal.

Most gig workers operate their daily lives with instant mobile connectivity that provides access to available job options and rich data. Unfortunately, when these gig workers are paid for their services, it’s often coming through antiquated means. Think checks or slow ACH processes that are cumbersome and use up valuable time that could be spent hustling for more work. And, when the payments need to cross global borders, the process is even less efficient and timely.

There’s a disconnect between when gig workers are currently paid and their workloads. Meaning, a small percentage of gig companies pay immediately when work is completed, but the average gig worker would put in more hours if they were paid faster. A streamlined real-time payment platform is ideally suited for gig companies that want to expand and improve the worker’s experience, regardless of where the worker lives. Here are four tips for streamlining payments for global gig economy workers.

Create Immediacy

Real-time payment methods are of course immediate. Work is done. Money is paid. With real-time payments in place, if a gig worker interacts with an end customer (driver, delivery, etc.), or if they’re a freelancer (designer, writer, etc.), the benefits of a better experience are profound. The worker has more positive experiences with the brand, is more likely to recommend them to others and more willing to perform high-quality work. Gig workers must manage variable monthly budgets, and immediate payouts allow them to understand their financial situation dynamically. The immediacy of the payments makes this happen.

Make it Flexible

Gig economy workers are flexible with when and how they work, and their payment options should follow suit. Companies that work with experienced real-time payment vendors can offer this flexibility. The gig worker receiving the funds can choose for direct sending to a debit or credit account or a physical or virtual prepaid card. On the gig company’s side, the platform features its own personalized branding and is easily integrated into existing systems. The vendor operates the complex back-end security and processes, and the gig economy receives a platform that streamlines accounting and increases worker satisfaction. This flexibility is essential for some underbanked global populations that need funds in a method that makes sense for their situation.

Boost Productivity and Loyalty

Real-time payments improve productivity because workers can focus on gigs instead of their finances. If they’re running ahead with money on the month, maybe they take a break for a day or two. Knowing they need to pull in some more dollars also helps them to take on new work with an existing or new gig provider. Real-time payments remove the waiting and worry that come with traditional payment methods. On the loyalty front, a gig company offering real-time payments can keep workers focused on their brand. This loyalty is crucial for managing and growing global gig workforces.

Give them a Tip

When Uber instituted tipping for drivers, it was a big deal. Drivers asked for it for years, and once in place, other gig economy brands followed suit. Real-time payment processing allows gig companies to separate payments specific to tips and regular pay. This can assist in budgeting for the worker, easier accounting for the company and encourage positive worker behaviors that result in tips.

As with other elements of the digital and mobile economy, real-time payments are removing inefficiency. Because in the context of the gig economy, inefficiency curtails innovation and growth for both the hiring companies and gig workers. Gig companies looking to expand globally must understand the need to attract the best gig workers, whether they’re in Omaha or Jakarta. Real-time payments integrated into a mobile-first philosophy is a primary way to develop a global group of loyal and efficient gig workers.

The post Streamlining Payments for Global Gig Economy Workers appeared first on PaymentsJournal.

This week, the U.S. Treasury Department began sending out economic impact – or stimulus – payments, in response to the COVID-19 pandemic. However, some people may have to wait weeks or months to receive their payments by mail. With its Trans@ct by 7-Eleven^® Prepaid Mastercard^®, 7-Eleven, Inc. provides a convenient solution to under- and un-banked individuals and families to help them receive these much-needed funds faster¹ than a paper check.

The Trans@ct by 7-Eleven® Prepaid Mastercard® offers cardholders an alternative to brick-and-mortar banks, and can receive direct deposit payments such as government benefits or paychecks. After registration and activation, all funds loaded onto Trans@ct by 7-Eleven card accounts are FDIC-insured. To facilitate stimulus payments, the U.S. Treasury Department is setting up a web portal to allow individuals to update their direct deposit information.* The web portal will be available as early as this week, and Trans@ct by 7-Eleven cardholders can update their account information to receive their stimulus checks via direct deposit sooner, rather than waiting to receive the payments in the mail.

“7-Eleven continues to look for ways to help our customers as they face hardships brought on by the COVID-19 pandemic,” said 7-Eleven President and CEO Joe DePinto. “We know a large number of Americans will need access to their checks as soon as possible, and we want to meet that need.”

Customers can purchase a Trans@ct by 7-Eleven card at participating 7-Eleven® stores, or they can apply online at https://www.transact711.com/. After customers complete enrollment, they will receive account information that can be used to update direct deposit information.

Here are some of the benefits of the Trans@ct by 7-Eleven® Prepaid Mastercard®.

• Reloadable – Money can be loaded onto the card at any 7-Eleven store.²
• No cost ATM – Cash withdrawals at Allpoint Network ATMs in 7-Eleven stores, or any ATM with a Trans@ct by 7-Eleven logo, are fee-free.³
• Shop – Use wherever Debit Mastercard is accepted – online, over the phone and in stores.
• Mobile app – Access account information in the Trans@ct by 7-Eleven Mobile App or in the Online Account Center, and track spending, check deposits and account balance.⁴
• Bill pay – Pay bills using the Trans@ct by 7-Eleven Mobile App, online at www.transact711.com, as well as at any 7-Eleven store.⁵
• Load checks with phone – Use iPhone or Android smartphone camera to load checks onto the card account with the Mobile App.⁶
• Text alerts – Anytime Alerts™ can be set up to send a text or email after every transaction.⁴
• Earn rewards – Regular use of a Trans@ct by 7-Eleven account earns waived fees and 7Rewards® loyalty program members can link their account to the Trans@ct by 7-Eleven card to earn points that can be redeemed for 7-Eleven merchandise.

¹ Faster access claim is based on comparison of a disbursement via direct deposit vs. disbursement via a mailed paper check. For further information, visit www.irs.gov/coronavirus/economic-impact-payments.

² Fee may be assessed by reload location and may vary from location to location.

³ There is no cost for ATM transactions performed at Allpoint or Trans@ct ATMs at participating 7-Eleven locations. Look for the Allpoint or Trans@ct logo or visit www.Transact711.com for a list of participating 7-Eleven locations. A $2.50 fee applies for each cash withdrawal made at all other domestic ATMs, plus the ATM operator’s fee, which may vary from ATM to ATM. There are other costs, terms, and conditions associated with the use and reloading of this Card Account.

⁴ We do not charge for this service, but your wireless carrier may charge for messages or data.

⁵ Bill payments may be subject to fee. Details about bill payment methods are available in the Online Account Center.

⁶ Mobile Check Load is a service provided by First Century Bank, N.A. and Ingo Money, Inc., subject to the First Century Bank and Ingo Money Terms and Conditions, and Privacy Policy. Approval review usually takes 3 to 5 minutes but can take up to one hour. All checks are subject to approval for funding in Ingo Money’s sole discretion. Fees apply for approved Money in Minutes transactions funded to your card. Unapproved checks will not be funded to your card. Ingo Money reserves the right to recover losses resulting from illegal or fraudulent use of the Ingo Money Service. Your wireless carrier may charge a fee for message and data usage. Additional transaction fees, costs, terms and conditions may be associated with the funding and use of your card. See your Cardholder Agreement for details.

*For more information on the stimulus payments, visit www.irs.gov/coronavirus/economic-impact-payments

The post Trans@ct By 7-Eleven® Prepaid Mastercard® Can Help Unbanked Receive Stimulus Payments Sooner¹ Than a Paper Check With Direct Deposit appeared first on PaymentsJournal.

Forbes announced the federal government’s solution to capture direct deposit information from citizens who don’t file taxes or don’t receive social security.  This will help to speed up the delivery of the Economic Impact Payment to individuals and decrease the number of checks in the mail.  Financial institutions may want to share this information with their customers and members:

Go to IRS.gov, which is the official website of the Internal Revenue Service (IRS).

Access the link that says: “Non-Filers: Enter Payment Info Here.”

You will be taken to Free File Fillable Forms, which a safe and secure IRS partner website.

Create an account with an email address and phone number.

Add your filing information (Single or Married filing jointly)

Add your personal information, including a valid Social Security Number

Check the box if someone can claim you or your spouse as a dependent.

If you want to be paid electronically, enter your bank information. Otherwise, you will receive a paper check in the mail.

You will be asked to verify your information with a driver’s license or state identification. If you don’t have either, you can leave this section blank.

Free Fillable Forms will send you an email confirmation that you’re all set, or whether you need to correct any errors. Once completed, Free Fillable Forms will file a Form 1040 and submit it to the IRS for you.

Here’s the official IRS website: https://www.irs.gov/coronavirus/non-filers-enter-payment-info-here

It is to be expected that scammers, who are spending more time at home like many of us, will take the opportunity to try and spoof the IRS website and grab consumer’s account details.

In the meantime, those who already have their information with the IRS have begun to receive their payments.  Here’s the current schedule for the payments which extends through September:

Stimulus checks started going out on April 9, 2020. If you filed your income taxes in 2018 or 2019 and provided your direct deposit information to the IRS, your stimulus check could be sent today. Estimated arrival time in your bank account could be on or before April 14, 2020.

The IRS will start sending paper stimulus checks to taxpayers with the lowest annual adjusted gross income first for taxpayers who filed taxes:

April 24: less than $10,000

May 1: $10,001 – $20,000

May 8: $20,001 and $30,000.

May – September: in order from lowest income to highest income based on 2018 or 2019 tax information.

September 4: any remaining checks, such as to married couples making $198,000 (the maximum joint income that is eligible to receive a stimulus check).

September 11: checks to those who didn’t provide contact information to the IRS.

Overview provided by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group.

For the original article quoted in this coverage please click here.

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A new vision for payments in the EU has been jointly issued by the European Banking Federation (EBF), the European Association of Co-operative Banks (EACB), and the European Savings and Retail Banking Group (ESBG).

Their 5-year vision includes goals to “seek to meet changes sparked by a mix of evolving customer needs, regulatory action, technology and innovation, and increased competition” and prioritizes instant payments that enhance the position of EU companies, while also reducing dependency on non-EU payment card schemes. This Finextra article points out that this vision is likely a tad myopic:

“But reading the document not one single word was mentioned about using blockchain or distributed ledger technology. It seems banks are increasingly getting in the defensive mode worrying the disruptive impact of this technology on their business

Some critical remarks

Looking into the report the focus is rather limited. It shows a rather isolated EU-oriented view. It does not take into account the new realities such as globalisation of the payments world, the upcoming of new technologies and the global role of organisations such as Visa and MasterCard, but also the likes of Facebook and Google.

It is too much EU but above all too much euro-area focused, while not taking into account the cross border element especially towards non-euro EU countries.

The report also does not go into more detail towards the various technologies including Big Data, Artificial Intelligence and above all blockchain.

Present state of EU payments market

But let us first look at the present state of the EU payments market. And what blockchain could mean to improve. As EU banks you cannot deny the outside world. I agree, most European domestic payment systems are pretty efficient. But not where one has to transfer money cross-border, especially where it relates to non-euro countries.

Most established centralised payment systems were designed decades ago, in a completely different world. While they are considered to be reliant, secure and stable domestically i.e. inside individual EU countries, these centralized systems have not been able to catch up with the needs of our digital, open and hyper-connected world.

Banks have continued to use the old-style correspondent banking systems for international payments – despite their inherent weaknesses. Notably, these systems are expensive, slow, and complex. In the correspondent banking system, both the originating bank and the foreign bank retain their own ledgers, from which they make reconciliations and settlements. This may lead to a lack of transparency, but also make them vulnerable for hacks.

According to a SWIFT and EuroFinance joint survey, lack of payments traceability, invisibility on banking fees, and amount discrepancies are the key concerns in cross border payments. It can take days to clear traditional cross-border wire payments, which carry fees as high as 10%. According to a McKinsey Research, cross border-payments take 3–5 days, which is quite long for corporates seeking to receive money. In the event of a dispute or investigation, the duration can be longer.”

Personally, I don’t think the joint statement should recommend any specific technologies, but should certainly identify the new landscape created by digital currency and distributed ledgers. This blog on Finextra goes on to discuss disruptive payments, SWIFT, Blockchain, and a range of other technologies and challenges that should be addressed in a joint document from such a large and important contingent of banks, and is worth a full read if you have the time and inclination.

Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group

The post Three EU Bank Groups Produce a Myopic Vision for the Future of Payments appeared first on PaymentsJournal.

Much, MUCH attention has been given to how benefits from the federal government’s CARES Act will be distributed. Since many individuals will receive this payment—and others, such as unemployment insurance—though a paper check, it may be weeks before some receive their money. Though it is difficult to change processes inside massive government operations while meeting the needs of all citizens, this current pandemic underscores the benefits of electronic payments. 

Speed matters here. The current environment is the best illustration of the value of electronic payments and, hopefully, will be the impetus that government entities are looking for to prioritize an improvement in quickly and safely delivering funds to their constituencies. The financial benefit of electronic payments over paper payments already exists, and has been understood for years.

This article in PaymentsSource looks into the struggle of trying to change a payment process in the midst of the current chaos:   

Fintech companies see big opportunities to help the government connect consumers and small businesses and banks with funds, but many gaps stand in the way, said Jareau Wadé, vice president of growth at Finix, a San Francisco-based payments software infrastructure provider that launched in 2015.

“A lot of fintechs want to be involved in helping disburse government funds, but they can’t because they’re not banks. And a lot of banks who could help are choosing not to, because they’ve decided it’s not worth it,” Wadé
said.

The government’s best option might be testing an approach that offers consumers several options for receiving funds.

“Ideally, consumers could go to a central location and pick any number of different disbursement options and there might be some complications with fraud and ID, but it would still be better to get funds out quickly, especially to the millions of people who are underbanked. There are more underbanked people operating in cash than most people realize,” Wadé said.

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

The post Rethinking Government Disbursements appeared first on PaymentsJournal.

A healthy wire operation is the heart of any financial institution’s payments business. Banks need to provide resilient wire services in the face of increasing volumes and demanding SLAs, as well as ‘black swan’ events like the current COVID-19 crisis. Whatever the situation, downtime for payment systems is not an option.

They must also be ready for the future of wires: 24/7 processing and ISO 20022 messaging. This article explores the latest wire trends and how financial institutions can navigate them. It also outlines a new approach: wire processing as a service in the cloud, which offers a fast track to payments modernization at low cost.

Fedwire today: An overview

Fedwire, the real-time gross settlement (RTGS) system in the United States, is doing well overall. The U.S. wire business is healthy and growing, with 167 million wires in 2019 alone. The average volume growth is at nearly 6%, which is three times greater than GDP and inflation growth. That said, the average value of a wire has declined by 40% since 2015, meaning transaction values are shrinking.

Additionally, the average revenue growth for payments hovers around 3%. If volumes are growing at double the rate as revenues, it means margins are going down. To combat this, a heavy focus on making wire processing more efficient is needed.

Future trends in wire payments

There are a few noteworthy trends anticipated for wire payments in the short and long-term future. Here are two of the key upcoming trends:

1. Fedwire’s move to ISO 20022 messaging.
   
   Fedwire will utilize ISO 20022-based messaging, which is a complete shift from today’s formats. ISO 20022’s data-rich messaging allows more information about a transaction to be transmitted in real time, eliminating slow payment processes. The future migration to 20022 will bring both opportunities and challenges, and will have a large impact on the payments industry.
   
2. The extension of settlement hours and the move to 24/7 real-time payments.
   
   By March 2021, the Federal Reserve will extend its National Settlement Service’s (NSS) operating hours by 45 minutes, extending the time for initiating Fedwire transfers on behalf of third parties to 6:45 p.m. ET. This extension is just the start. Looking further into the future, large-value wires will be enabled every day, all day.

Between the rising volume growth, move to ISO 20022, and anticipated real time, around-the-clock settlement, it is clear that a significant amount of change is coming to financial institutions that provide wire payments services.

The impact of around the clock wire processing on banking operations

In addition to the more obvious impacts, such as operations and customer service staffing, there will also be impacts to other facets of the business. For example, vendor relationships will be impacted because vendors will need to support banks and their customers on a back-to-back basis.

While all banks will need to conform to the same rules operationally, some will struggle to enable their end-to-end processes to work around the clock. Doing so impacts not only the payment system, but core banking channels, and every other component and department involved in providing payment services.

These challenges are similar to those experienced by banks that provide real-time payment services like The Clearing House (TCH) RTP. Banks that have already worked through the challenges associated with RTP will be better positioned to seamlessly adapt to the future of wire payments. 

The move to ISO 20022 is more complex than many banks realize

Since the shift to ISO 20022 is more complex than many banks realize, it will have a larger impact on the industry than many financial institutions currently expect. Some view the shift as just a format change that can be addressed by simply translating messages, but this is not the case.

ISO messages allow for substantially more data to flow with transactions (e.g., remittance data, extended payee information, supply chain data, and so on). While financial institutions can opt to just translate messages to the new format, that is not a viable response in the long term. While there will be backward compatibility initially, this won’t necessarily be the case in the future. It is likely that there will be evolving mandatory fields, which will have to be understood by the payments systems in place.

Payments systems also need to have the ability to process the extended data, as its possible that something as simple as the recipient’s email address or invoice contents could trigger a sanctions warning—and if that gets truncated in a translation step, banks risk being out of compliance. Thus, it is particularly important for financial institutions to take advantage of the rich payment data that ISO 20022 enables, as opposed to just translating messages in and out of older formats.

Can current payment systems handle these requirements?

The short answer to this question is no, as many current systems were put in place a decade or longer ago. In other words, they were built to handle substantially lower transaction volumes and cannot support real-time or around-the-clock operations. On top of that, their data models are not compatible with ISO 20022.

Banks do not realistically have the option to stick with their current systems, which would require major upgrades to be compatible with an up-to-date wire system. Instead, they will need to work to push past the limitations of their current technology to keep up.

Payments as a service in the cloud: A new approach to wires

An alternative solution to legacy in-house systems is payments as a service in the cloud, and more specifically, wire processing in the cloud. The cloud offers a slew of benefits that legacy systems do not, including:

• Business resiliency, delivered by technical resiliency

The technical resiliency and around–the-clock operability of cloud-based payments services means there are no more missed, duplicated, or delayed payments, and banks can have more confidence in meeting customer service level agreements (SLAs). Another distinctive advantage of cloud-based services is their ability to have multiple active instances. In an era where business continuity can be dramatically impacted by extenuating circumstances like pandemics and natural disasters, these are very important advantages.

• Cost savings

Cloud-based payment services can deliver cost savings of 40% or more and eliminate large upfront costs in favor of operating costs, as they are largely based on “pay as you go” or subscription models that favor opex over capex.

• Accelerated onboarding and time to value for new services

Cloud-based payment processing services that provide support for handling proprietary corporate payment file and statement format integrations can significantly accelerate customer onboarding, cutting the time it takes to bring on a new corporate customer from months to weeks or days.

• Future-proofed operations

PaaS makes it substantially easier to handle continuous operation and ISO 20022 compatibility. The extensible nature of cloud services also makes it much simpler to implement new payment rails like TCH RTP and other future payment options.

Conclusion

Wire processing as a service in the cloud offers financial institutions a number of benefits, including allowing them to better enable ISO 20022 messaging and adopt around-the-clock settlement.

To learn more about how payments as a service can transform your wires business, get complimentary access to a webinar recording entitled, Why it’s time for a new approach to wire processing, featuring speakers Marie Garvey, VP Product Management, First American Trust; Vinay Prabhakar, VP Product Marketing, Volante Technologies; and Tushar Puranik, Managing Director, Deloitte.

The post Why It’s Time For A New Approach To Fedwire Processing appeared first on PaymentsJournal.

Comdata Inc., a FLEETCOR company and world leader in payment innovation, introduces Comdata QuickPay powered by Crestmark, a division of Metabank. Comdata QuickPay is a new financing solution that gives fleet owners access to same-day payments on the loads they deliver. The program also helps fleets improve cash flow and scale their businesses by providing a seamless way to access shipper payments directly on their Comdata fuel card.

Comdata QuickPay is the latest payment innovation from Comdata’s offerings of fleet solutions to help fleets meet their financial needs for same-day shipper payemnts. By simplifying the approval process and streamlining access to capital, carriers can get paid within 24 hours of delivery instead of waiting the standard 30 days for payment transactions to process.

“Comdata and Crestmark have long histories of helping customers improve their cash flow through innovative financing solutions,” said Justin King, Senior Vice President of Product and Innovation, North America, Comdata. “On average, fleets have to wait 30 or more days to be paid on a delivered load, and that’s a challenge in times of economic uncertainty. We developed this solution to provide faster funding options to give fleets a stronger financial footing and much easier access to those payments through their existing Comdata fuel card or bank account.”

Comdata QuickPay enables fleet owners to begin factoring invoices to Crestmark upon delivery at one of the lowest factoring rate fees in the industry. By minimizing the payment window to same or next day shipper payments, fleets can increase business cash flow and eliminate the burdensome process of collections.

“Crestmark is dedicated to delivering the highest quality financing solutions to Comdata’s customers during this time of financial uncertainty,” says Crestmark President, Heath Holdbrooks. “Crestmark funds thousands of same-day payments for invoices every day assuring that vendors and employees are paid on time to keep our customers’ fleets moving.”

To learn more about Comdata QuickPay, connect with Comdata via http://comdata.com/fleet-solutions/my-fleet-program/index.

About COMDATA

Comdata Inc., a FLEETCOR company, is a leading provider of innovative payment and operating technology that drives actionable insights from spending data, builds enhanced controls and positively impacts its clients’ bottom lines. The company partners with more than 30,000 businesses to better manage $55B in annual fleet, corporate purchasing, payroll and healthcare spending, making it one of the largest fuel card issuers and the second largest commercial MasterCard provider in the United States and Canada. Founded in 1969 and headquartered in Brentwood, Tennessee, Comdata employs more than 1,300 professionals across North America. To learn more about Comdata Inc. visit www.comdata.com.

About FLEETCOR

FLEETCOR Technologies (NYSE: FLT) is a leading global business payments company that simplifies the way businesses manage and pay their expenses. The FLEETCOR portfolio of brands help companies automate, secure, digitize and control payments to, or on behalf of, their employees and suppliers. FLEETCOR serves businesses, partners and merchants in North America, Latin America, Europe, and Asia Pacific. For more information, please visit www.FLEETCOR.com.

About Crestmark

Crestmark, a division of Meta bank, (NASDAQ: CASH) is focused on B2B lending for small to medium sized companies throughout the U.S. and Canada. Crestmark Transportation Services is based in Franklin, Tennessee and provides accounts receivable finance solutions to fleets ranging from startups to companies with 1000 or more units. Crestmark quickly establishes a line of credit or factoring facility to accommodate the trucking clients daily needs as well as extended term financing. In addition to a focus on accounts receivable Crestmark also offers Insurance Premium Finance. For more information please visit www.crestmark.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20200326005134/en/

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Comdata Inc., a FLEETCOR company and world leader in payment innovation, introduces Comdata QuickPay powered by Crestmark, a division of Metabank. Comdata QuickPay is a new financing solution that gives fleet owners access to same-day payments on the loads they deliver. The program also helps fleets improve cash flow and scale their businesses by providing a seamless way to access shipper payments directly on their Comdata fuel card.

Comdata QuickPay is the latest payment innovation from Comdata’s offerings of fleet solutions to help fleets meet their financial needs. By simplifying the approval process and streamlining access to capital, carriers can get paid within 24 hours of delivery instead of waiting the standard 30 days for payment transactions to process.

“Comdata and Crestmark have long histories of helping customers improve their cash flow through innovative financing solutions,” said Justin King, Senior Vice President of Product and Innovation, North America, Comdata. “On average, fleets have to wait 30 or more days to be paid on a delivered load, and that’s a challenge in times of economic uncertainty. We developed this solution to provide faster funding options to give fleets a stronger financial footing and much easier access to those payments through their existing Comdata fuel card or bank account.”

Comdata QuickPay enables fleet owners to begin factoring invoices to Crestmark upon delivery at one of the lowest factoring rate fees in the industry. By minimizing the payment window to same or next day payment, fleets can increase business cash flow and eliminate the burdensome process of collections.

“Crestmark is dedicated to delivering the highest quality financing solutions to Comdata’s customers during this time of financial uncertainty,” says Crestmark President, Heath Holdbrooks. “Crestmark funds thousands of same-day payments for invoices every day assuring that vendors and employees are paid on time to keep our customers’ fleets moving.”

To learn more about Comdata QuickPay, connect with Comdata via http://comdata.com/fleet-solutions/my-fleet-program/index.

About COMDATA

Comdata Inc., a FLEETCOR company, is a leading provider of innovative payment and operating technology that drives actionable insights from spending data, builds enhanced controls and positively impacts its clients’ bottom lines. The company partners with more than 30,000 businesses to better manage $55B in annual fleet, corporate purchasing, payroll and healthcare spending, making it one of the largest fuel card issuers and the second largest commercial MasterCard provider in the United States and Canada. Founded in 1969 and headquartered in Brentwood, Tennessee, Comdata employs more than 1,300 professionals across North America. To learn more about Comdata Inc. visit www.comdata.com.

About FLEETCOR

FLEETCOR Technologies (NYSE: FLT) is a leading global business payments company that simplifies the way businesses manage and pay their expenses. The FLEETCOR portfolio of brands help companies automate, secure, digitize and control payments to, or on behalf of, their employees and suppliers. FLEETCOR serves businesses, partners and merchants in North America, Latin America, Europe, and Asia Pacific. For more information, please visit www.FLEETCOR.com.

About Crestmark

Crestmark, a division of Meta bank, (NASDAQ: CASH) is focused on B2B lending for small to medium sized companies throughout the U.S. and Canada. Crestmark Transportation Services is based in Franklin, Tennessee and provides accounts receivable finance solutions to fleets ranging from startups to companies with 1000 or more units. Crestmark quickly establishes a line of credit or factoring facility to accommodate the trucking clients daily needs as well as extended term financing. In addition to a focus on accounts receivable Crestmark also offers Insurance Premium Finance. For more information please visit www.crestmark.com.

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The U.S. Faster Payments Council (FPC), a membership organization devoted to advancing faster payments in the United States, today announced that payments expert and industry veteran Reed Luhtanen will be its executive director. Most recently with Walmart Inc. and an officer on the FPC Board, Luhtanen brings a wealth of industry knowledge and experience to this vital role. He succeeds Kimberly Ford, the FPC’s inaugural executive director. His first day with the FPC will be April 13.

“We’re thrilled to have Reed leading the FPC as executive director and look forward to leveraging his industry knowledge, expertise, and vision for the organization. His unique experience at the intersection of payments-related public policy, financial services, corporate treasury, and nonprofit service will help take the FPC to new heights,” said FPC Board Chairperson Michael Bilski. “Kim has done a tremendous job in laying a strong foundation of the FPC, raising the visibility of the organization, and setting us on a successful trajectory. Reed will build on that momentum, applying his leadership skills, deep roots in the payments industry, and fostering his existing relationships with our members and the board of directors. We are confident that he, along with our dedicated staff and members, will drive the FPC to greater success in 2020 and beyond.”

Luhtanen has extensive experience in the payments industry and has served on myriad industry bodies, most recently the Federal Reserve-sponsored Governance Framework Formation Team, which created the U.S. Faster Payments Council, and the Corporate Advisory Group for The Clearing House’s Real-Time Payments System. Prior to joining the FPC, he spent 15 years at Walmart, departing as senior director of global treasury, where he was responsible for the company’s payments-related public policy and public relations initiatives, network and processor relationships, and establishing Walmart’s payments acceptance strategies.

In 2015, Luhtanen was recognized as one of PayBefore’s “Top Ten Payments Lawyers” and The Electronic Transactions Association honored him as a member of its “Forty Under 40” class in 2019. He has a B.A. in Political Science from the University of Arkansas’ Fulbright College of Arts and Sciences and a J.D. from the University of Arkansas School of Law.

“I’m excited about the opportunity to lead the FPC and further its commitment to advancing the path to a faster payments future in the United States. I plan to focus on working across the entire payments ecosystem to deliver tangible, valuable results for our members and the U.S. payments ecosystem overall,” said Luhtanen. “FPC members are everything to our organization, playing important roles as both idea generators and active contributors toward accomplishing our mission. I look forward to engaging with our members to get their ideas and perspectives and galvanizing our collective voices to inspire the next chapter of the FPC’s growth.”

The FPC is a unique organization in that companies from all industry segments can join as full members, participate in work groups, vote equally, and run for a seat on the FPC Board of Directors. “We want a big, open table surrounded by members who are dedicated to our mission,” Luhtanen said. “If you’re interested in helping to promote the availability and adoption of faster payments in the United States, this is the place to do that.”

The FPC prioritizes industry collaboration in tackling complex topics such as interoperability among faster payments solutions, identifying real-world solutions that can ease adoption of faster payments, managing security risks and fraud threats, addressing barriers to cross border payments, and more, as the organization paves the way toward a future of faster payments for all.

“There’s an enormous amount of interest in faster payments today, and I believe that the FPC is widely recognized as the industry leader on this issue,” said Ford. “Reed has been instrumental in the creation and growth of the FPC, and I’m thrilled he will be stepping into this important role as the organization continues to thrive. The FPC is also fortunate to have an enthusiastic board of directors and supportive members who collectively act on their passion to drive the U.S. toward a faster, more secure, and more efficient payments system.”

About the U.S. Faster Payments Council (FPC)

The FPC is an industry-led membership organization whose mission is to facilitate a world class payment system where Americans can safely and securely pay anyone, anywhere, at any time and with near-immediate funds availability. By design, the FPC encourages a diverse range of perspectives and is open to all stakeholders in the U.S. payment system. Guided by principles of fairness, inclusiveness, flexibility and transparency, the FPC will use collaborative, problem-solving approaches to resolve the issues that are inhibiting broad faster payments adoption in this country. For more information, please visit FasterPaymentsCouncil.org.

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With faster payments gaining popularity across the payments industry, Nacha—the organization that oversees the wildly popular ACH Network—will make a significant rule change to further enhance its faster payments solution. Beginning March 20, Nacha will increase the Same Day ACH per-payment dollar limit to $100,000, up from the current $25,000 limit.

To understand the reasoning behind this move and what other innovations Nacha has planned, PaymentsJournal sat down with Michael Herd, senior vice president of ACH Network Administration at Nacha, and Sarah Grotta, director of Debit and Alternative Products Advisory Service at Mercator Advisory Group.

During the conversation, Herd and Grotta also discussed the state of the ACH Network, the use cases the new rule change will enable, and the areas where Nacha plans to spark innovation going forward.

The tremendous growth of the ACH Network

No matter how you assess the numbers related to the ACH Network’s payment volume and value, one thing is clear: The ACH Network is rapidly growing. Overall, the volume of payments humming along the Network increased by 7.7% from 2018 to 2019. In addition, $55.8 trillion transacted across the ACH Network, an 8.9% increase in value from 2018.

With the overall ACH Network growing, it is no surprise that the volume and value of Same Day ACH transactions also grew. Between 2018 and 2019, the volume of Same Day ACH payments grew by 41% and the value of transaction went up 55%.

“Same Day ACH volume in 2019 saw over a million transactions processed per day and a billion dollars in value every day,” explained Grotta. “These are pretty interesting statistics.”

She attributed such impressive growth to the fact that businesses can send and receive Same Day ACH payments without having to retool their back offices or create new procedures, “since it works very similarly to standard ACH.”

Grotta also noted that although Same Day ACH may be considered a premium product, and is thus priced a little higher by financial institutions, use of the ACH rails is still economical and efficient when compared to similar faster payments types. The last reason she identified for Same Day ACH’s increased use is that the faster payment option has many use cases.

Why is Nacha increasing the per-transaction dollar limit?

If the ACH Network is growing at a healthy rate, it may come as a surprise that Nacha is changing its rules. Even more surprising, the current dollar limit covers roughly 98% of the transactions moving along the ACH rails.

However, the reason for the change is simple. “We listened to what the users of the ACH system were asking for,” explained Herd, “and the increase in the dollar limit for Same Day ACH transactions was number one on their list.”

Nacha came to this determination after attending numerous forums and conferences where Nacha officials would solicit feedback from ACH users. Since so many corporates, businesses, and other end users routinely requested a higher per-transaction limit for Same Day ACH payments, Nacha decided an increase was appropriate.

The use cases for Same Day ACH

Herd noted that once the change goes into effect on March 20, there will be specific use cases that “will be greatly enhanced by having a higher dollar limit. For example, B2B payments will be improved by the move.

“B2B is the area where we have the greatest volume of outstanding payments on the ACH Network that are above $25,000,” explained Herd.

Now with the limit going up to $100,000, Herd expects that more B2B payments will make use of Same Day ACH capabilities, compounding a trend that was quite evident in 2019 as Same Day ACH B2B payments increased by 45%.

He also pointed out that insurance claim payments and other types of disaster assistance payments can now move along as a Same Day ACH faster payment. Many of these payments total over $25,000 because they are often covering the value of people’s cars, homes, and other valuable assets.

Another use case is for small businesses and merchants to secure quicker funding, “particularly for items like their payment card transactions or even short-term lending arrangements,” said Herd. Raising the dollar limit helps these entities quickly secure up to $100,000 at a time.

What other rule changes are on the horizon?

Next year on March 19, Nacha plans to make another announced rule change official. Nacha will expand its hours for Same Day ACH by two hours a day, every banking day that Same Day ACH is available.

“That’s another area where, quite simply, we’re just listening to what the market is asking for: The ability to transact Same Day ACH payments later into the day,” said Herd. Such a move aids businesses further west, including in the center of the country and the coast.

As Herd put it: “Providing extra hours in the day will enable a lot of those institutions and their customers to take much greater advantage Same Day ACH.”

In addition to expanding the operating hours, Nacha is currently working to understand how businesses and consumers are interacting with and using new technologies to initiate commerce. As more people make payments using their personal voice assistants, such as Alexa and Siri, Nacha wants to learn how to better accommodate these use cases.

“We want those that want to use the ACH Network for these kinds of conversational commerce transactions to be able to do so and to understand how the Nacha rules apply to them and those transactions,” explained Herd.

This is only one of a set of rules proposals and other concepts collectively referred to as Meaningful Modernization. The overarching purpose of the proposals to help reduce barriers to use of the ACH; provide flexibility and increasing consistency related to the authorization of consumer ACH payments; and reducing certain administrative burdens. Nacha is requesting industry feedback by May 1. Whether it’s through increasing its per-transaction dollar limit or expanding operating hours, Nacha is working to ensure that more business and consumers can take advantage of Same Day ACH and the benefits that come with faster payments.

The post Nacha to Raise Same Day ACH Dollar Limit Amount appeared first on PaymentsJournal.

As we have been highlighting now for quite some time via research and postings, faster (and real-time) payments are key payments initiatives and likely to reach a global tipping point within a ‘coupla three’ years, perhaps even more quickly on the consumer side versus B2B. One of the high interest areas is reaching a real-time environment for cross-border payments. There are several initiatives underway, including in the Nordic region and ASEAN.

The referenced posting here is on ZyCrypto and discusses a collaboration between Ripple and DeeMoney, a Thailand-based money transfer service. The partnership allows Thai nationals working in various countries to send money back to Thailand using the RippleNet cross border network.

‘With this partnership, DeeMoney will be using RippleNet to provide low-cost and superfast international payments to people in Thailand…More than one million Thais working abroad are now able to transfer money back home via payment corridors between Thailand and South Korea, Indonesia, Singapore, Israel, the Middle East, and the Gulf regions, for the first phase of the implementation.’

The article indicates that a second phase will involve outbound payments from Thailand as well.  One thing we should point out is that the article’s title suggests real-time payments are available, which is only partially true.  Based on the details, it seems that clearing is in real-time but settlement is ‘same day’, subject to timing since same day net settlement systems have limited processing windows.

‘For the second phase, DeeMoney will utilize RippleNet for outbound transfers from Thailand after they identify the most ideal partners in the respective destination countries…Per the Ripple announcement, DeeMoney offers same-day settlement to all Thai bank accounts.’

The announcement indicates that DeeMoney is the first non-bank in Thailand to leverage RippleNet.  So, the cross-border world continues to make incremental progress towards a faster and better world.

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post RippleNet Enables Faster Cross-border Payments in Thailand appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s report – Faster and Real-Time Payments Fraud.

Four key areas of focus for Faster Payments:

• Strengthen Authentication: Deny access to bad actors from the beginning
• Invest in Analytics: Each payment type is accompanied by a great deal of data
• Leverage Artificial Intelligence: Data driven insights are needed to drive business rules without human intervention
• Take a balanced approach: Stopping fraud is the goal, but so is enabling legitimate transactions
• For Large Banks: The risk of NOT having a competitive faster payments offering is greater than the fraud risk
• For Small Banks: The risk of fraud outweighs the risk of not having a faster payments offering

About Report

Financial institutions are implementing or planning new faster payment solutions from same day to real-time transactions and creating roadmaps for new products with faster payment solutions embedded. Simultaneously, attention is being given to protecting faster transactions and preserving the trust customers have in their banks and credit unions to protect their financial transactions. A new research report from Mercator Advisory Group titled Faster and Real-Time Payments Fraud reviews these trends, challenges, and solution.

“At the same time that financial institutions are wrestling with new fraud types and the rise of tactics like business email compromise, they are rolling out new faster payments solutions that innately allow less time to detect criminal activity. The good news is that the security providers are responding with solutions. The implementation and adaptation of these solutions to individual operating environments needs to be the focus,” comments Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group and author of the report.

This research report has 15 pages and 3 exhibits.

Companies and other organizations mentioned in this report include: ACH Alert, Brighterion, Early Warning, Experian, Faster Payments Service (U.K.), Feedzai, Federal Reserve, FICO, GIACT, LexisNexis, Mastercard, NICE Actimize, NuData Security, Rambus, RiskRecon, The Clearing House, Verafin, and Visa.

The post Four Key Areas of Focus for Faster Payments: appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s report – Faster and Real-Time Payments Fraud.

Legal ramifications for Faster Payments:

• Faster payments is an example of technology outpacing law and legal frameworks:
• Different financial institutions offer different protections against accidental authorization
• Some banks refund an errant transaction, while others hold the account owner responsible
• Liability is also questionable between end user, originating bank, network operator and receiving bank
• The American Bar Association says it depends on “the nature and features of a payment” including:
• “Whether a transaction is consumer or commercial, debit pull, credit push, reversible or final”

About Report

Financial institutions are implementing or planning new faster payment solutions from same day to real-time transactions and creating roadmaps for new products with faster payment solutions embedded. Simultaneously, attention is being given to protecting faster transactions and preserving the trust customers have in their banks and credit unions to protect their financial transactions. A new research report from Mercator Advisory Group titled Faster and Real-Time Payments Fraud reviews these trends, challenges, and solution.

“At the same time that financial institutions are wrestling with new fraud types and the rise of tactics like business email compromise, they are rolling out new faster payments solutions that innately allow less time to detect criminal activity. The good news is that the security providers are responding with solutions. The implementation and adaptation of these solutions to individual operating environments needs to be the focus,” comments Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group and author of the report.

This research report has 15 pages and 3 exhibits.

Companies and other organizations mentioned in this report include: ACH Alert, Brighterion, Early Warning, Experian, Faster Payments Service (U.K.), Feedzai, Federal Reserve, FICO, GIACT, LexisNexis, Mastercard, NICE Actimize, NuData Security, Rambus, RiskRecon, The Clearing House, Verafin, and Visa.

The post Legal Ramifications for Faster Payments: appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s report – Faster and Real-Time Payments Fraud.

6 approaches for thwarting real-time payments fraud:

• Multifactor Authentication: initiation occurs on one device and authentication takes place on a separate channel
• Tokenization: sensitive account information masked behind a one-time-use token
• Real-Time Account Validation: verifing state of the account, payment history, ownership, and consistency of personal information
• Standardized APIs: currently each API is developed by each bank – standardizing would allow seamless flow
• Strong Authentication: move beyond knowledge tests with facial recognition, thumbprint, iris scanning…
• Mercator anticipates greater emphasis on validating account and identity vs. assessing the actual transaction

About Report

Financial institutions are implementing or planning new faster payment solutions from same day to real-time transactions and creating roadmaps for new products with faster payment solutions embedded. Simultaneously, attention is being given to protecting faster transactions and preserving the trust customers have in their banks and credit unions to protect their financial transactions. A new research report from Mercator Advisory Group titled Faster and Real-Time Payments Fraud reviews these trends, challenges, and solution.

“At the same time that financial institutions are wrestling with new fraud types and the rise of tactics like business email compromise, they are rolling out new faster payments solutions that innately allow less time to detect criminal activity. The good news is that the security providers are responding with solutions. The implementation and adaptation of these solutions to individual operating environments needs to be the focus,” comments Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group and author of the report.

This research report has 15 pages and 3 exhibits.

Companies and other organizations mentioned in this report include: ACH Alert, Brighterion, Early Warning, Experian, Faster Payments Service (U.K.), Feedzai, Federal Reserve, FICO, GIACT, LexisNexis, Mastercard, NICE Actimize, NuData Security, Rambus, RiskRecon, The Clearing House, Verafin, and Visa.

The post 6 Approaches for Thwarting Real-Time Payments Fraud: appeared first on PaymentsJournal.

PPS, formerly PrePay Solutions, and subsidiary of Edenred, the everyday companion for people at work, has today announced its direct participation in Pay.UK’s Faster Payments Scheme, the service that enables UK domestic mobile, internet, telephone and standing order payments to move quickly and securely.

In conjunction, PPS also announces its new partnership with Form3, a leading provider of cloud-native API payments technology, which will provide the technical gateway for PPS to connect to the scheme and provide real-time payments for end users.

Accessing the Faster Payments Scheme via Form3’s fully managed payment technology service allows PPS to offer real-time payments for its fintech partners. 

The news comes just as PPS is approved to provide Local Belgian and French International Bank Account Numbers (IBANs), with more Local IBAN and SEPA Instant Credit Transfer capabilities coming soon 

The service runs on the Faster Payments Scheme’s real-time payments infrastructure, operated by Pay.UK, the UK’s leading retail payments authority. The Faster Payments Scheme is a Financial Markets Infrastructure (FMI) providing UK bank, building society and non-bank payment service provider’s customers with real-time, 24×7, account-to-account funds transfers. Over 400 financial institutions use the Faster Payments System, making it available to the vast majority of current account holders in the UK.

Aoife Hurley, Head of Strategic Partnerships, PPS, said:

“Becoming a member of Pay.UK’s Faster Payments Scheme and partnering with Form3 are crucial moves for PPS as we continue to support leading challenger banks and fintech players across the UK and Europe. It’s incredibly important to be able to offer best-in-class real-time payment solutions to our customers, particularly as consumers and businesses alike demand this key service. There are many players still offering “Batch based” Faster Payments which offer a poor customer experience but our service is genuinely instant. I’m proud of how well PPS and Form3 have worked together to get our UK faster payment solution off the ground with Pay.UK.  We have certainly got an exciting year ahead and I look forward to being able to reach more end users and grow transaction volumes with our enhanced digital banking products.”

Adam Moulson, CCO, Form3, added:

“We were chosen to become a partner to PPS due to our advanced technology, reliability, scalability and ability to address the speed of the ever-growing fintech market. To date, we have successfully collaborated by efficiently testing, integrating and migrating PPS’ platform to connect to the Faster Payments Schemes central infrastructure. This has enabled us to get to where we are today, providing the company with an improved working range of banking tools and putting PPS on a level playing field with some of the markets biggest names.”

Matthew Hunt, Chief Operating Officer, Pay.UK said:

“Gaining direct access to our Faster Payments Scheme allows payment service providers of all shapes and sizes to offer their customers the benefit of real-time payments on a 24/7 basis. We are delighted to welcome PPS on board as our newest direct participant, further demonstrating Pay.UK’s success in levelling the playing field on access, running a resilient payment system and helping us to enable a vibrant UK economy.”

The post PPS Enables Best-in-Class Real Time Payments for UK and European Fintechs via Pay.UK’s Faster Payments Scheme and Strategic Partnership with Form3 appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s report – Faster and Real-Time Payments Fraud.

Faster payments make four common fraud schemes more successful:

• Authorized Push Payment Fraud—using social engineering like fake emails and invoices
• Account Takeover Fraud—stolen identity is used to take over legitimate accounts
• Money Mule Fraud—account takeover fraud used to launder money vs. steal money
• Account Opening Fraud—stolen identity used to open new accounts and build fake profiles
• Faster payments transfers are irrevocable, immediate, and highly liquid
• U.K. fraud losses in 2007, before Faster Payments Service: $22.6 million. In 2008 after launch: $52.5 million.

About Report

Financial institutions are implementing or planning new faster payment solutions from same day to real-time transactions and creating roadmaps for new products with faster payment solutions embedded. Simultaneously, attention is being given to protecting faster transactions and preserving the trust customers have in their banks and credit unions to protect their financial transactions. A new research report from Mercator Advisory Group titled Faster and Real-Time Payments Fraud reviews these trends, challenges, and solution.

“At the same time that financial institutions are wrestling with new fraud types and the rise of tactics like business email compromise, they are rolling out new faster payments solutions that innately allow less time to detect criminal activity. The good news is that the security providers are responding with solutions. The implementation and adaptation of these solutions to individual operating environments needs to be the focus,” comments Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group and author of the report.

This research report has 15 pages and 3 exhibits.

Companies and other organizations mentioned in this report include: ACH Alert, Brighterion, Early Warning, Experian, Faster Payments Service (U.K.), Feedzai, Federal Reserve, FICO, GIACT, LexisNexis, Mastercard, NICE Actimize, NuData Security, Rambus, RiskRecon, The Clearing House, Verafin, and Visa.

The post Faster Payments Make Four Common Fraud Schemes More Successful: appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s report – Faster and Real-Time Payments Fraud.

How many billions will be transacted in the U.S. via faster payments in 2020?

• Mercator Advisory Group estimates that the U.S. will transact $905 billion in faster payments in 2020
• The largest segment will be business-to-business faster payments: 44%
• Second largest faster payments segment will be person-to person: 34%
• Business to consumer faster payments is a growing space—up to 21% of annual volume
• Consumer-to-business transactions are an emerging space occupying only 1% of transaction volume in 2019
• Although some industry observers have expressed concern about the Fed’s plan to enter faster payments…
• …the announcement seems to have removed uncertainty from the market and prompted increased interest in faster payments

About Report

Financial institutions are implementing or planning new faster payment solutions from same day to real-time transactions and creating roadmaps for new products with faster payment solutions embedded. Simultaneously, attention is being given to protecting faster transactions and preserving the trust customers have in their banks and credit unions to protect their financial transactions. A new research report from Mercator Advisory Group titled Faster and Real-Time Payments Fraud reviews these trends, challenges, and solution.

“At the same time that financial institutions are wrestling with new fraud types and the rise of tactics like business email compromise, they are rolling out new faster payments solutions that innately allow less time to detect criminal activity. The good news is that the security providers are responding with solutions. The implementation and adaptation of these solutions to individual operating environments needs to be the focus,” comments Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group and author of the report.

This research report has 15 pages and 3 exhibits.

Companies and other organizations mentioned in this report include: ACH Alert, Brighterion, Early Warning, Experian, Faster Payments Service (U.K.), Feedzai, Federal Reserve, FICO, GIACT, LexisNexis, Mastercard, NICE Actimize, NuData Security, Rambus, RiskRecon, The Clearing House, Verafin, and Visa.

The post How Many Billions Will Be Transacted in the U.S. via Faster Payments in 2020? appeared first on PaymentsJournal.

This episode was recorded at the Money 20/20 event in 2019. On this episode, PaymentsJournal’s editor-in-chief, Ryan McEndarfer, sat down with Marc Vaughn, Concourse Sales Director at BHMI.

PaymentsJournal:

Welcome to the PaymentsJournal podcast. I’m your host, Ryan Mac, and today’s episode was recorded at the Money 2020 event 2019. Now during this episode, I’m going to be speaking with Marc Vaughn who is the Concourse Sales Director at BHMI. Now, Marc has been in the payments industry for over 40 years. So we’re going to be taking a look at the evolutions and changes that he’s seen within the payments industry. And we’re also going to be getting into how BHMI is working with the payments industry on a global scale. So without any further delay, let’s start the show.

So Marc, it’s fantastic to talk with you today. Now, I know that you’ve been active in the payments industry for more than 40 years. So I’m guessing that you’ve seen a lot of change in the industry.  And so, I’m curious and if you could help enlighten our audience, what are some of the biggest and most monumental changes that you’re seeing in the payments industry today?

Marc Vaughn:

Thank you, Ryan and I appreciate the time today. You are right about seeing a lot of change and I began putting ATM systems back in the 70s. And in fact, I replaced offline ATM system to use track three, to account for the balances of the accounts. So it tells you how we’ve moved and been able to go to an online system and beyond with some of the things I’ve seen in the ATMs of today. But the innovations that I’ve seen are probably similar innovations that most people in America have seen is in the area of mobile phones and in first personal computers and then in mobile phones.  The idea and ability to go to the internet and connect to a phone that has that much power and that much application capability is incredible. And so it’s been a catalyst for the industry to be able to take advantage of that digital technology digital phone and put it into the business environment where it can be used and stretched and we’ve seen the younger generation take advantage of it but I also think folks that are the 40s and even in the 60s are taking advantage of that technology. So with that, you also see micro payments is being a very important part of that growth of transactions and even tap and pay you could have been paid by a card now I’ve used it myself. So those transactions will eventually show the momentum of real time payments. And in that payment structure, the fact is that you’ll see many more payments that have to be addressed and the adoption of that.  We’ve seen faster payments as part of this overall evolution of payments. And the initial part of faster payments that we saw in action was in the UK initially.  In 2008, we saw the faster payments program in the UK begin and also internationally, the New Payments Platform in Australia, short name of NPP, in earnest in 2018.  And in the United States, we saw faster payments and same day payments in 2016 and then RTP in 2017 along with P2P networks like Zelle that were later this year. So shortly after that, we all saw the card networks get out involved, including Visa Direct and Mastercard Send, to be able to push money to accounts in a real time fashion. We then saw the recent announcement of the Federal Reserve; they’re going to be participating in a program called FedNow, that will go live within a few years. So we’re going to see more and more faster payments.  It’s going to be C2C or consumer to consumer, P2P payments, as well as B2C as well as consumer to business payments, which will be a form of bill pay. So that kind of gives you a feel for what I see is changed over the last 40 years. Ryan I hope that answered your question.

PaymentsJournal:

No, it certainly does. And thank you very much for that Marc. You know, I think you’re completely right there. You know, it really is amazing to see how the payments industry is changing and the rapid pace of changing that it’s going through but as we know, you know, with change that is obviously going to bring up some challenges here. So I’m really curious from your perspective and from BHMI’s experience, what are some of the biggest challenges that you see companies facing today?

Vaughn:

Yes, there is. I mentioned it earlier I talked about transaction volume but one of the biggest challenges will be the sheer volume of transactions. We talked about micro payments. We talked about other types of adoption of digital technology with the mobile phone that will always drive to payments. And if you don’t have a software environment and a hardware environment that is able to handle these transaction loads, you’re going to be behind the trend so to speak or be able to handle these alternate payment mechanisms. Another key challenge is able to support new payment methods. For instance, card based /account based payments as well as card based payments will need to be supported. In some cases, they will have to be supported in different environments. You have alternate reference numbers such as telephone and email addresses that also have to be taken into consideration and have directory services for.  Based on what has happened during these last years, I think there you say many types of new digital transactions. And this means companies will need to have a flexible system that will support these new upcoming payment methods and the transactions that are tied to them. Also, as we discussed earlier, faster payments is gaining momentum, and companies need to ensure they can handle a flexible system to perform a real time processing. Currently, most legacy systems are based on batch processing by moving to a continuous passing environment standard application standard, excuse me, companies will not be able to create a system that is faster but they also be able to be more efficient and the overall capacity.

PaymentsJournal:

Excellent. So now let’s talk about faster payments here. Obviously a big topic within the payments industry. Now you mentioned at the tail end of your last answer there that most legacy applications are based on batch processing. I could imagine that this is going to be a significant barrier for companies that want to be successful in this modern world of payments that we’re living in. So, can you tell me more about what you’re seeing in this particular area?

Vaughn:

Sure, absolutely. To address the changes occurred in the payments industry, many companies have focused on frontend systems, which makes sense because they connect directly to the mobile phone that we talked about earlier, or those endpoints that are were transactions are being originated. All these transactions ultimately, though, need to be processed for a back end by a back end, and have back end processes tied to them to ensure that they’re audited and reconciled properly. This will be very difficult for a batch system to be able to move and address these new environmental changes in the marketplace. And you can consist of multiple levels, legacy systems to be able to try to work together to be able to meet these needs. Therefore, they don’t have an “always on” environment that will allow them to simply consume increased volume of transactions and leveraging new value the digital world.

PaymentsJournal:

That’s certainly very interesting there, Marc. So I know that BHMI is best known as the creator of Concourse Financial Software Suite. And there’s been a lot of press lately about how it enables companies to support faster payments. So perhaps you could enlighten me and our audience to a little bit more about Concourse?

Vaughn:

Yes, I will be glad to and you mentioned faster payments—when you say that I think about the architecture of Concourse first, and then I’ll talk about that and then talk a little bit about the application modules. So let me talk about the architecture. Unlike traditional back office systems that we talked about earlier, Concourse continuously loads data and from all transaction sources and process that data as it arrives and places the data into a centralized repository. It then instantly performs back office processing, as soon as the data arrives. As a result of that, companies have real-time access to the data and processing activity. They can view the complete transactions, they can look at the current life cycles of every transaction. A real important example of that would be, as we talked about earlier, the NPP system in Australia; you only get three business days to do a dispute process, meaning that you have to have the data available in an immediate timeframe.

Also, when we talked about Concourse, we talk about how you need flexibility. With that flexibility, we provide a modern, dynamic rules engine. That rules engine supports requirements that customers will have to address, and it has to meet their client’s needs and requirements. So I think the architectural feature of the rules engine, along with the continuous processing and continuous loading, is very important. In the Concourse Financial Software Suite, the application modules and integrated software include transactional research, as I mentioned earlier, settlement processing, dispute management, reconciliation, and fee calculations. So those four modules in a package provide the overall suite and you can use the modules as needed as you go forward with your application installation.

PaymentsJournal:

Excellent. Thank you for that overview there, Marc. Now, I wanted to ask you about some recent news I’ve been seeing about clients in the United States and internationally that have selected Concourse for faster payments. Can you enlighten us to about some of those recent announcements?

Vaughn:

Sure, so you may have seen the announcement about Early Warning selecting Concourse for the Zelle network. All Zelle transactions will be accepted by Concourse in a near real time fashion and stored in a Concourse repository. In fact, Early Warning licensed the whole suite of Concourse products, but their initial implementation will be to address dispute processing and then they will be able to look at reconciliation, as well as settlement processing as an audit function for the overall Zelle network. The next one you may have noticed is in Australia.  Concourse is being used by Cuscal.  Concourse’s role within Cuscal is similar to the role that is played by Zelle. A new payment platform, as I mentioned earlier, is a real time payment network in Australia. Concourse is being used by Cuscal for providing NPP gateway services for their clients. Concourse is a repository for research facilities and the database of record for all NPP transactions by the Cuscal clients.  With Concourse, Cuscal able to provide real time updates for all money movement activities. Concourse is also being used by the NPP payment disputes involving Concourse clients. In addition, Concourse is being used as the dispute and settlement system for the non NPP transactions within Cuscal, including Visa and moving forward next year with Mastercard settlement. Another example is Portugal-based Payshop, which is a subsidiary of Banco CTT and provides Europe a wide range of payment services. Payshop is using Concourse to provide a unified back office environment for all their payment services. This includes cashless transactions and cross border payments, which, Concourse supports via the ISO 20022 payments standard for SEPA, which is the Single European Payment Area.

PaymentsJournal:

Wonderful know that certainly very exciting news. You know, obviously, based upon the clients that you mentioned there, it would obviously appear that Concourse is a very well suited offer the modern world of payments, and I certainly mean the world of payments because you had mentioned Portugal, you had mentioned Australia and obviously the United States here. So now I’m curious in terms of just additional resources here, you know, obviously as an experienced payment software provider, you know what industry councils and payments advocacy groups, would you recommend to our audience?

Vaughn:

That’s a great question. BHMI is involved in a variety of councils and events. As, as of late with the last year that we were focused on the evolution of modern payments first comes to mind is BHMI is a member of the Faster Payments Council.  In fact, I just got back from an autumn council meeting and in Boston. BHMI is also a member of the ATPC, which is the American Transaction Processing Coalition which is the influential group of payment processors and solution providers, that is helping the lead away from the payment industry from a regulatory perspective. BHMI also intends to participate in many other payment events much like Money 2020. I also want to mention that BHMI has published a variety of white papers. We recently did a research brief with the Mercator Advisory Group called “Is Your Back Office Keeping Up With the World of Payments”. I would like to invite everyone listening to the podcast download is complimentary copy, which is within the white papers section of the PaymentsJournal website. It gives great information about the current payments landscape.

PaymentsJournal:

I think that that that’s fantastic there. And yes, just as the last kind of reminder to our audience that they do have the availability to be able to download that white paper from PaymentsJournal.com. I certainly read through it is a fantastic, fantastic read from not only a resource perspective. So, Marc, thank you so much for taking the time today for speaking to me about BHMI and kind of your insight to this changing and quickly changing payments industry that we have.

Vaughn:

Oh, thank you very much, Ryan. I really appreciate your time today.

The post How the Payments Industry Is Changing: A Conversation with BHMI appeared first on PaymentsJournal.

Data aggregation continues to gain importance in the financial services world. But what value does it offer?

PaymentsJournal sat down with Paul Diegelman, VP of digital payments and data aggregation at Fiserv, and Sarah Grotta, director of the Debit and Alternative Products Advisory Service at Mercator Advisory Group, to delve deeper into the topic.

Defining data aggregation

Data aggregation, or what Diegelman referred to as “consumer permission financial data aggregation,” can be broken down into two parts: consumer permission and financial data aggregation.

The consumer permission component of the definition refers to the fact that in data aggregation, consumers should consent to the process and provide the necessary credentials for their bank. In return, consumers expect security, privacy, transparency in the use of their data, and some form of benefit.

The second component, financial data aggregation, consists of the financial data that is pulled—or aggregated— from thousands of sources, including banks, credit unions, credit card platforms, investments, mortgage companies and other payment providers. Aggregators like Fiserv have built what Diegelman referred to as an “underlying set of pipes,” allowing these parties to connect together in a faster process and deliver something of value to consumers.

Visa’s $5.3 billion Plaid acquisition

Visa’s January 2020 announcement of its $5.3 billion acquisition of third party data aggregator Plaid caused major players in the payments world to focus more of their attention on data aggregation.

Though open banking is not mandated in the U.S., there is a growing interest on the part of consumers and small businesses to connect their bank and credit union accounts to a third party app or platform. Data aggregators such as Plaid, MX, Fiserv and others are needed to facilitate this connection and the sharing of information, making it available not only through P2P payment apps like Venmo or Zelle, but also through private label debit cards like GasBuddy and Cumberland Farms, mortgage originators, and some digital-only banks.

Visa’s acquisition underscores how important data aggregation has become and reveals the direction it is heading. According to Grotta, Visa’s decision to buy Plaid gives it “a jump start in what is becoming the private sector approach to open banking in the United States.” 

Consumers are interested in using platforms that manage their finances

The results of the 2019 Expectations & Experiences: Consumer Payments survey from Fiserv indicated that consumers are interested in several financial management techniques that would require data aggregation.

In the survey, over 3,000 consumers ranked their interest level in the following financial management techniques:

1. The ability to manage their financial accounts from different organizations using a single online location or app.
2. A mobile money management/budget app that is connected to their bank and credit card accounts.
3. Aggregated credit card usage statements that would allow them to track spending in different budget categories across multiple cards.

For all three options, over one-third of the respondents were “Extremely Interested” or “Very Interested.” The generational difference was noteworthy. In some cases, Generation Z consumers reported being four to five times more interested in using these techniques than older adults.

Data aggregation benefits consumers and businesses

Diegelman provided PaymentsJournal with a clear example of data aggregation making the consumer experience smoother.

“Let’s say a consumer applies for a mortgage, and as part of the qualification process they need to provide three months of bank statements,” he said. Today, many mortgage originators are “providing the ability for the borrower to input their banking account credentials into the originator’s loan system, which then connects to an aggregator like Fiserv or Plaid.” 

This means that consumers can avoid the headache of bringing in paper bank statements or finding, scanning, and then emailing the statements as PDFs. Instead, such an approach offloads the work to an aggregator that provides the digital rendering of that statement directly into the mortgage generator’s platform.

“It’s entirely possible that this makes the mortgage process go much faster for the consumer. Speed and convenience are two dimensions data aggregation can provide, and consumers value speed when it comes to their finances,” added Diegelman.  

Data aggregation helps businesses, too. If a business wants to increase its customer base, and needs information to grow, using a data aggregator is an obvious opportunity.

Beyond that, though, data aggregators have already built the infrastructure needed to retrieve data from a banking or financial services platform and, at the consumers’ request, send data to a permissioned third-party. It would be extremely difficult, costly, and time-consuming for individual companies to take on the burden of building out thousands of connections themselves, when they can instead opt to take advantage of already in-place data aggregation systems from aggregators with strong data security.

Consent and privacy are hallmarks of a strong data aggregator

Strong data aggregators must live up to expectations of both sides of a transaction. When consumers want to connect their bank transactions to other apps, they do it for a specific purpose and expect their data to be used for that purpose. They have privacy expectations regarding who sees their transactions and how secure the transactions will be. Financial institutions, banks, and credit card platforms on the other end of the transaction have similar expectations.

Furthermore, even though a consumer provided their username or password via an app or platform of their choosing, this does not mean that the app has access to the credentials. Instead, the consumer’s credentials are often held in the smaller realm of data aggregation providers who offer security as part of their aggregation offering.

Data aggregation enables faster payments

Data aggregation is already working to enable faster payments. For example, if a consumer has to pay a monthly fee for their child’s school lunch, but the school only accepts ACH payments, it can be tedious for the parent to find their checkbook and routing information. Alternatively, a school website with an aggregation component would allow parents to connect their bank account using their bank account credentials.  

Another strong example of data aggregation enabling faster payments is the use of P2P payment platforms, such as Venmo or PayPal, instead of writing a check or going to the ATM to withdraw cash. After linking a bank account with the app, consumers can send money to others with the click of a few buttons. The recipient can then immediately deposit the funds into their account.

Grotta noted that data aggregation services may also be the mechanism that launches real-time payments in the point-of-sale environment. “It will certainly be an area to watch to see if new apps or payment devices connection with aggregation start developing new POS payment capability outside of the current networks being used today,” she said.

The future of data aggregation 

Looking forward, Diegelman identified two major developments related to data aggregation that are already underway: the shift away from screen scraping and the evolution of open banking.

The legacy method of data aggregation, known as screen scraping or credential-based harvesting, relies on an aggregator writing scripts and automating the same process a consumer would use to log into their bank. Then, the data that has been requested gets pulled.

The legacy method of screen scraping may create a burden on the technical infrastructure of banks, or may be a less-secure practice than other options. Thus, Diegelman expects larger financial institutions to continue to shift toward a form of direct connection such as OAuth, a token-based model that provides a dimension of privacy and consent. 

Secondly, open banking is maturing in the U.S. market at an advancing rate that is expected to continue. With that in mind, Fiserv became a board member Financial Data Exchange (FDX) in 2019. FDX brings together payments industry leaders that want to “develop standards around account aggregation with the goal of balancing consumers’ desire to utilize and share their data for some purposes and banks’ prioritization around data security and use cases.” Standardization by leaders in the industry will be needed to successfully expand the open banking market.

Conclusion

Data aggregation is currently experiencing high growth in the financial services world, and that growth won’t be slowing down anytime soon.

With aggregation, the convenience and speed demanded by consumers is made possible. Ultimately, maximizing the power of data through data aggregation services benefits consumers, businesses, and financial institutions alike. 

The post How Consumers and Companies Benefit from Data Aggregation appeared first on PaymentsJournal.

The topic of payment channel networks is arcane but also required to speed up blockchain transactions. Bitcoin uses Lightning and Ethereum uses Raiden as payment channel networks. This article (the research paper is much clearer) describes a new solution from MIT and others that utilizes the concept of packet-switching networks, such as X.25, to speed up payment transactions:

“Payment Channel Network permits users to charge accounts with a selected amount of virtual currency and is used on layer two scaling solutions. Remittances are carried out on such accounts, and only the opening and closing of the account is listed on the blockchain.

This results in a mode of payment that is allegedly much faster and scalable as compared to that made on the blockchain.

The MIT Spider is attributed as an efficient one because members can invest as little as a section of funds in their account. MIT spider can also process four times more transactions as compared to other payment checking networks.

The report also mentioned that the scheme functions by dividing transactions in small packets that spread across different channels, dividing helps to route big payments through accounts with low funding levels. Due to this method, congestion is avoided according to its developing team. Vibhaalakshmi mentioned that the MIT Spider was inspired by packet switching, which is an effective way of carrying data over the web.”

Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group

The post Speeding up Crypto Using a New Payment Channel Network Design (Faster Than Lightning) appeared first on PaymentsJournal.

Real time payments are in their infancy here in the U.S., which is a great time to look at the fraud experiences in other countries with real time payments platforms that are more mature.  A recent study that FICO conducted in Asia Pacific found some rather sobering facts:

The proliferation of real-time payments platforms, including person-to-person (P2P) transfers and mobile payment platforms across Asia Pacific, has increased fraud losses for the majority of banks. Silicon Valley analytics firm FICO recently conducted a survey with banks in the region and found that 4 out of 5 (78 percent) have seen their fraud losses increase.

Further to this, almost a quarter (22 percent) say that fraud will rise significantly in the next 12 months, with an additional 58 percent saying they expect a moderate rise in fraud.

“While the convenience of real-time payments is great news for customers, increasingly, banks have zero time to clear a transaction or payment. AI can’t slow down the clock, but it can help create systems that are radically quicker to recognize a transaction that smells likely to be fraudulent,” said Dan McConaghy, president of FICO in Asia Pacific. “Banks will need to move beyond passwords and OTPs and add biometrics, device telemetry and customer behavior analytics to keep up with the changing payments landscape.”

Banks in this APAC survey found that social engineering, followed by account takeovers were the greatest culprits. 

As Mercator discussed in a recent faster payment fraud report, a concerted focus on identity and authentication solutions is needed.  Solutions are available in the market place with new biometrics and multifactor options that can help.  In the U.S., most are waiting for volume to justify the investment. FICO’s survey found the following approaches are being used in APAC:

…the majority of APAC banks have a strategy of multifactor authentication (84 percent).  They increasingly use a wide range of authentication methods including: biometrics (64 percent), normal passwords (62 percent) and in last place behavioral authentication (38 percent). Interestingly, nearly half of the respondents (46 percent) are currently only using 1 or 2 of these strategies, potentially leaving them more exposed to attack vectors such as identity theft, account takeovers, cyberattacks.

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

The post In Real Time Payments Fraud: Lessons from APAC appeared first on PaymentsJournal.

While not a new idea—some states have considered transferring responsibility for sales tax collection and disbursement from merchants to payments processors —none of the efforts have succeeded, and attempts have mostly flown under the radar.

This may all change as Massachusetts Governor Charlie Baker has resurrected the sales tax collection idea by putting it into his fiscal 2021 state budget. This faster payments-type concept looks to accelerate sales tax revenue by collecting it and sending it to the state coffers in real time as purchase transactions occur.

States would get their money faster as well as possibly pick up any extra cash in case merchants under-pay sales tax collections. Right now, there is no software/hardware solution in place to make this happen, although as the article mentions, there are two interested private parties lobbying for these changes. Payments processers and providers have yet to weigh in publicly, but we can guess which side of the issue they will be on.

How far this proposed collection change goes remains to be seen. A legislative bill would have to be introduced then go through the sausage-making process of turning plan to law. We’ll be watching for future happenings on this far-reaching plan and keep PaymentsJournal readers informed.

A Boston Globe article discusses more on this topic, which is excerpted below:

Next, at the State House: Governor Charlie Baker included language in his proposed state budget to significantly accelerate sales tax collections, in part to get more money for the MBTA. One big potential beneficiary would be STAC Media, a startup that holds a patent for the tax-collection process — and that counts Cronin as a significant minority investor.

The budget proposes a two-phased effort to update and improve the current collection and remittance procedure for the state’s sales tax. The current procedure is antiquated and allows retail vendors to hold sales tax for as many as 50 days after they are paid by a consumer.

The initial phase will consist of the Commonwealth’s largest businesses remitting on a faster timeline. These businesses will be required to remit collections from the first three weeks of each month in the final week of that same month. Remittance for the final week and reconciliation of the monthly filing will continue to occur in the following month. This phase will only impact the largest 10% of businesses, which account for 90% of sales tax revenue.

Overview by Raymond Pucci, Director, Merchant Services at Mercator Advisory Group  

The post Massachusetts Revives Plan to Change Sales Tax Collection Process for Merchants appeared first on PaymentsJournal.

Understanding the payments industry in the U.S. can be a complex endeavor. The landscape is a crowded place, comprised of thousands of banks, credit unions, fintechs, and other organizations that offer a variety of products and services tailored to different aspects of the payment experience.

Then there is the issue of compliance. Companies must obey the myriad of regulations and laws governing how and when payments should be made, and what information needs to be requested, provided, recorded and stored. These rules can vary by payment rail, further adding to the complexity.

To navigate these challenges, many companies hire consultants to access their needed expertise. One such group is Nacha’s Elevation Consulting, which works with both national and global organizations – including startups, corporations, financial institutions, fintechs and more – to help them understand how to successfully utilize and optimize payments.

To learn more about Elevation, PaymentsJournal sat down with Samantha Carrier, senior director of Advanced Payment Solutions at Nacha. Joining us in the conversation was Aaron McPherson, vice president of Research Operations at Mercator Advisory Group.

During the conversation, Carrier and McPherson discussed the type of consulting work undertaken by Elevation and for whom, as well as Elevation’s payment calculator tool, and the challenges and opportunities posed by the ISO 20022 standards.

Elevation consults on more than just the ACH Network

Given that Nacha is the steward of the ACH Network, you would be forgiven for thinking its consulting arm would focus exclusively on questions related to ACH. However, Elevation’s offerings go well beyond the Network.

“While we certainly have quite a bit of depth on the team when it comes to ACH expertise, [many of whom have the] Accredited ACH Professionals credential to offer clients, our portfolio of businesses is actually pretty diverse,” said Carrier. “With so much going on in the industry, our team has really had an opportunity to work with a lot of different players in the banking system.”

Banks, businesses, technology providers, and others hire Elevation for a variety of reasons. Some seek payments advisory and strategy, while others seek custom education and even custom rulewriting. Additionally, Carrier explained how Elevation often helps smaller financial institutions develop their digital strategy as it relates to payments.

“With those engagements, we’ve been working with financial institutions to look not only at how to better leverage and expand what they’re doing with ACH, but also to look at things like RTP and Zelle,” said Carrier. “We’ve even done work for clients in the wires and card space. People may be surprised that Elevation helps companies from a broader payments perspective.”

Carrier noted that due to the high volume of innovation currently going on in the payments industry, Elevation often works with fintechs as well.

Elevation also helps foreign clients

Elevation’s clients aren’t confined to the U.S. “When we first launched Elevation, we had assumed that our primary focus would be on U.S.-based businesses,” said Carrier. “And while that does comprise the vast majority of engagements that we work on, we’ve seen growth in terms of our clients that are based outside of the U.S.”

For example, a foreign company looking to bring its product to the U.S. market might work with Elevation to better understand which of the available payment rails is optimal for a specific use case. A foreign company can also rely on Elevation to better understand compliance rules.

Elevation currently has clients in Europe and Latin America, and Carrier predicts that the number of foreign clients will continue to grow.

Education is key for Elevation

Another part of Elevation’s engagement portfolio is customized education and training offerings. “It’s very targeted training for a specific client and perhaps a specific product that they’re looking to work on or expand,” said Carrier.

For instance, perhaps a company had high turnover in its ACH operations group and wants to get the new recruits up to speed. Or perhaps a company recently invested in new technology that impacted its payments system. In either case, the company can hire Elevation to provide highly specialized training.

For one recent engagement with a fintech, Elevation provided training opportunities for the company’s product managers, sales team executives and others. “The training covered quite a bit of content inclusive of ACH, but also emerging payments technology such as helping them with how APIs are driving change in the industry, payment speed, interoperability, cross-border payments and more,” Carrier said.  

Elevation’s emphasis on education comes as no surprise, as Nacha offers a wide variety of educational resources, both online and in person. In a sense, Elevation’s custom-made educational approach complements Nacha’s broader educational resources.

The online payments calculator

When you visit Elevation’s website, you will find a helpful tool: the Cost Calculator. Once you input information related to your company’s payments mix, the calculator will point out potential areas where you can achieve savings. For example, perhaps there is an opportunity to save money if the company switched more of its payments to the ACH Network.

“It will give you a gut check on how payments mix have cost implications,” Carrier said. Elevation also offers a more sophisticated calculator. In that case, the Elevation team meets with the client and conducts a deep dive into their payments mix.

Working to help clients understand ISO 20022

As the consulting arm of Nacha, Elevation is well-versed in the ISO 20022 standard. Nacha remains deeply involved in the ISO 20022 community, explained Carrier. “We’ve actually worked on developing [payment] messages that are part of ISO 20022.”

Specifically, Nacha has recently done work leveraging the ISO 20022 standard in the development of APIs.

Against this backdrop, Elevation is well-positioned to help financial institutions and other organizations understand how the format can be useful, and how it can be used for specific business use cases. “There’s an education gap there in some cases where Elevation has been able to offer support,” explained Carrier.

While Nacha’s Elevation Consulting does provide a lot of expertise related to ACH, its value doesn’t end there. From helping businesses create payment strategies to providing education on the newest regulations, Elevation is helping diverse organizations get a better handle on the payments industry as a whole.

The post Meet Elevation, Nacha’s Consulting Arm appeared first on PaymentsJournal.

I just read a commentary piece by Harsh Sinha on CNBC’s website titled Despite how earnings go, US banks remain far behind on this big tech issue. In the piece Mr. Sinha, the chief technology officer at TransferWise, makes his case for the U.S. government’s FedNow initiative to create a national faster payments network.

Once implemented, “FedNow” will be a real-time gross settlement system that settles retail payments by debiting and crediting an institution’s account(s) with a Federal Reserve Bank. Alongside this, I proposed that the Fed should enable 24x7x365 access to a liquidity tool like FedWire for all financial institutions.

He makes some very valid points in his commentary, among them: The current ACH system is old and may need to be brought into this century, smaller financial institutions can feel locked out of the current system, and other countries are adopting new real-time settlement processes.

That said, the development of FedNow or, anything like it, to serve the entire financial institution ecosystem is much more difficult than one may think. The U.S. has a uniquely complicated financial system. Developing something that works for a $100 billion community bank may not be the same as a multi-trillion dollar mega bank. Not to mention the ancillary player who want to get into the game.

The other countries mentioned by Mr. Sinha, generally speaking, have less sophisticated financial system or a less developed financial ecosystem, making development of such a platform much simpler.

I think that this issue is far more complex than some would like us to believe. When evaluating the FedNow issue, like anything else, it is more complicated than first thought.

These are my two cents. I am not an expert on this matter. I highly recommend reading some of the work our own Sarah Grotta has written on the subject (and others for that matter).

Overview by Peter Reville, Director, Primary Research Services at Mercator Advisory Group

The post Faster Payments: Caveat Emptor appeared first on PaymentsJournal.

Drivers looking for faster pit stops will have another payment option later this year. As announced at CES 2020 in Las Vegas, Fiserv and ExxonMobil are partnering with Alexa and Amazon Pay to enable conversational commerce at the pump.

For vehicles equipped with Alexa, drivers will be able to pull up to a gas station pump and give voice commands to select a pump and authorize a payment. Expect to see more connected car commerce to expand consumers’ mobile order and pay options from their vehicles.

A Business Wire article discusses more on this topic, which is excerpted below:

Ahead of CES 2020, ExxonMobil and Fiserv announced that they are transforming the way people pay for gasoline using Amazon Alexa. Coming later this year, consumers with Alexa-enabled vehicles, Echo Auto, and other Alexa-enabled mobility devices will be able to say, “Alexa, pay for gas” when they pull up to the pump. This new experience will initially be available at over 11,500 Exxon and Mobil stations in the U.S., and is being demonstrated for the first time at CES 2020 in the Amazon Automotive booth (Las Vegas Convention Center, North Hall #5616).

Transactions will be processed using Amazon Pay, allowing consumers to securely use the payment information stored in their Amazon account, and powered by digital commerce technology from Fiserv, Inc. (NASDAQ:FISV), a leading global provider of payments and financial services technology solutions.

“We’re excited to bring new technology and better experiences to the gas station,” said Eric Carmichael, Americas fuels marketing manager at ExxonMobil. “We build and seek out technology that will wow our consumers, providing both ease of use and security.”

“As consumer expectations change, there is growing demand for frictionless interactions that span the digital and physical worlds,” said Devin McGranahan, senior group president, Global Business Solutions at Fiserv. “The age of connected commerce is here, and voice-activated smart devices will play a pivotal role in the future of payments by streamlining the way consumers make purchases every day.”

Overview by Raymond Pucci, Director, Merchant Services at Mercator Advisory Group

The post Fiserv and ExxonMobil Fueling Fill-Ups With Alexa appeared first on PaymentsJournal.

I don’t think that anyone would be surprised if I were to say that the way that consumers and businesses pay for things is changing. While old habits die hard, the shift away from many conventional payment methods, caused by many new ways to pay, is underway.

While many authors have pointed out this change, further proof was published recently in an article from Digital Transaction titled New Fed Data Underscores How Far Electronic Payments Have Eaten Into Checks. 

This article shares Federal Reserve data that shows check issuance was down 20.7% from 2015 to 2018 (20.3 billion checks written in 2015 versus 16 billion in 2018).  In this article, the author also mentions that ATM cash withdrawals are down by 100 million transactions over the same time frame.

People and businesses still need to pay for things.  While credit card transactions are up, there are other payment methods that are in play that are eating into the check and ATM usage numbers.  Here are just a few from the consumer side:

• Electronic Bill Pay – Mercator’s most recent PaymentsInsights data of 3,000 consumers reveals that 60% of American are paying at least some of their bills via automatic bank withdrawal and 60% are also paying bills digitally via online banking or paying the biller directly via the internet. By contrast only 27% of consumers pay by mail (a proxy for check)
• Digital Wallets – Although they may not have lived up to the hype, digital wallet use is still impacting the use of other payment types.  PaymentsInsights data shows that the use of digital wallets has increased 13% since 2016 from 53% to 60%.
• Shifting Merchant Repertoires – Consumers are shopping at different types of merchants.  Subscription services, online retailers, Uber, Postmates, etc. are all predominately dedicated to electronic payments.
• Peer to Peer (P2P) Services – The services such as PayPal, Venmo, Zelle and the like have taken situations where a consumer might write a check or use cash to pay another person, and shifted that to an electronic transaction.  Our most recent PaymentsInsights data shows that in 2019 about two-thirds (67%) of consumers are using P2P services up from 60% in 2018.

With the changing payments landscapes checks are likely to continue to steadily decline and suffer the “death of a thousand knives”.

Overview by Peter Reville, Director, Primary Research Services at Mercator Advisory Group

The post Check Usage is Down – and I Can’t Say I’m Surprised appeared first on PaymentsJournal.

Banco Sabadell, Banco Santander, Bankia, BBVA, and CaixaBank have deployed a smart contracts test platform built on blockchain that enables interbank payments between the partners. While this article provides no details regarding the smart contract implementation, this aspect is the most likely source of risk. 

The trend, starting with Ethereum, has been to utilize a Turing complete development language which has no restrictions on what can be programmed other than costs associated with resources consumed. This, in turn, makes validation that the contract will execute as expected extremely difficult or even impossible. A better solution would use a restricted language, possibly one linked to a modelling system that can validate both the actions that will be taken, action triggers, and completeness or a special language that exposes only those contractual terms required:

Banco Sabadell, Banco Santander, Bankia, BBVA and CaixaBank have initiated a proof-of-concept test to deploy an interbank Smart Payments Platform that would enable the execution of payments in blockchain networks.

The initiative, coordinated by Iberpay, the company that manages the Spanish Payment System (SNCE), aims to facilitate the initiation of instant credit transfers from smart contracts deployed in a blockchain network.

Iberpay says that any kind of business case developed with the technology could execute and programme automatic payments – from the signing of a contract to the delivery of goods.

Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group

The post Spanish Banks Deploy Smart Contracts with Payments in 6 Month Trial appeared first on PaymentsJournal.

Payrailz, a technology provider of payment capabilities for financial institutions (FIs), announced they are piloting the Mastercard Bill Pay Exchange product.  This is a bank or credit union centric bill pay solution that offers consumers a choice of payment type when paying bills. Today, most FI bill pay solutions limit the payment option to just the user’s checking account.  Sometimes consumers like to use other payment types like credit cards, either for rewards or for those times when they need just a little more time to pay off an expense.  Mastercard’s product also offers features like alerts, a simple user experience, and faster payment options, features billers have been offering for some time. 

Payrailz joins a network dedicated to enhancing consumers’ bill pay experience, particularly telecom, utility, rent, credit card, mortgage and other personal bills. The program enables consumers to pay these bills directly through their financial institution by using a single touch point. This removes the need to set up multiple direct accounts with each service provider.

This solution will give billers access to a new billing and payment channel, which can reduce the cost of mailing paper bills and processing checks, provide streamlined reconciliation and lower customer support costs due to added payment transparency. Billers will also have the option of accepting cards, real-time payments or traditional bank account payments as they do on their own websites.

The Mastercard Bill Pay Exchange represents a major shift in the way consumers, billers and financial institutions will handle bill payments,” said Fran Duggan, CEO of Payrailz. “We are honored to be involved in this initiative and see this cooperative approach to transforming the bill pay experience as a necessary and timely development. 

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

The post Payrailz Pilots Mastercard’s Bill Pay Exchange Solution appeared first on PaymentsJournal.

Over the past five years, Instant Payment schemes have been developed across the world, gaining the attention of consumers, banks, corporates and regulators. While initially making waves in the consumer-to-consumer space, Instant Payments have grown in global prominence for consumer-to-business and business-to-business payments, with participation in some schemes even mandatory in several countries.

“Instant Payments offer a broad variety of benefits, allowing companies to initiate liability payments at the exact moment they are due, meaning that liquidity can be better put to use elsewhere,” says Christof Hofmann, Global Head of Payments & Collection Products at Deutsche Bank. “They can also facilitate credit transfers between parent companies and subsidiaries and be used for bulk payments. The benefits also extend to recipients: Instant Payments are irrevocable and lower in cost compared to credit cards since no additional fees for guarantees are necessary.”

While the initial corporate use cases for Instant Payments emerged in the consumer-to -business space, there are numerous ways that they can be used by corporates, such as: booking spare capacity last-minute (whether with cargo companies, manufacturers or other providers), securing on-demand services (such as cloud computing), or augmenting the client experience (allowing immediate responses to incoming payments or instant pay-out of due claims).

To fully embrace the potential of Instant Payments, corporates need to interact with their bank with almost no latency. This can be realised by the great opportunity of combining Instant Payments with application programming interfaces (APIs) to provide safe, real-time connectivity and interactive collaboration. 

“The beauty of using an API solution is that the corporate is able to interact with their bank in real time, 24/7, without downtimes or cut-off times,” adds Hofmann. “The bank, in turn, can offer a better, more cost-efficient service to clients, improving liquidity and potentially gaining a competitive advantage over peers.”

Deutsche Bank’s guide concludes that it is not only speed that differentiates Instant Payments and traditional payment systems. The combination of innovative services that utilise the real-time technology with other market initiatives, such as Request to Pay, will drive market adoption and potentially help establish Instant Payments as the “new normal”.

“Making a payment in real time can be seen as simply the first step on the journey to a real-time treasury,” says Hofmann.“Looking ahead, instant payments mean that liquidity buffers become obsolete, with surplus cash invested elsewhere. Real-time cash-flow forecasts will pinpoint the exact time and amount of borrowings that may be required.”

Read “Instant Payments: a guide for corporates” here.

The post Instant Payments a First Step on the Journey to Real-Time Treasury, Says Deutsche Bank appeared first on PaymentsJournal.

Selling accounts payable automation internally to CFOs has become a recent topic of discussion online among this group. CFOs are finding themselves asking two common follow-up questions of AP practitioners who pitch automation to them:

Why now? And why fix what isn’t broken?

These questions can be difficult to counter because they’re so open-ended. Here are a few ways to break them down and make a strong case for change.

Why Adopt Automation Now?

Managers at all levels ask this question about virtually every technological and process change. And if the change isn’t absolutely necessary to comply with regulations, very few accepted answers exist beyond the idea that the proposed change will either:

• increase efficiency 
• save costs 
• add to revenue 

…or all three, which is what payment automation inevitably does.

Of course, the question of “why now” with regards to checks is beyond arbitrary. Modern paper checks date back to 17th century England, and have been largely phased out in the personal finance realm by debit cards, digital truncation and online payments. But in business, virtually all industries have kept this nearly 500-year-old payment method at the center of their AP process in one way or another.

That loyalty to one method comes at an increasing cost. According to Levvel Research’s 2018 Payables Insight Report, a full 48% of AP professionals identified manual data entry and inefficient processes as their number-one pain point. Companies with legacy paper-based manual processes waste valuable time and money spent annually on processing. Between hidden costs like payment errors, late payments, approval time, the cost of poor visibility, file storage, and headcount and hiring, the price of making a vendor payment by check can range between $4-$15.

After years of employing manual methods, AP teams have stacked up substantial payment costs that could have been spent more effectively on process improvements and deeper initiatives. The pace of modern business has pushed AP into the grey zone between manual processes and automation after decades of paper as the default payment method.

Why now? Because time’s up.

Digitization and on-demand insights have rendered paper the wrong medium for payments. Paper invoices and checks will eventually need to disappear from the payables process in order for AP teams to realize their true strategic value.

Why Fix What Isn’t Broken?

This question is clichéd precisely because it makes complete sense—especially given the vivid imagery that the word “broken” conjures. We’re not pointing at a plow with a cracked handle here. But when it comes to process-automation changes brought about by tech development, it begs a couple of other questions:

• Why improve anything? For example, the check-writing task that your check-printing process replaced wasn’t exactly “broken”—it was just inefficient. It took up too much time, which ultimately cost your business more money than necessary.
• Will it cost you more to fix it after it breaks? Your car’s onboard computer system is designed to alert you to problems before total (and expensive) mechanical failure occurs. Do you have similar alerts in place for your company’s finances—and are you paying attention to them?

The obvious next question becomes: How does your company determine when your payment process is “broken”? When payment fraud causes you financial and reputational loss? When a pay run error damages your supplier relationships?

If you stay committed to a manual, paper-based payment process, you keep risking fraud over the long term—especially if your team doesn’t fully resource proper security reviews of all parts of the processes.

The Bottom Line

Of course, this is about far more than an issue of whether or when to initiate a fix to your AP. Using automation to optimize your payment process doesn’t only improve fraud recognition and reduce errors. It makes payments more time- and cost-efficient, and gives your AP team the chance to take on strategic initiatives like negotiating better payment terms. All of these improvements give your organization a more competitive edge.

A side-note on competitive edge: while some teams may not even recognize the need to upgrade their payment process, the cost of not doing so could eventually cause employee burn-out. This eventually results in unproductive work, a high turnover rate, or both. As a manager and leader, you want to avoid both scenarios.

The post The Business Case for AP Automation: Why You Should Fix Broken Things Now appeared first on PaymentsJournal.

One of the hottest topics in the payments industry today is faster payments. Consumers increasingly want faster, more seamless payment experiences and a mix of fintechs and financial institutions are releasing new services to meet this demand.

Whether it be new payment rails or the sleek customer-facing interfaces that leverage them, the payments landscape is undergoing a transformation that all industry stakeholders should understand. However, it can be a complicated topic because the term refers to a myriad of different products and services, and uncertainty exists on how to connect to faster rails and what the benefits are of doing so.

To aid industry stakeholders seeking to better understand the rapidly evolving world, Nacha’s Payments Innovation Alliance and the U.S. Faster Payments Council (FPC) jointly launched the Faster Payments Playbook, an online educational and decisioning resource.