2018 marks the fifth year of FIS’ report “Flavors of Fast”. It was originally inspired to capture the early but remarkable influences of faster payments schemes around the world. In 2014, it counted a total of 14 live schemes. By the time the 2017 report went live, there were 25 countries live with faster payment schemes.
This year, that number jumped to an astounding 40 countries live with faster payment schemes, fuelled in part by regions like Australia, the United States, and the launch of the SEPA Instant Credit Transfer (SCT Inst) scheme, created by the European Payments Council (EPC). SCT Inst is expected to progressively bring faster payments to more than 30 countries over the course of the next year.
Real-time payments are about more than just speed. They create frictionless commerce and enable a financial world in which the entire payment process occurs seamlessly and immediately. An open payments system can also provide opportunities for financial institutions to help commercial and retail customers better understand and manage their financial picture with greater ease.
By developing innovative overlay services on top of the faster payment rails, whether through Open Banking initiatives or new ways of initiating payments through QR code scanning, all parties in the value chain benefit.
Initiatives like the sharing of application programming interface (API) access among financial institutions, as an introduction to customers and their customers’ data, has shifted the conversation about the potential for faster payments.
The discussion is no longer about the business case for faster payments but adding real business value to commerce in all spheres of operation. What is driving increased interest in the deployment and uptake of real-time payments, what has changed and what does this mean for consumers, merchants, governments and corporations?
Are instant payments primarily a P2P instrument, or will they become a mainstream tool used in the business-to-business (B2B) sphere too? Once the instant payment infrastructure is in place, the real debate lies in the solutions and use cases that are available in the market and how to tailor the characteristics of these services to each customer segment.
The research found that overlay services – chat, retail apps, instant loans and more – and open APIs provide innovations that encourage consumers and businesses to use real-time payments. For example, a supermarket chain in France implemented instant payments through its shop app; this simplified payments for shoppers and reduced card acquisition, processing fees and check usage for the company.
Meanwhile, India’s Immediate Payment Service (IMPS), which runs through the country’s Unified Payment Interface (UPI), has allowed money transfer apps to feature chatting capabilities. This further encourages public use of real-time innovation.
“The growth of real-time payments programs around the world speaks to consumer demand and the rapid innovation that exists today,” explains Gareth Lodge, senior analyst, Celent. “Real time payments is a competitive differentiator for the bank that gets it right.”
The 2018 report highlighted three particularly innovative real-time payments programs as part of its “Faster Payments Innovation Index.” The index, which rated programs on a scale of 1-5 (5 being highest), measured the comprehensiveness of real-time payments projects and how well they meet the needs of consumers and corporate customers.
- India’s Immediate Payment Service (IMPS) took home the report’s only 5 rating for the second year in a row. The fastest growing immediate payment system in the world, IMPS daily transaction volume grew from about two million per day in 2017 to approximately 2.8 million per day this year. The project’s high rating was based on the system’s standard, published API and strong participation from third-party vendors.
- Australia’s New Payments Platform (NPP), which went live in Feb. 2018, received a 4+ rating. NPP enables real-time clearing and settlement 24 hours a day, seven days a week. It provides Australian businesses and consumers with a fast and versatile payments system for making their everyday payments.
- Singapore received a 4+ rating for its Fast and Secure Transfers (FAST) service. Covering credit transfers, direct debits, bill payment, P2P, merchant payments, mobile and more, FAST allows customers from 20 of Singapore’s participating banks to move funds almost instantly 24 hours a day, seven days a week.
Twelve other programs received 4+ or 4 ratings in this year’s index. That includes China, which now makes 25.9 million faster payment transfers every day – up from 12 million in 2017; Single Euro Payments Area (SEPA) Instant Credit Transfer Scheme, which expects to have 34 countries live with real-time payments by 2019; and the United States, which saw the launch of its first real-time payments system in late 2017.
The report also calls out Germany and Hong Kong as two countries poised to make significant strides forward in implementation of real-time payments schemes.
To read the report click HERE