Compared to the United States, other geographies have seemingly had an easier task to bring real time payments to market – simply based on their size.
Yet, accessibility and ubiquity remain obstacles even in countries with many fewer players than the U.S. Increased payment system access by more players has the potential to reduce complexity as some barriers are eliminated, while accessibility may also increase the work required of those who now have to directly deal with the scheme’s application process and connections.
Accessibility may also require “liquidity,” depending on how transactions are funded or pre-funded, creating another hurdle for those who desire direct access. And, even if accessibility is broadened, there is no surety of ubiquity – the absolute certainty that anyone can send a payment to anyone else.
At its recent Payments Innovation Alliance meeting in Dublin, Ireland, Nacha, The Electronic Payments Association, brought together banks and providers involved in existing real time payment systems from around the world. The meeting encouraged participants to “forget theory” and to instead “focus on reality,” by sharing actual real time payments experiences from adoption to fraud mitigation.
In the U.K., where direct access to the faster payments scheme is now happening, the hope is that fewer barriers will spur volume. When initially deployed, existing volume from other payment types was moved to the faster payments rails to gain the volumes needed for efficiencies, even if the payments didn’t really move real-time. In contrast, Sweden began with new applications to replace cash, so all initial volume came from new, incremental electronic payments with new, end-user behavior.
New behavior is a tricky animal – can you teach an old dog new tricks? Does acceptance and use of a new payment type vary by consumer or business or age of the user? In the corporate area, once a new payment type was presented, behavior started to change. Real time payments prompted new uses such as supporting a government’s regulation on buying or selling metals that required safety, visibility and control. In a different way, small businesses embraced this new payment type in simple ways. A florist in Denmark hung a sign that displayed their mobile phone number as an identifier to help direct real time payments to their bank account by those picking up flowers from the market on a Saturday morning.
So, is it as easy as developing a new service and they will come? There were some lessons learned and some hints for those countries now embarking upon deployment of new real time payment systems. Yes, fraud will be present, but there are ways to begin to prepare even before speed picks up. The same due diligence and processes will be needed when payments speed up, review policies and responsibilities and consider what may be better accomplished automatically vs. manually.
But there are some new twists to consider. What if you are traversing from one payment system to another? How do you balance the expectation of a “return” in a new payment system where the payment is final and irrevocable? These are topics where bringing diverse parties together to make decisions is incredibly important. And, that is what NACHA will continue to do in future Alliance meetings and in its other venues for dialogue with the payments industry.