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Immediate/Faster Payments solutions rolling out world-wide

As commerce around the world has become a twenty four hour a-day, seven days a week real-time reality, payment technology has also moved to real-time. This allows for the transfer of money from one account to another immediately, with certainty and convenience, and at a low cost. In the Fundtech white paper by SVP Gene Neyer, he surveys the development of representative Immediate Payment schemes, identifies lessons learnt and lays out a case for a strategic response (by the banks) to this “once in a generation” paradigm shift.

For corporate treasurers. it is this global move to immediate payments that will mean that their bill collection systems need to be adjusted be ready for ugh numbers of real-time payments. 

Systems review and comparison
Nyer reviews the development and progress of the Immediate Payment Systems in the UK - Faster Payments, Mexico, Sweden, and Singapore. He then reviews the New Payment Platform in Australia. 

He concludes that although very different in detail, all the infrastructures reviewed show the common commitment to speed, availability and convenience. The differences are driven more by history, technology choices (Mexico, in particular) and the business models that apply in a given country. His summary table presented the main differences between different countries’ schemes. And that overall that a singular, “right” model for Immediate Payments is not likely to be feasible in the immediate term, with two caveats:

  • ISO 20022 is the preferred message format;
  • there is strong agreement on the requirement to offer immediate posting at any time;  
  • the requirement can only be met by the development of a new central infrastructure. As seen in the case of Mexico, by leveraging an existing RTGS system, the goals associated with cost, convenience, and speed can be met, however “around the-clock availability” cannot be attained with a system designed around the “closing of the books.”

Immediate Payment solutions are coming
Gene Neyer clearly believes that immediate payment solutions will become available world-wide. In at least 50 countries and possibly as many as 100. He suggests how banks can prepare, despite the diversity of the country implementation models, for Immediate Payments even before the detail of the scheme in a particular country is known. 

There is a driving need for Immediate Payment solutions because the Internet and telephone banking payments which need almost real-time payments are driving payment volumes. Migrating payments from the old overnight ACHs happened very quickly as the graph below for the UK shows:


 


 No country is immune from this move to Internet and telephone payments, so you can expect Immediate Payment systems in almost all countries AND ISO 20022 to be used.

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