Real-time payment system planned for Bank of Tanzania: Rollout date February 2022

According to the Citizens’ news report, Bank of Tanzania (BoT) is currently in the process of introducing a new payment system, the Tanzania Instant Payment System (TIPS). After being put on hold due to the pandemic, the system was first rescheduled for launch in December 2021 but was postponed again due to an upgrade. It is now planned to launch in February 2022.

BoT launched the TIPS pilot program successfully in June 2021. Bernard Dadi, National Payment System Director, BoT, stated that they tested the project with three banks and two mobile organizations, Airtel and Tigo. According to BoT, the TIPS runs from a single platform on which the user is registered. Those who wish to send money will search for the name of the recipient registered in the system and initiate the payment. Registration with the system is possible via the USSD code and application. Mobile money operators such as Airtel Money, Tigo, MPesa, HaloPesa, Ezy Pesa and TPesa will be integrated into the program.

There are several stages involved with the TIPS innovation process. Dadi added that the first step will begin with individual-to-individual payments and individual-to-business payments. BoT plans to add tax payment and lump sum payments as part of their fourth development phase initiatives. Additionally, BoT stated that further possible enhancements on the development of a digital currency platform could include CBDCs and conceivably cryptocurrencies.

 

Real-time payments for consumer bill pay: US Bank becomes the trendsetter

The bill payments world has been resistant to change for many years. However, a change is in motion as instant payments continue to trend. US Bank, a subsidiary of US Bancorp, has begun the process to deliver real-time payments to US Bank’s consumers on their bill payments.

Request for Payment (RfP), a real-time payments (RTP) solution to transform how billers send and customers pay their bills, was used to successfully test US Bank’s consumer bill payment system. US Bank expects to launch this feature to consumer bank clients during the first quarter of 2022.

US Bank, a high-tech financial institution and high-performance payments company, has worked closely with The Clearing House to develop and create valuable customer applications for the RTP network. With the RfPs, consumers are ensured payments have cleared immediately 24/7. RfPs provide a reduction in costs for the billers by decreasing paper transactions and increasing transparency about when payments are received.

The complete transaction process takes place in real time, providing both the sender and the biller with the assurance that the invoice is paid immediately and contains the pertinent information related to the bill in an easy and systematic way. Shailesh Kotwal, Vice Chair, Payment Services, US Bank, commented that RfP provides an innovative, frictionless bill payment system for billers and consumers.

Below is the procedure on the bill payment process:

• The biller initiates an RfP and submits an electronic bill to the consumer's bank.

• The consumer will receive a notification via the banking app with the biller's name, amount to be paid, and due date.

• The customers pay immediately upon receipt or schedule payment.

• The biller will receive the payment on time, with irrevocable funds.

• Customers will see an immediate confirmation that the invoice has been paid.

Tim Welsh, Vice Chair, Consumer and Business Banking, US Bank, stated that this innovation is US Bank’s commitment to provide clients with solutions to effectively and seamlessly manage their funds. Furthermore, RfP has the potential to add other applications such as opening online accounts, transfers between accounts, e-invoicing small businesses, and simplified payables.

Currently, US bank has enabled the RfP feature for enterprises through their digital solutions for accounts receivable teams. Many companies are waiting for consumers to receive these invoice payment requests. Once received, they will be able to incorporate RfP options into their accounts receivable process and platform.

 

China's messaging app WeChat en route to accepting digital yuan payments

WeChat, China's messaging platform, will begin accepting digital yuan payments. With over 1 billion users in messaging apps, this is expected to drive adoption of China’s digital yuan, eCNY. Additionally, WeChat Pay is a versatile messaging and mobile payment application. The introduction of this service is expected to significantly increase the number of digital source users.

As fierce competition increases, WeChat Pay is currently not the only payment platform aimed at increasing the use of digital yuan. One of WeChat's major competitors in China, AliPay, is also trying to facilitate digital payments. In 2021, AliPay, a subsidiary of Alibaba's Ant Group, began investigating the introduction of Central Bank Digital Currency (CBDC) in China. According to Linhao Bao, analyst, Consultancy Trivium China, the consumers in China find it challenging to switch to a new mobile payment platform. Furthermore, AliPay and WeChat Pay have been the main mobile payment methods in the Chinese market for a long period of time. Bao added that the integration between these two payment methods and the central bank would be complementary as they move forward.

Intense efforts have been strengthened in recent months to promote the adoption of CBDC. In November 2021, the People’s Bank of China (PBoC) stated that about 140 million people have created digital yuan wallets. Additionally, PBoC recently released a pilot version of the eCNY, a blockchain type of CBDC backed by the local bank reserves in China. This mobile wallet will be used with the digital yuan, and the pilot apps are available across China on iOS and android devices. Local users of the digital yuan can now download the application and perform pilot tests on the operation and dissemination of the CBDC.

Pilot testing was initially available in Shanghai and later expanded to other cities. The PBoC also said that the pilot version of the digital yuan will only be available to certified users. Users are selected by the institution that provides the eCNY service.

 

The Fed`s plan for single-day Fedwire ISO 20022 migration in 2023

The Federal Reserve plans to move Fedwire Funds Services to the ISO 20022 messaging standard in one day. However, the American Bankers Association (ABA) supports these plans but is concerned about the minimal detail specifications on testing strategies and conversion requirements.

In response to a request for comment from the Federal Reserve Board, ABA will back the implementation strategy for the November 2023 transition to ISO 20022 but proposes one of two weekends with no bank holidays. The ABA also stated that it is critical that the transfer to ISO 20022 also occur on the same day as the Clearing House’s Chips service migration to ISO 20022.

Additionally, the ABA agrees with the schedule, but states that banks need a detailed implementation plan as soon as possible so that they can form a team and allocate resources to begin preparation and testing. Furthermore, a technology comprehensive plan to include critical timeline dates for system testing and requirements will be essential for the board and reserve banks.

In addition to the Fedwire migration, US banks are similarly preparing for SWIFT’s ISO 20022 movement scheduled for November 2022 and the FedNow real-time payments system set to be live in 2023. The ABA is requesting the Fed to withdraw plans to extend operation of Fedwire and the National Settlement Service and make the ISO 20022 migration the top priority, due to bank constraints on limited resources and time.