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Payments future: Combination of the new services and old solutions that never die

Recently NACHA - The Electronic Payments Association  in the USA - were delighted to announce the results of a survey with Credit Research Foundation, credit and account receivables professionals, that predicts that in the USA ACH transactions will surpass checks as the leading form of payment received from business customers by 2020. Cheques have been in long term decline around the word, e.g. In USA down to 50% from 63% in 2014, in UK they are declining at 15%/year. Cash is declining in the developed countries too, but what will be the end state?

UK shows the future

The UK Clearings payment statistics report for May 2017 reported that:

  • BACS:
    • Direct credits fell by 1% at 2.1bn
    • direct debits +4% at 4.2bn
  • Faster Payments Service: Single immediate payments +20% at 0.96bn 
  • cheques: fell by 15% at 0.32 bn
  • debit cards are growing at 14% (predicted to pass cash next year, see)
  • cash: 47% of all transactions at Point of Sale.

For corporate treasurers this raises key questions can they stop accepting:

  • Cheques?
  • Cash?

It is clear that the answers will vary depending on the dynamics of each industry and market segment, e.g. airlines had no problem in stopping accepting cash for in-flight payments, but UK Payments could not get rid of cheques because there were too many market segments that still used them.

Payment systems future

The NACHA / CRF survey found that most credit professional believed that checks were still essential for some segments. It is this combination of the old and the new that is going to dominate.

The massive growth in Real-time Payment Systems, sometimes called Instant Payments or Faster Payments, is set to continue as RTPs bring many new dimensions to payments as Edgar, Dunn & Co. showed in their thought provoking report:

Source & Copyright©2017 - Edgar, Dunn & Co. 

But it will be combined, as the UK is showing, with the old systems. Cash and cheques will never die completely.

CTMfile take: The API driven future of payment systems will still need to include cash and cheques. ACHs bulk payment services will still grow in their niche, Real-Time Payments systems will not take over completely. 

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