A webinar on the SEPA Instant Payments initiative hosted by D+H and Finextra discussed the revolution currently transforming the payments industry, in particular through real-time payments.
The growing use of smartphones, combined with the boom in online commerce, is driving the rising adoption of real-time payments, according to the webinar's moderator, Gene Neyer of D+H. Initiatives to implement real-time payments are popping up globally, including these three flagship instant payment schemes:
- The EU's SEPA Instant Payments, effective from November 2017
- In the US, The Clearing House's real-time payments scheme was announced in April this year
- Australia’s New Payment Platform (NPP) for real-time, low-value payments is expected to be operational later this year
Banks struggling to digitise
The advent of real-time, or immediate, payments raises several questions for banks. Finextra's Gary Wright said: “I think one of the struggles for banks at the moment is the question of what kind of organisation are they trying to be in today’s world?” Banks are dealing with changing regulation, changing technology, legacy systems and higher customer expectations, meaning that they have to re-focus their strategies on digital services to remain competitive.
Instant payments alone 'not enough'
An interesting point was raised by John Broxis, of PRETA, a digital payments and identity company owned by EBA Clearing, who said that instant payments in themselves are not enough. He argued that an instant information service is also needed: “You need a services layer which sits on top, so that not only do I receive the money in real-time, but I know that I’ve received the money in real-time. So I can hand over the goods or the services that are being asked for.” He cited the example of Faster Payments in the UK, which was introduced in 2008 but its benefits didn't become generally acknowledged until fairly recently, when the immediate payments ability became connected to mobile services.
The potential of blockchain?
The webinar also discussed the problems facing banks in terms of their legacy IT systems and the challenge of digitising so they can offer digital-based services to customers. The panellists also discussed how blockchain could transform real-time payments and agreed that everyone is closely watching this space, although the real-time systems currently under development are not based on blockchain technology.
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