An increasing number of US businesses are showing interest in real-time payments. A recent survey of 150 companies by Citizens Financial Group found that more than 41% are in talks with their banks about the real-time payments network or are having discussion about doing so.
However, the chief of payment card giant Visa Inc has questioned whether the resources being expended by banks and governments around the world in systems for instantly transferring money between accounts represent a sound investment – or that they will seriously trouble Visa as the world’s largest payment network.
Speaking at an investor conference in New York, Al Kelly said of real-time and instant payments systems: “I’m not convinced that these are going to take off like crazy. Does the consumer really need the funds that much faster?”
Real-time payments in the US were launched in late 2017 by The Clearing House (TCH), the bank-backed automated clearing house (ACH). At the time, it was forecast that the system would be used by US banks holding more than half of all deposits by the end of 2018 and would become “ubiquitous” by 2020.
However, despite active promotion by the TCH, adoption of the new technology proved slower than anticipated and since the launch the US Federal Reserve has explored developing its own system.
Visa rival Mastercard Inc. made its foray into real-time payments two years ago, when it paid US$920 million to acquire payments technology specialist VocaLink, which has been working with TCH.
However Kelly appears to be more sceptical of real-time payment systems, which he said often don’t have the ability to revoke funds if money is sent to the wrong person or goods aren’t delivered as promised. He added that Visa could begin working with real-time systems to improve consumer protections.
“Some of these systems are not as reliable, not as robust and very unfortunately don’t have the same protections,” Kelly said. “If I now have a dispute with you over it and there needs to be some element of charge-back, how’s that going to work? With great difficulty.”
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