Thursday , March 28, 2024

Real Time Gets Real

This month, we are featuring two stories about the progress of faster payments. Our cover story, “The Bill-Pay Revolution,” shows how real-time capability is finally asserting itself in a crucial segment of the payments business. Then you’ll find “2020 Vision,” our take on just what’s going on with that Fed-inspired 2020 deadline for so-called ubiquitous real-time payments.

Up to now, most of the attention in real-time payments has been riveted on peer-to-peer payments. This is a natural market for real-time applications, since it affects consumers directly and, so to speak, immediately. After all, who isn’t thrilled to get money from another person just as if that person had handed you a $20 bill—but without the paper?

But bill pay is potentially a much bigger market with a much bigger potential payoff—if the providers play it right. Card networks see that potential, which is why Mastercard, for example, developed a system that lets banks offer real-time bill payment as part of an effort to recapture volume lost to billers. If anything can reverse the long slide in market share from aggregated bill-pay at bank sites to biller-direct sites, it just might be real-time payment.

But that leaves open the question of just how prepared banks, billers, and merchants are for speedy payment flows. So, in our second story, we indulged our curiosity about how soon all this real-time activity will finally arrive. It was only two years ago, after all, that the payments industry set itself the goal of establishing real-time capability for all or nearly all endpoints by 2020. That’s next year. Is it going to happen?

The easy—and somewhat evasive—way to answer this question is to say that it depends on how you define ubiquity. But our bet is that no, ubiquity is probably not going to arrive in 2020. That’s if you define it as most in the business do, as a very high percentage of accounts capable of handling real-time flows.

This is not for lack of trying. Players like The Clearing House Payments Co. LLC and Early Warning Services LLC have pushed hard for real-time capability. TCH has 15 institutions on its Real Time Payments platform, built with the help of Mastercard’s Vocalink unit, and more are in the pipeline. Early Warning’s Zelle network is backed by many of the country’s biggest consumer banks.

There are others pushing technology for real time, too. So we could be proven wrong. In the end, though, what’s important is that real time happens relatively soon. If soon means 2021 or 2022, few will complain.

—John Stewart, Editor |  john@digitaltransactions.net

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