Doubt plagues any disruptive technology. But with federal officials now pressing for faster payments technologies to get off the ground, time is running out for the nay-sayers to be convinced.
FinTech company linked2pay isn't worried, though. The firm has introduced real-time payments capabilities for its Bank Centric Payments platform, built for financial institutions. The firm's chief marketing officer, Richard McShirley, said he's confident in the potential for real-time payments to get off the ground, to provide added payments security and to disrupt even the B2B payments world.
True, there are some industry players and analysts that believe real-time payments won't be able to truly disrupt B2B payments.
"We think it is just the opposite," explained McShirley. "Many said the same about email when it was first introduced."
Skeptics argue that businesses enjoy the length of time it takes for a payment to go through, which gives a company the ability to hold onto cash in its account just a bit longer. But McShirley argued that real-time payments actually give businesses greater control of that cash flow.
"We have never spoke to a business that didn't want more control of their cash flow," he said. "Providing a last-minute option to send funds, better traceability and visibility are key drivers."
In other words, it's not just the fact that real-time payments capabilities are faster that makes them so attractive to corporate payers. The added benefits, like deeper data attached to a payment and enhanced traceability, mean the technology can offer businesses deeper insight into a transaction.
Ensuring that transaction is accurate is also a significant benefit for the corporate payer.
"Besides the benefits of the speed of the transactions, just think about the number of ACH returns and errors that could be avoided," McShirley added. Linked2pay, which has teamed up with Push Payments to add real-time payments capabilities into its platform for banks, noted that the added features of the tool mean banks and payers can validate accounts and obtain instant confirmation that a payment has moved through. McShirley said this could help reduce the headache of non-sufficient funds cases.
OK, so real-time payments capabilities with added data capture and transparency are certainly an enticing proposition for businesses. But some doubters have also expressed concern over the security of real-time payments. The window of opportunity to catch a fraudulent transaction is immensely shorter.
"On the surface, you would be correct," McShirley said in response to this concern. "If the entire process wasn't addressed correctly by the acquirer and processing platform, this could be a real challenge."
He explained that, by banks using third-party systems, like those of linked2pay and Push Payments, the payments security is integrated into the technology. This allows banks to take care of compliance and protect clients, without having to build a solution from the ground up.
"We all know, with the regulatory environment today, both banks and ACH providers require regulatory compliance in order to manage risk," he stated. Third-party providers taking care of this compliance means even smaller, community banks can now implement real-time payment capabilities, where once only large banks had the resources needed to not only develop and implement the technology but to ensure security.
With FinTech developers taking care of payments security from the inside out, McShirley said real-time payments could make some noise in the corporate payments space. He admitted it's unclear exactly how that might happen, though.
"There is a lot of talk around use cases and specific benefits for corporate, insurance and other types of disbursements," he said. "We feel that the benefits have only started to identify themselves."
He pointed to Europe, where a faster payment initiative has been at work for several years now. Though, at the start, the market similarly explored targeted use cases for the technology, today, he said, Europe takes a broader view of the technology to let it make an impact where it can. The same could have been said for disruptive business models within the sharing economy, he pointed out, with analysts unable to pinpoint exactly how companies like Airbnb and Uber could have shaken up the market.
"It would be foolish for us to try and think of all the use cases where faster payments could be utilized," he said. "If money, rewards, rebates or any type of funds need to be moved from one account to another account, there is a case for real-time payments."
The only certainty about this is that it will take time for those use cases to make themselves known. Similarly, McShirley said, it will take time for real-time payments to truly become ubiquitous. Right now, however, the demand for real-time payments is here.
"There are so many influences and changes at work in our market today," the executive added. "We live in an on-demand world today, and people expect instant action on everything, and many of the payment processes today don't support this need."