Faster Payments

ACI Aggregator Services Expediate Fast Payments

Faster Payments Help FinTechs

The Faster Payments scheme in the U.K. has changed the way payment service providers are approaching the immediate availability of funds. While the New Access Model provides the ability for payments players to offer their customers real-time payments 24/7, the initiative can still be a challenged for organizations that may not have enough resources and experience to run a payments system.

ACI Worldwide’s Simon Wilson recently joined PYMNTS to discuss how aggregator services are helping to break down the barriers of entry to payment service providers.

Here is an excerpt of the conversation.

PYMNTS: What influence has faster payments in the U.K. had on the global payments ecosystem?

The U.K. has been at the forefront of changing the payments landscape. The introduction of the U.K.’s faster payments is an innovation that changed modern payments at the foundational level. Most recent payment innovations still rely on credit card or ACH rails. Why does this matter?  hile these rails are extremely reliable and proven, they still include a batch-based component to their processing, which impedes the availability of funds. Faster payments break down this barrier and offer improved availability of funds. This aligns with consumer expectations in a real-time eCommerce world and enables businesses to manage liquidity with a heightened precision. The U.K. has now taken the next step in its history-making march for modern payments systems by enabling non-banks to access this new scheme.

PYMNTS: How is the New Access Model providing a level playing field to payment service providers?

Any FinTech, challenger bank or other PSP with a need to offer expedited payments can connect to the scheme. This drives lower costs by using faster payments rather than card transactions, provides better service to corporate customers by delivering payments sooner and facilitates control with a reliable, robust direct membership rather than relying on a bank’s indirect service.

FinTechs such as TransferWise see this as a competitive benefit to offer expedited funding and disbursement of funds. A challenger bank or smaller organization is no longer relegated to an inferior service level. But sometimes the difficulty is not in gaining access to the service, but in the operational commitment and overhead to offer the service. As with any service, there are hardware requirements, IT expertise and ongoing compliance to the standards to manage.

PYMNTS: Can you describe the aggregator services being made available through the U.K.’s new scheme?

Managing payment operations for a smaller institution or an organization that does not have experience running payments systems can be an overwhelming task. Here, the U.K. has had tremendous foresight again. To facilitate access to faster payments, aggregator services offered under the New Access Model offer options for how participants connect to the U.K. Faster Payments scheme. The intent is to lower the barriers to entry and make it possible for any provider to have direct, real-time access, even if the participants’ volumes are low. The model also aims to make the process straightforward. There are three main considerations: access, connectivity and ongoing management.

Securing the right credit sponsorship for access to clearing and settlement can be facilitated by ACI. Technically, it need not be a major undertaking. Perhaps the simplest and most cost-efficient mechanism is to use an aggregator service such as ACI’s UP Immediate Payments, which provides 24/7/365 access through our private cloud using our pre-certified gateway that accepts a variety of message types and delivers them as real-time payments. We also see this as a model likely to expand beyond the U.K. market to enable direct access for more payment providers. Compliance and ongoing technical oversight is provided by ACI.

PYMNTS: What role do open APIs play in the faster payments narrative?

The financial services world is opening up and this will create completely new business models and offerings. Many of these will utilize the real-time payments rails. PSD2 provides parties, other than the financial institution, the ability to access customers account data and utilize that information to provide valuable services. The regulations also mean that those service providers can initiate payments on their customer’s behalf. Open APIs will change the nature of banking and customers’ relationships with their banks, but coupled with faster payments, it’s a powerful combination for innovation. From a business perspective, working through the business case is important, but FinTechs and banks alike should take a long-term view – real-time will become the norm, and offering new models and services focused on the customer needs positions any payment service provider well for the future.

To learn more about how new faster payments models are accelerating FinTech growth, check out ACI Worldwide’s latest webinar, titled How The New Faster Payments Model Drives Growth For FinTechs.

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