Less than two months after its implementation, Same Day ACH, the ubiquitous faster payments initiative for the payments industry in the United States, is showing a significant impact on the market, but it still has plenty to learn from those across the pond.
In October alone, the ACH Network processed nearly $5 billion in 3.8 million Same Day ACH transactions with an average transaction value of more than $1,000, NACHA reported.
While the numbers clearly reflect an American appetite for faster payments, the U.S. still has faster payment lessons to learn.
PYMNTS caught up with ACI’s Barry Kislingbury, director of solution consulting, and WA Proctor, vice president and product line manager, to get their thoughts on faster payments in the United States and around the world and the lessons that the U.S. must learn from its matured European counterparts.
Learning from a broad customer base
Proctor told PYMNTS that ACI’s wide customer base has helped it learn lessons that can be useful for faster payment schemes in the U.S. and other countries around the world.
The company, one of the largest players in the U.K. scheme that supports 60 percent of the network’s direct participants, recently struck a new partnership with Turkish Bank (UK), a small British financial institution that serves the Turkish and Cypriot community, to provide the bank’s faster payments offering.
For ACI, supporting smaller banks, like Turkish Bank (UK), alongside larger financial institutions, has fostered a diverse client base that demands solutions to faster payment problems for businesses big and small, which need a diverse set of tools to be resolved — something that other faster payment schemes would need to incorporate to be successful.
“One of the key points of ACI’s offer is the flexibility in terms of how it can be packaged,” Proctor said. “It’s the same software that we would sell to a bank like Barclays or to a small bank like Turkish Bank (UK), but how it’s configured and how it’s packaged is different because they aren’t always interested in the same features.”
Under the terms of the partnership with Turkish Bank (UK), ACI will enable the bank to process all transfers to and from domestic bank accounts immediately through its newly established cloud-based European data center in Limerick, Ireland.
Kislingbury noted the importance of setting up a new data center to offer diverse data sets that are needed by both large and small businesses.
“We’ve had data centers in organizations owned by ACI for awhile, but largely because of the demand for faster payments, we decided we should invest in a new data center in Ireland that was built from scratch,” he said. “With faster payments, you actually have to have two data centers, so this allows us to deliver a more reliable and secure network.”
Learning to stay safe from experience
Along with its presence across the pond, ACI has been a significant player in the U.S. faster payments market, working with The Clearing House in support of its real-time payment system initiative in America.
The huge payment volume of same-day transactions transferred through the ACH Network shows the demand for faster payments in the United States, Kislingbury said. This growth is set to get even bigger.
As the real-time payments technology develops, it is set to have an impact on a broad range of businesses in the U.S. and around the world, including supermarkets and other large retail stores.
And as faster payments schemes gain wider adoption, Kislingbury noted, there were mistakes made by its forerunners in countries like England and around Europe that U.S.-based financial institutions should try to avoid.
“The U.K. has certainly learned some lessons that … a lot of the rest of the world, including the United States, is able to benefit from,” he said. “The banks didn’t necessarily realize how clever fraudsters were, but very quickly after that, they all put in fraud and security systems, and I think other countries need to do that more quickly.”
Faster payments providers in the United States should look to protect some of the most vulnerable transactions, Proctor added, in order to keep fraudsters at bay while the technology develops and becomes more secure. Financial institutions also need to ensure that solid, proper authentication always proceeds payment initiation.
Learning to reach a wider audience
With the United States about to complete its first full year developing and using its faster payments network, its Same Day ACH payment volume is projected to get a lot bigger.
Much of this increased volume, Kislingbury said, is likely to come from the faster payment technology finding use cases in virtually every industry. A wider usage would likely appeal to consumers looking for a new form of payment when making everyday retail purchases, he added. Additionally, Same Day ACH is already showing that B2B payments, with the ACH ability to pass extensive payment information, will provide the foundation for new innovation for business payments.
Perhaps it won’t be too long before faster payments are embraced by consumers and businesses alike around the world.
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