It’s not just the speed of payments that’s important, but also the data that payment operators gain as more consumers use faster forms of digital and mobile transactions.
The collection, analysis and use of such payments-related data will help shape future trends in commerce and payments, according to Ramon Villarreal, global architect of financial services for Red Hat. PYMNTS recently caught up with Villarreal to get a better sense of where payments are headed as open-source software, cloud computing and real-time transactions gain even more steam.
“Real-time payments are being adopted around the globe,” he said. Sure, that might sound a bit obvious, but the statement also provides a quick opportunity to catch up on those deployments and developments – and to consider what changes will arise when RTP moves even further into the consumer mainstream. “The growth of real-time payment options has helped build a new standard among consumers,” noted Villarreal. “These changes are creating new types of analytical data and behavioral information, which generates big opportunities for banks.”
Bigger RTP Trends
PYMNTS research helps to paint the picture when it comes to real-time payments.
According to a new report from PYMNTS and Mastercard, Making Real-Time Payments a Reality: Rising Demand for Real-Time Payments, more than two-thirds of executives surveyed say that they’re “very” to “extremely” aware of RTP, and over 85 percent are now implementing RTP, or plan to, over the next three years.
As you can imagine, the main point of interest around RTP has been improved cash flow. That has not changed, according to PYMNTS research and reports. Even so, banks, credit unions and others are starting to imagine wider possibilities for RTP, as the technology does more than just send funds fast. The entire suite of functionality is also gaining fans, especially among financial and technology firms.
Villarreal discussed some of the wider anticipated impact of real-time payments during his talk with PYMNTS. “As new opportunities (emerge) in Latin America, Europe and the United States,” he said, the data from such efforts will flow. “New analytics and new ways of using data will create new markets and new types of offerings.”
Those new markets and offerings might include customer loyalty programs and tools – just one example of how the spread of real-time payments could bring wider innovation and disruption. “Once you aggregate that data, you can provide consumers and smaller companies with additional benefits,” Villarreal noted.
Progress on the RTP front is proceeding relatively quickly, PYMNTS research shows. Some 83 percent of companies that have at least $1 billion in annual revenue are moving toward the real-time payments future with full awareness of that technology and ecosystem. That said, significant obstacles remain.
One such obstacle concerns smaller companies, those firms well shy of that $1 billion revenue mark. As revenue size gets lower, reported awareness of (and interest in) RTP falls proportionately.
According to PYMNTS analysis, that finding suggests fears surrounding the cost and complexity of integration more than any perceived downside to real-time payments. As well, about 40 percent of respondents said that concerns over RTP technical integration are holding back implementation. That is a significant challenge that will require focus and work in the coming years.
But even when taking all of that into consideration, there is reason to be pragmatically optimistic – not only about the progress of real-time payments, but also the general view of the importance of payments in the larger world of commerce and business.
As Villarreal discussed with PYMNTS, globally, about half of financial institutions (FIs) will increase their IT budgets for payments-related projects in the near-term. As he noted, over the last three years or so, FIs’ payments-related revenue has steadily increased, and has now reached the 40 percent mark. “The market is growing,” Villarreal said. “You have to make a big investment in order to compete.”
Real-time payments still have a lot to prove on a global scale, and much innovation and disruption in the wider world of payments is yet to come. But it seems clear that many FIs and other businesses are waking up to the importance of payments – and that interest promises to fuel other experiments and deployments.