Report: Request For Payment Seen By Banks As Real Time Payments Game Changer

Businesses waiting to get paid can face significant financial struggles, but immediate payment methods have helped cut out delays that saw firms waiting for checks in the mail or for funds to settle into bank accounts.

Push payments sent over immediate transfer systems like the The Clearing House (TCH)’s Real-Time Payments (RTP) network can streamline these exchanges, and firms that have relied on pull payments also want access to such speeds and convenience.

Features that enable request-for-payment (RfP) messages to be sent over immediate payment networks can help fight this problem by allowing sellers to instantly reach out to their clients with billing information and prompt them to send back funds over the real-time payments systems. The transfers are also accompanied by plenty of data about the transaction, helping sellers quickly reconcile them. The February Real-Time Payments Tracker® dives into the matter and examines how RfP features are helping businesses and freelancers get paid on time and protect their cash flows.

Around The World Of Real-Time Payments

Financial institutions (FIs) are paying attention to real-time RfP capabilities and how they can help businesses transact more smoothly. These methods help vendors quickly receive and reconcile payments by enabling them to send billing messages to their customers, and then — when customers send back funds in response — receive data about the original requests, helping sellers pair payments to customer accounts, according to statements from Lou Grilli, senior innovation strategist for credit union service organization PSCU. This can remove confusions and trim down processing times.

Interest in faster payments has been growing worldwide, and several Irish banks recently came together to propose a joint venture through which they would create a rapid interbank payments app intended to help them compete with similar offerings from FinTechs and challenger banks. The legacy banks’ efforts have hit a hitch with regulators, however, because the organization responsible for enforcing competition laws initially rejected the FIs’ application to jointly create the app, saying that it needed more information to be able to properly assess the project. The FIs are reportedly undeterred and are working to address this issue.

Pakistan also saw recent faster payments efforts, with the government debuting an instant payment system that will be phased in through several stages. The service — called Raast — is intended to encourage greater movement away from cash and help the government enforce tax collections and get insights to enable it to better thwart corruption and financial crimes.

Find more on these and the rest of the latest headlines in the Tracker.

Fighting Cash Flow Strains With Requests For Payment

RfP features allow businesses to link immediate payments capabilities with the bills they send, creating more compelling calls to action. This can help encourage customers to pay quickly, reducing businesses’ risks of being left waiting, explained Bank of the West Chief Digital Officer and Executive Vice President Hisham Salama.

In the Feature Story, Salama details how such capabilities can revolutionize payments and billing and create smoother experience for both customers and sellers.

Check out the story in the Tracker.

Deep Dive: How Real-Time Request-For-Payment Capabilities Fight Late Compensation

Small vendors and freelancers suffer especially when clients pay late. Encouraging their customers to adopt quicker payment methods could help reduce those problems, however, because real-time payments deliver money immediately into recipients’ accounts. Gig workers and small businesses that send RfPs over these immediate transaction systems can help encourage their customers to use the same systems for delivering back funds.

The Deep Dive examines the late payments problem and the potential for RfP to help small players get paid on time.

Read more in the Tracker.

About The Report

The Real-Time Payments Tracker®, a PYMNTS and The Clearing House collaboration, examines how request-for-payments messaging can help businesses get paid faster and more conveniently.