Request-to-pay features have emerged with promises to benefit merchants, financial institutions and billers. The message exchange service allows payees or creditors to collect a payment from a debtor or payer. As a result, payees can benefit from increased control over the payment process, accelerate incoming payments and save time chasing debtors.
But experts say it will take more than updating Automated Clearing House (ACH) networks to advance digital services and products, including digital wallets. Instead, real-time payments must enable digital channels. RTP, or R2P as it is called in Britain, is a major component of the United Kingdom’s real-time strategy. R2P drives real-time payments digitally as the payer receives them on their mobile device, usually on a banking or FinTech app. At that point, the payer can approve or reject the request. If it’s given the green light, real-time credit transfers to the payee.
This month’s Real-Time Payments Tracker® examines the rise of request-to-pay functions and the challenges that real-time payments providers must overcome to encourage further adoption.
Developments From Around the World of Real-Time Payments
The Federal Reserve Board has updated FedNow, the instant payments service expected to launch in 2023. The Fed has said corporations, banks and consumers will want to use the tool. Fed data reports that on average a consumer pays at least eight bills per month. One payment tension for consumers and businesses is that the clearing process routinely requires scheduling a payment at least two days before the due date. With the adoption of FedNow instant payments, the Fed promises this will allow expenses to be paid immediately and sent at any time.
BankProv, one of the oldest banks in the United States, has joined the real-time payments (RTP) network. Created by The Clearing House, this network is a platform for domestic payments. It promises to offer new data capabilities and confirm payments instantly. BankProv has partnered with COCC, the Connecticut-based financial technology company, to connect to the RTP. David Mansfield, BankProv CEO, said the bank’s newer clients, particularly cryptocurrency companies, need to move funds quickly to deal with valuation risk due to the currency’s volatility. Beyond the digital currency community, Mansfield said the RTP network allows banks to reduce risk, enhance reconciliation and provide instant settlement of funds.
A banking innovation that allows customers to verify and dispute payments before cash transfers from their account is being introduced in the U.K. Request to Pay is a messaging service that companies can use to settle bills and other payments. It gives customers the ability to communicate with their biller using an in-app chat feature. This means they can query an unusual or unexpected bill before the payment is made or make alternative payment arrangements. Once approved, the service then turns the payment request into a credit transfer.
For more on these and other stories, check out the Trackers News & Trends section.
U.S. Bank On How Leveraging Request For Payment Alleviates Friction, Provides Visibility Into Billing Processes
Demand for faster digital payments quickened over the past 18 months as businesses placed an even brighter spotlight on providing a better experience for customers. By harnessing the power of request-to-pay features, businesses can enable consumers to manage bill payments securely in one place and grant them the flexibility to pay early or instantly on the day the bill is due. In this month’s Feature Story, Richard Erario, executive vice president, head of global treasury management for U.S. Bank, explains how Request for Payment puts consumers in control of transactions and helps businesses save time and money.
Deep Dive: How Request to Pay is Shaking up the Payments Landscape
Businesses and consumers have lauded real-time payments for the speed they provide, but there are other advantages these methods afford. Request to pay is a particularly valuable feature, as it allows payors to gain better insights into and more control over their funds while helping payees more efficiently monitor and collect outstanding debts. This month’s Deep Dive explores the rise of request-to-pay features alongside real-time payments platforms, as well as the challenges preventing these services from reaching an even broader audience.
For more on how Request To Pay is becoming more prominent, visit the Tracker’s Deep Dive.
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