Will this be the year that real-time payments — and, especially, peer-to-peer (P2P) — reach critical mass in the United States?
In an interview with PYMNTS, Matt Wilcox, senior vice president of payments innovation at Fiserv, said recent data points show that an increasing number of financial institutions (FIs) are determined to satisfy a real demand for real-time transactions.
The conversation came against a backdrop where, at the end of February, Fiserv said that nearly 600 banks and credit unions (CUs) have joined the turnkey service from Zelle to enable person-to-person (P2P) payment capabilities, and that the number of participants accessing the network via Fiserv has increased ten-fold in 2019 from 2018.
Along with greater participation from these FIs, the number of people sending money using Zelle was up 116 percent, and transactions increased by 207 percent in 2019 as compared to the previous year.
The data points to a confluence of events, as Wilcox told PYMNTS: a readiness on the part of consumers to embrace real-time payments, and an increasing readiness of FIs to serve them.
“I think the ‘why now’ has a lot to do with consumers' expectations and the demand they are now placing on financial institutions, whether it be banks or credit unions,” said Wilcox. “And I think there’s a short list of investments that financial institutions want to make, to position them to grow their digitally engaged customers and members.”
He noted that P2P is the first application of real-time payments to gain traction, and said the arrival of that payments functionality is “long overdue.”
Streamlining the Onboarding Process
But to offer the ability to quickly send and receive funds between bank accounts in the U.S., an FI must invest in technology that can support and maintain such efforts at scale. Wilcox said companies such as Fiserv are partnering with Early Warning Services (which owns Zelle) to help smooth onboarding of FIs — where banks used to be onboarded one at time, that process is now happening in batches.
“No two banks are configured the same way,” Wilcox said, adding that “they’re not all using the same core, they may not be on a Fiserv core, they're not all using the same configurations. So getting to a point where we have multiple ways to connect a financial institution for real-time payments was among the pieces that had to be built out over time … the more installations you do, the better you get.”
Wilcox noted that amid configuring those installations that enable FIs to join the Zelle network, the initial emphasis may be on P2P payments, but there’s also an eye (on the part of FIs) to utilize that connectivity for future offerings, such as bill pay.
Looking out at the evolution of real-time payments, Wilcox said that as P2P continues to drive usage among mobile and online activities, FIs are seeing growth in the use of other digital applications.
“We’re seeing a cross-sell component take effect, because you are inherently driving more meaningful interactions with financial institutions … and more touchpoints with end customers that were not there before,” Wilcox told PYMNTS. As he noted, that’s translating into an increased number of deposit products, increased loan balances … and a boost to FIs’ top lines.
And in looking toward the evolution of real-time payments, he said it’s likely the movement will be from P2P to consumer-to-business (C2B) — especially in paying small businesses such as lawn care companies or car repair shops. Beyond that, he added, business-to-consumer (B2C) would likely see an uptake of real-time payments, especially for disbursements.
As P2P gained ground, he said, “A lot of the fraud was related to consumer education and the bad guys using the tool in a way that it wasn't intended. Therefore, there were a lot of account takeovers, which seemed to corner a lot of the headlines.” But the technology underlying real-time payments, he said, remains sound. Fiserv and others have spent time building out “knowledge training” and call centers to educate stakeholders.
Regardless of fund flows, now or in the future — or who recipients and senders might be on each side of the transaction — Wilcox maintained that trust is critical when it comes to real-time payments. The trust consumers feel toward their FIs has helped to fuel the adoption curve for P2P, and it is critical for stakeholders to “future-proof” the ecosystem with robust fraud prevention and risk management capabilities. He said, too, that Fiserv has been collaborating with banks on real-time decisioning and data analysis.
“We’ve often heard, 'this is the year of P2P,’ and I think we have finally hit it,” he told PYMNTS.