How It Works: Inside The FIS RealNet Platform

Real-time payments are piquing the interest of firms around the globe.

PYMNTS research has found that more than a quarter of firms surveyed in the U.S. and the U.K. will update their operations in order to receive real-time payments within the next few years.

FIS Executive Vice President of Global Real-Time Payments Raja Gopalakrishnan told Karen Webster that interoperability is a key driver of real-time payments, and FIS’ new RealNet platform, which he said can improve cash flow for merchants, streamline B2B payments and enable low-cost, cross-border payments.

At a high level, the new platform will let organizations across any number of verticals send and receive instant payments. And as PYMNTS reported, RealNet, billed as a cloud-based Software-as-a-Service (SaaS) platform, will enable through application programming interfaces (APIs) account-to-account (A2A) transactions through an initial rollout in the U.S., with U.K. and Europe soon after.

The discussion came against a backdrop in which 60 percent of banks that have access to real-time payments don’t yet offer the potential for instant payments to workers, suppliers or customers.

As Gopalakrishnan noted, any business today, especially one operating in the U.S., must grapple with a number of payment modalities. Those modalities span cash, check, ACH, same-day ACH, wires, debit cards, credit cards, cryptocurrencies and digital wallets.

The list keeps expanding, he said, and there may be some overlap, but no two payment methods are exactly the same. In the bid to digitize or “electronify” payments as firms offer a range of options to end users, the premise of RealNet has been a platform that eliminates the complexities of embracing instant payment options.

Payments, as Gopalakrishnan explained, are not just about transactions. Now more than ever, transactions are embedded within experiences.

Done well, payments can act as the strategic enabler to the digital transformation of a businesses. But as part of that transformation, the payments must be managed as efficiently (and in as cost-effective a manner) as possible. RealNet, he said, operates both direct-to-business and bank-to-business channels, leveraging FIS’ more than 1 million merchant clients and its thousands of bank clients through a network effect that can help eliminate an estimated $2.7 trillion in transaction-related inefficiencies and errors.

Figuring It Out

Through its orchestration engine, RealNet “lets us figure out the ‘how’ … in deciding and making the rules,” he said, enabling the lowest, cost-efficient routing. The firm’s platform also cuts down on complexity. Often, enterprises have to work with multiple systems, partners, banks and providers as they enter new markets or offer new payment modalities.

“That’s one big pain point that we take away,” he told Webster. “In terms of accountability, the accountability is on RealNet.”

He also noted that a heavy source of friction lies with compliance, sanction screening, anti-money laundering (AML) and other mandates.

Through payments orchestration, said Gopalakrishnan, companies that have traditionally been bogged down in paper processes can pivot toward modernization. Picture, then, the insurance company that is in the midst of paying out a claim.

That continuum of starting a claim, providing documentation, sending it in and getting paid has been tied to paper forms, and at the other end of the interaction, a paper check. The entire journey can take weeks.

“If you’re making the payment to RealNet, regardless of whether you’re digitized or not, you can get rid of the check,” he said.

The insurance company can offer the policyholder a range of payment options.

Disbursements, he said, represent low-hanging fruit for RealNet out of the proverbial gate, focused on B2C interactions. But as business scales, B2C will be followed by B2B. Then over a period of time, RealNet will continue to extend its services out to government payments, taxes, refunds, stimulus, charities, nongovernmental organizations (NGOs), etc.

“We see over the next several years that real-time, account-to-account payments is one of the highest growth areas because it has to keep pace with what’s happening in society, which is instant gratification on commercial transactions,” he said.

A2A payments will represent the biggest bang for the buck (so to speak) for RealNet, he said.

Every network needs an ignition strategy, he said, and the end user — particularly the small- to medium-sized businesses (SMBs) that want to manage cash flow more efficiently — will spark the dry kindling. The more firms that come onto the platform, the more data the platform has, which, through analytics, will increase scale and drive costs down, giving rise to a network of networks upon which new applications can be layered with ease.

Beyond just getting more payments to more locations faster, said Gopalakrishnan, RealNet will help corporates realize additional value by expanding digital functionality as they look to operate in two corridors or several, or offer payments across 150 currencies.

As he told Webster, the platform model, enabling real-time payments functionality across a variety of verticals and use case, can make payments “a pleasurable experience.”