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Real-time payments are more than just speed

February 4, 2021
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Real-time payments (RTP) are electronic payment solutions available 24/7, 365. RTP results in immediate or close to immediate interbank clearing of a transaction and crediting of a a payee’s account.
Real-time payments are fast, touchless and also facilitate better data and increased certainty of payment.

Better data

Real time payments systems allow for greater development of value-added services to be built within or on top of the infrastructure. In Australia, the real-time payments system is known as the New Payments Platform (NPP).
As the payments sector is evolving exponentially, data is becoming increasingly important. Real-time reporting and automatic reconciliation also facilitate more effective transfers.

The way payments data is collected, used and shared presents opportunities for financial institutions, payment service providers and their customers. Enhanced data has the potential to create new payments processes, business models and to also improve access for new entrants into the payments sector.

Enhanced data can also strengthen the detection of financial crime and strengthen consumer protections in financial services.

Payments data can be a mix of financial, transactional, behavioural and other types of data.

An enhanced data capability can enable recipients to see information relating to the purpose of the payment, tax and benefit information, a personalised message or underlying business transaction details.
One of the key drivers for instant payments and use of the ISO 20022 standard is the extended data carrying capabilities opened up by its implementation.

ISO 20022 allows for as much data to be included in a payment message. It also allows for the transmission of images, invoices and more.

Challenges

• Standardisation of data in the payments ecosystem. RTP systems are often built alongside existing legacy infrastructure. These rarely interoperate payments data is difficult to share across payment systems. Therefore, it can potentially be a challenge for banks to formulate a consistent customer data proposition across multiple payment systems
• Lack of market practice on data expectations e.g. how to handle unstructured data, storage duration, fraud and crime screening.
• What type of data should be permitted in payments systems. Accounting for any data that needs to be de/re-coupled e.g. non-payment related data
• Utilisation and monetisation. Managing data once it’s been collected
• Data governance. How the data is collected and by whom

International standards groups such as the ISO 20022 Real Time Payments Group have published best practice guidelines on how much data should be passed through a real-time payments system. But further market practice must be developed within each jurisdiction.

Increased payment security

Increasingly, markets are putting in place various solutions to ensure certainty of payment:

  1. In the UK, the payments industry is creating a Confirmation of Payee (CoP) service. This gives end users of payment systems, greater assurance that they are actually sending their payments to the intended recipient. The CoP is akin to an ‘account name checking service’ that can help avoid payments being misdirected due to manual errors.
  2. It can also address certain types of Authorised Push Payment (APP) fraud, by introducing another hurdle for fraudsters. The CoP gives effective warnings to customers about the risks of sending funds to an account where the Payee names do not match.
  3. In the US, The Clearing House RTP system incorporates ‘Request for Information’ messaging. This allows for real-time information exchange between the biller and payer, similar to text messages.
  4. On SWIFT’s ‘Global Payment Initiative’ (GPI) platform, end-to-end payments tracking has been introduced. SWIFT GPI banks are able to instantly check the status of the payments sent, in progress and received alongside many different payment options.

Customer’s expect greater transparency when they send a payment, and real-time payments provide better data and better security. Real-time payments help businesses anywhere, anytime.

Get in contact with us.

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Disclaimer: Monoova Payments Pty Limited (ACN 126 015 227 | AR No. 428863) trading as Monoova (Monoova) is the authorised representative of Monoova Global Payments Pty Ltd (ACN 106 249 852 | AFSL 421414) (Monoova Global), being the issuer of the Combined Financial Services Guide & Product Disclosure Statement Non-Cash Payment Products and Services (FSG/PDS). Copies of the FSG/PDS and the terms and conditions of the products and services offered by Monoova and Monoova Global (disclosure documents and terms) are available by contacting Monoova at support@monoova.com. You should consider the relevant disclosure documents and terms before deciding whether to acquire, or continue to hold, the product or service. The information provided on this website is factual information, is given in summary form, and does not purport to be complete. The information set out does not take into account your particular investment objectives, financial situation or needs. Before acting on any information, you should consider the appropriateness of the information having regard to these matters, and in particular, you should seek independent legal, financial and tax advice. To the extent that the communication/document contains information sourced from third parties, statements made by third parties or provides link to third party websites, Monoova takes no responsibility for the accuracy, currency, reliability and correctness of any information included in the material provided by or statements made by third parties nor for the accuracy, currency, reliability and correctness of links or references to information sources (including internet sites) operated by third parties.

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