Instant payments initiatives are gaining momentum across the globe
A growing number of domestic payments markets are offering a more customer-centric approach that delivers greater speed, choice, transparency and richness of functionality. These programmes are being developed by the financial services industry, often at the request of regulators and governments, and are supported by market infrastructure providers, banks and non-banks in order to deliver low-value payment services fit for the digital reality of the 21st century.
These programmes are supported by market infrastructure providers, banks and non-banks in order to deliver low-value payment services fit for the digital reality of the 21st century.
Growing global network
Australia's New Payments Platform (NPP) went live to the public in February 2018 with 70 financial institutions onboard, eight of which were directly connected. This has enabled 50 million customer accounts to experience faster payments, the majority in retail banking via the mobile channel. Roll-out across the business and corporate banking sector is ongoing.
In the week before Sibos 2018, 2.5 million faster payments were made, a volume which has been increasing by approximately 20% each week, primarily person-to-person. To boost further traffic, the NPP is seeking to better support the development of the Australian payments ecosystem via an API programme. This will provide standardisation, interoperability and consistency in the APIs being launched on the market, supported by an API sandbox.
The RT1 instant payments platform in Europe, run by EBA Clearing, has enabled instant credit transfers within the Single Euro Payments Area (SEPA) since going live in November 2017, processing transfers between payment service providers for euro transactions in less than 10 seconds. So far, it has processed five million transactions, with a total value of €3 billion, and currently averages 70,000 transactions a day, with peak days hitting 100,000 transactions.
“We built a product-agnostic service which focused on delivering instant payment processing to give PSPs the flexibility to go forward in their own way and create different use cases for their customers based on the use of our infrastructure,” said Petia Niederländer, chairperson of EBA Clearing and head of retail and corporate operations at Erste Group, speaking at the Swift Hub session ‘Instant payments – Really a real-time reality?’.
A further initiative in Europe is the recently launched TARGET Instant Payments Settlement (TIPS) platform, a 24/7 multi-currency funds transfer system for payment service providers, operated by the European Central Bank (ECB) and fellow Eurosystem members. TIPS has been built as an extension of the ECB's TARGET2 pan-European RTGS platform and uses the SEPA credit transfer instant scheme. It settles payments in central bank money, and allows eligible banks and their reachable parties in TIPS to conduct settlement of instant payments.
By developing this infrastructure, the Eurosystem is hoping to ensure that any national instant payments schemes are not isolated, and can be supported across Europe.
“We hear from banks that they are expecting to join in 2019, as they need to be compliant with the SEPA credit transfer instant scheme, and we will be working with the banks and our partners at Swift to support that progress,” says Karen Birkel, deputy head of division at the ECB for TIPS.
All three platforms – NPP, RT1 and TIPS – are supported by Swift technology.
Although many instant payments platforms are in their early stages, others are better established and rapidly growing market share. In an audience poll at the panel session, 38% of respondents expected that instant payments would absorb payments volumes from most other channels by 2025.
Getting the measure of market sentiment and engagement is key to building on initial positive momentum.
For the schemes designed to increase overall market efficiency – rather than building profitability for a specific business – return on investment, development and progress need careful assessment in order to move the whole market forward. Getting the measure of market sentiment and engagement is key to building on initial positive momentum, panellists said.
“You can never achieve universal account reach on day one,” says Adrian Lovney, CEO of NPP Australia. “We assessed beforehand the minimal critical mass needed which enabled us to confidently make the decision to go live.”