Publication Finextra held a roundtable conversation last year in London with IBM on the topic of the global real time payments platforms. With the roll out of the U.S. solution sometime this year and also the anticipated debut of the Australian NPP solution, real time payments are sure to get more attention in 2017. Even though the U.S. and Australia are relatively late to the real time payments game, two incredibly important issues remain to be resolved across all of the existing and planned solutions.
First, are real-time payments domestic only opportunities or will global interoperability be achieved? Finextra offers some background on this:
The roundtable attendees – especially those from banks operating in multiple jurisdictions – were also quite preoccupied by the differences between different schemes, and how to accommodate those in their technology and business processes. Clearly, the fragmentation of real-time payments schemes is a challenge. Interoperability between schemes will become increasingly important as more are rolled out.
Steps are being taken to address this. The European Automated Clearing House Association (EACHA) recently published an instant payments interoperability framework that provides the technical basis for interoperability between the different euro instant payment services. Fragmentation is also being tackled in the UK where the Payments Strategy Forum has proposed consolidating the country’s three payment system operators: Bacs, Cheque and Credit Clearing Company and Faster Payments into a single entity.
The second question, Is there a business case to support the investment? Some thoughts, but not answers, on this from the Finextra meeting:
One issue the Finextra/IBM roundtable focused on quite heavily was the question of business case. In practice, and in common with most if not all infrastructure developments, the business case for real-time payments will be realised over the long rather than short term. Connectivity to real-time schemes is costly. Depending on the level of integration required, projects can range in cost from €500,000 to €5 million. While initial costs are mainly related to integration and testing, the ongoing costs of maintaining these links must be considered.
Overview by Sarah Grotta, Director, Debit Advisory Service at Mercator Advisory Group
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