This article appears in PaymentsSource and is essentially a review of real-time payments initiatives both live and underway. The title of the article suggests that real-time cross-border payments are live, but that is not really the case, nor the actual article content. The point is that real-time payments are helping to facilitate faster settlement in-market, with one example being the back-end of a credit card transaction, which is typically settled between acquirer and merchant using ACH but now has real-time options.
‘With consumers and merchants alike sharing the need to be paid faster, the case for adopting real-time payments globally has quickly advanced during the COVID-19 pandemic….Banks and technology providers are more clearly seeing the benefits of real-time payments as the pandemic persists. But it’s an arena they have been laser focused on for several years now, with a goal of making real-time payments the norm. The pandemic hasn’t changed the strategy behind the need for real-time payments; it has just put a brighter spotlight on it.’
Mercator Advisory Group has been closely covering faster (and real-time) payments very closely so this piece reinforces our view that modernizing the rails and client offerings will bring greater flexibility to compete in the new world. The eventual connectivity between real-time systems across borders will also be coming to the fore in a matter of a few years. The use of ISO 20022 as a global payments messaging standard is also part of the modernization effect, and it facilitates better reconciliation, as well as new models for billers.
‘In the background, the ISO 20022 standard common in Europe, the U.K. and Australia has been embraced in the U.S. for real-time payments, making it possible for most networks to essentially speak the same language. ISO 20022 allows thousands of data fields to be attached to the payment as a communication tool that, in and of itself, helps move payments along faster….Banks in the Swift network are also finding it complements the Global Payments Innovation cross-border payment initiative — which orchestrates legacy banking networks to operate more efficiently and quickly, while also viewing technology advancements as a practice that all banks could embrace in the same manner and, if possible, timeframes.’
The article is a good, quick read for those seeking an overall summary scope view.
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group