This blog post in Finextra provides an interesting view of real time payments (RTP) through the lens of a business analyst who helped develop the UK’s Faster Payments platform (operational since 2008). This is a good read for those looking to understand pragmatic reasons for developing RTP. It makes the case for Faster Payments, but not for the reasons and not in the way the UK market originally intended or expected. The addition of open banking the author says, is what is making all the difference:
Instead of looking at Real Time Payments as the solution we should look at it as an enabler. There are clear advantages of using Real Time Payments over credit cards. Lower merchant fees, for one, which is significant. Also, many people like to make payments directly from their accounts so as to better manage their budget, rather than put it on credit and get a nasty surprise at the end of the month – with ballooning consumer debt warnings by the Bank of England this is no bad thing.
However, with the advent of Open Banking in 2018, and a surge of new players joining Faster Payments, we are hopefully on the cusp of something exciting. New Fintech players, and some of the old guard, will develop overlay services on top of the Real Time Payments rails. AI, data analytics, loyalty programmes, discount vouchers, and more, coupled with easy to use interfaces will finally enable us to realise the Real Time Payments potential.
So, Real Time Payments is the Answer. But not to the problem we originally thought. In fact it was the key jigsaw piece that has opened up the possibilities for new services.
Overview by Sarah Grotta, Director, Debit Advisory Service at Mercator Advisory Group
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