You may have the articles last week quoting Visa’s CEO, Al Kelly that real-time payments are not going to see wide-spread adoption. One such article is here. Is this view driven by the fact that the card company doesn’t want to see a new payments rail encroach on their territory? Or is Visa dismissing rival Mastercard’s purchase of VocaLink, a technology provider deeply involved in the development of real-time payments platforms around that world and with The Clearing House here in the U.S.? Mr. Kelly clarified his comments by saying that real-time payments won’t take off and won’t cannibalize card transactions due to a lack of reliability and also recourse (or clear recourse) in the event of misdirected transactions or fraud:
“I’m not convinced that these are going to take off like crazy,” Kelly said Wednesday at an investor conference in New York. “Does the consumer really need the funds that much faster?”
In the U.S., an association known as The Clearing House — which is backed by the biggest banks, including JPMorgan Chase & Co. and Bank of America Corp. — has been promoting a real-time payments service it introduced in 2017. Adoption of the new technology has been slow and, in the meantime, the Federal Reserve has explored building its own system.
Visa rival Mastercard Inc. made its foray into real-time payments with its $920 million purchase of VocaLink, which has been working with The Clearing House.
Real-time payment systems often don’t have the ability to revoke funds if money is sent to the wrong person or goods aren’t delivered as promised, Kelly said on Wednesday. He said Visa could begin working with real-time systems to improve consumer protections.
“Some of these systems are not as reliable, not as robust and very unfortunately don’t have the same protections,” Kelly said. “If I now have a dispute with you over it and there needs to be some element of charge-back, how’s that going to work? With great difficulty.”
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group