The buzz phrase of 2015. Now, the latest projections for the U.S. and Europe show that real-time payment infrastructures are set to be live by the end of 2017 through the ISO 20022 for real-time messaging standard.
In Europe specifically, the real-time payments services in the Single Euro Payments Area that was created by the European Payments Council has goals to be in place on that timeframe. In the U.S., the focus is more on the payments infrastructure once terms get finalized.
James Aramanda, CEO of The Clearing House (TCH), has indicated that the details of what’s next should emerge soon, citing the first quarter of 2016, according to a Banking Technology article. He noted that big banks in the U.S. have a “growing sense of urgency that they are behind and getting [more behind].” Testing for real-time payments should go live toward late 2017, he added.
Now, through a deal with VocaLink — a U.K.-based international payments system provider — and TCH, the push for implementing the faster payments goals are expected to build at a rapid pace.
“Finalizing this partnership with VocaLink represents a significant milestone in our effort to make ubiquitous real-time payments a reality in the U.S.,” Aramanda was quoted as saying. “Once completed, customers will pay or receive money in real time from any financial institution, and with its innovative extensible design, the system will be built to provide the basis for payment solutions currently unimagined.”
Another faster payments initiative that was put forth was from SWIFT, which announced a global initiative designed to use its existing global network of correspondent banks to enable same-day payments between businesses anywhere in the world.
As MDP CEO Karen Webster pointed out in her commentary this week, “Both are in response to the criticisms that the core banking rails everywhere — and in the U.S. in particular — are in serious need of an upgrade. The gauntlet that’s been thrown in front of the FinTech community and U.S. financial services sector is to get on board with delivering faster/real-time/immediate payments, well, fast.”
“No one, especially bankers and the operators of those core banking systems, argues against the need to modernize them. But where there’s plenty of debate is around defining who needs faster payments and when, how fast do payments need to be, who’s best suited to enable faster payments rails and what those faster rails replace, if anything at all,” Webster wrote.
Aramanda indicated that the U.S. real-time payments initiatives are ambitious and focused on ubiquitous payments, with the top 24 U.S. banks accounting for 60 percent of the industry. Of course, the real challenge is reaching the entire financial ecosystem, which encompasses 14,000 financial institutions in the U.S. The overall goal that’s been conveyed across the faster payments initiatives is to “empower U.S. consumers and businesses to send and receive real-time payments from their existing accounts at financial institutions [and] also provide a platform to launch innovative new services that will power a new economy built around real-time payments.”
Here’s a rundown of those who are in the race to push faster payments rails, as explained by Webster: