B2B Not A Vital Part Of Real-Time Payments Innovation, Yet

Faster payments schemes across the globe are placing new definitions on what it means to be fast, especially as more initiatives heard towards real-time transacting.

Dozens of countries already have real-time payments programs in operation, with several more under development, as identified by financial services technology provider FIS in its latest Flavors of Fast report. In the three years since FIS began this annual report, the number of real-time payments programs more than doubled, researchers noted.

“Interest in real-time payments platforms is growing at an ever-faster pace,” reflected FIS’ chief operating officer for banking and payments, Anthony Jabbour, in a statement. “Financial institutions need to be actively exploring use cases for real-time payments within their own organizations for meeting the requirement of their customers. Those who wait may find themselves left behind as the faster payments revolution takes hold.”

Not all real-time payments initiatives are created equal, though. FIS surveyed 25 markets in which real-time payments programs are operational, rating their innovative qualities on a scale from 1 to 5. According to the research, approximately half of the real-time payments schemes in place today can handle corporate and B2B transactions.

“Originally, faster payment systems were primarily focused on the retail market [person-to-person (P2P) and person-to-business (P2B)], but increasingly business payments [business-to-person (B2P) and business-to-business (B2B)] are taking advantage of the benefits that faster payments offer,” FIS wrote in its report.

According to analysts, as faster payment programs continue to innovate, they’re more likely to encompass more demographics and use cases of real-time payments capabilities, including B2B and government payments. However, in its latest report, only a handful of existing real-time payments programs that support B2B transactions scored a 4 on the innovation scale, meaning the program “meets some features maximizing customer value.”

Denmark

Denmark’s NETS RealTime 24/7 initiative launched in 2014 and offers near real-time settlement of transactions — including P2P, mobile, online and credit transfer payments, as well as B2B payments. Consumer payments and demand for faster mobile payments solutions drive the development of Denmark’s program, FIS explained.

Singapore

Singapore’s Fast and Secure Transfers (FAST) scheme also received a 4 score on the innovation scale, which focuses on accelerated inter-bank transfers as well as direct debits. Nineteen banks currently participate in the program, FIS said, which supports both consumer and business payments to checking and savings accounts as well as credit and debit card accounts. The Monetary Authority of Singapore’s support of the initiative as part of its “Singapore Payment Roadmap” to improve the national payments system — plus plans to implement an API solution allowing other payment solutions to integrate the FAST service — mean further innovation is likely ahead.

Poland

Another high-ranking faster payments system, Express ELIXIR in Poland, similarly supports B2B payments. This scheme supports near real-time transactions and, like Denmark’s, operates 24/7. While there are no volume limits, there are caps on both consumer and business transactions of $26,000, according to FIS.

Analysts expect significant growth of the Express ELIXIR scheme thanks to the participation of major Polish banks and the system’s open structure enabling third parties to develop add-on solutions. This, FIS noted, can be particularly beneficial in B2B use cases.

“One of the most interesting innovations has been an application that allows shipping companies to make duty-free payments to the local port authorities,” FIS wrote in its report. “When a ship arrives in its port, the duties can be paid instantly allowing for a streamlined and efficient turnaround for unloading and loading without the customary delays.”

Switzerland

The Swiss Interbank Clearing (SIC) program also scored a 4, though the platform cannot support P2P payments. It does, however, enable real-time B2B and P2B payments, as well as credit transfers and bill pay. SIX Group, which operates the scheme, plans to have all banks updated to its fourth generation by the middle of next year as it positions the nation’s payment system “for greater innovation, flexibility and efficiency,” according to FIS.

U.K.

The U.K.’s Faster Payments scheme is one of the most well-known, and has seen significant, ongoing growth since its launch in 2008. U.K. Faster Payments offers payment confirmation in as few as 15 seconds, while posting takes approximately two hours, FIS noted. With the U.K.’s development of the Open Banking initiative, a government effort to launch a set of banking APIs to the industry, Faster Payments is likely to see increased innovation through third-party development of value-added services that could likely include B2B payments use-cases — at least, eventually.

B2B’s Role In Faster Payments

FIS’s Jabbour did highlight the role B2B transactions play in the proliferation, adoption and innovation of faster and real-time payment initiatives.

“Whereas in the early days the focus was primarily on consumer payments, we now see a proliferation of solutions based on immediate payments that cater to [SMB] and corporate clients,” he wrote in his preface for the report.

However, as current faster payments initiatives suggest, the focus continues to be on consumer payments, mainly P2P and consumer-to-business (C2B), with some programs supporting B2B transactions.

That’s not surprising, though, considering corporates are not necessarily demanding real-time payment capabilities. A survey released last month by the EuroFinance Corporate Treasury Network and SWIFT found fewer than half of polled corporate treasury professionals want to be able to make instant payments, with approximately 44 percent of treasurers at large institutions saying they desire this capability. SMBs, meanwhile, see even less demand, with only about one-quarter interested in real-time and faster payments.

But, according to FIS’s report, as real-time payments initiatives spread across the globe, and greater emphasis is placed on expanding interoperability with third-party services and solutions, more B2B use cases may come to light and encourage corporate use. After all, the schemes will likely, inevitably, continue to see increased adoption by consumers and businesses alike.