Real Time Payments

UPI Tap & Pay: Ushering in a New Era of Real-time Payments in India

fsstiprod — Thu, 04 Jan 2024 05:58:27 +0000

UPI Tap & Pay: Ushering in a New Era of Real-time Payments in India fsstiprod Thu, 01/04/2024 - 11:28

India's digital payment landscape has witnessed a meteoric rise, and at the heart of this revolution lies the Unified Payments Interface (UPI). 2023, in particular, was a landmark year for UPI in more ways than one. UPI transactions crossed the 100 billion mark in 2023, closing the year at 118 billion. This was a 60% growth as compared to 2022. The value of transactions also grew by 44% in 2023.

There were several new UPI features that were brought to consumers in 2023; a marquee one being UPI Tap & Pay. Introduced in September 2023 at a leading fintech festival, UPI Tap & Pay is a contactless payment method that is poised to transform the way we transact. This feature will take UPI a leap forward by making payments faster, smoother and even more secure.

How does UPI Tap & Pay work?

No more QR codes to scan. If you have an NFC-enabled smartphone and the merchant has a compatible point-of-sale (POS) terminal, then all you need to do is tap your phone on the terminal and your payment goes through instantly through your UPI-linked bank account.

Some of you may already be using Tap & Pay with your credit cards. UPI Tap & Pay will work in a similar manner.

More than just convenience

Sure, UPI Tap & Pay will make digital payments more convenient. We won’t need to fumble with our phones anymore to open an app and scan a QR code. We have to simply tap our smartphone!

This is not only more convenient, but with set limits, also more secure. Currently, UPI Tap & Pay will work for transactions of ₹500 or less at offline stores. For this, the feature leverages UPI Lite, a PIN-less, offline payment mechanism. Beyond ₹500, the familiar UPI PIN provides an extra layer of protection.

What also enhances the security of UPI Tap & Pay is that it utilizes NFC technology, which minimizes the risk of fraudulent transactions. QR codes can be easily manipulated, but NFC technology makes transactions secure.

What is NFC technology

Near Field Communication (NFC) technology is akin to a handshake between two devices. It is a short-range wireless technology that enables two devices to communicate with each other when they’re touched together or brought within a few centimeters of each other.

Apart from contactless payments, NFC is also used for sharing photos, videos or files, connecting devices via Bluetooth using a tap, using a phone as a key, etc. What makes NFC secure is that, unlike unknown QR codes, it uses your very own device to complete a transaction.

UPI Tap & Pay benefits to merchants

Merchants, long burdened with managing cash and handling QR codes, can now enjoy simplified payment acceptance. UPI Tap & Pay requires minimal infrastructure, eliminating the need for QR code scanners and printers. The speed and efficiency of UPI Tap & Pay translates to quicker checkout times, leading to happier customers and improved business productivity.

Furthermore, UPI Tap & Pay empowers businesses by offering a low-cost, hassle-free solution, enabling them to accept digital payments and attract a wider customer base. This financial inclusion aspect aligns perfectly with the vision of a digital India.

The future is in UPI Tap & Pay

Looking ahead, UPI Tap & Pay is expected to evolve, enabling peer-to-peer payments, bill payments, and more. With increasing smartphone penetration and NFC adoption, UPI Tap & Pay is poised to become the de facto payment method in India.

However, UPI Tap & Pay will face some challenges. Ensuring widespread adoption across merchants and user awareness are crucial. Additionally, concerns around data security and potential misuse of NFC technology need to be addressed with robust security protocols and user education.

In conclusion, UPI Tap & Pay represents a significant leap forward in India's digital payment journey. Its focus on convenience, security, and inclusivity holds immense promise for revolutionizing the way we transact. While challenges exist, the potential of UPI Tap & Pay to transform the financial landscape and empower millions is undeniable.

FSS and UPI

FSS UPI solutions for real-time payments equips PSPs with a flexible platform to streamline real-time money movement via the UPI network and offers the extensibility to cater to a variety of use cases – P2P, P2M, P2C and C2P.

The solution’s gateway connects with the central infrastructure to enable instant push/pull payments based on a virtual address, completing real-time authorizations as well as immediate payment clearing and settlement efficiently.

Click here to learn more.

PayShap: Revolutionizing Payments in Africa with Vision and Innovation

fsstsprod — Fri, 18 Aug 2023 11:41:55 +0000

PayShap: Revolutionizing Payments in Africa with Vision and Innovation fsstsprod Fri, 08/18/2023 - 17:11

In a world marked by technological progress and digital transformation, PayShap has emerged as a shining beacon of change within the African financial landscape. As part of the South African Reserve Bank's (SARB) Vision 2025, which aims to revolutionize payments by making them faster, safer, and more cost-efficient, PayShap is leading the charge towards a future where transactions are instant, seamless, and accessible to all.

Embracing the Need for Instant Payments

The human desire for instant gratification extends to the realm of payments. People today want transactions that are effortless, quick, and hassle-free. This need for speed and convenience has driven the development of PayShap, a low-value real-time rapid payments platform designed to cater to this demand.

South Africa's financial landscape presents a unique set of challenges and opportunities. With approximately 85% of the population already banked, the challenge shifts from including the unbanked to optimizing the banking experience for those already connected. However, a notable statistic casts a spotlight on an underutilized aspect of the current system: the majority of users who are paid weekly or monthly quickly withdraw their funds in cash. This behavior, coupled with the prevalence of cash transactions, is costing the economy billions.

A Vision Beyond Transactions: Enabling Interoperability and Value-Added Services

PayShap's ambitions extend beyond mere transactions. It seeks to enable interoperability, connecting people beyond the confines of financial transactions. By fostering the adoption of digital payments and offering value-added services, PayShap hopes to shift the paradigm and encourage a transition from cash to digital. This change would not only benefit individuals but also lay the foundation for significant innovation within the financial sector.

The Potential of Remittances and Global Integration

Africa's significance as a remittance market cannot be understated. The ability of PayShap to facilitate swift cross-border transactions holds the potential to reshape the dynamics of remittances, making them more accessible and cost-effective for both senders and recipients. Examples from other markets, like India's integration with PayNow in Singapore, highlight the immense potential of such collaborations.

Beyond the Present: Challenges and Opportunities

While PayShap has made remarkable strides, it is not without its challenges. Inconsistent pricing, ranging from free transactions to charging R49, presents a hurdle to widespread adoption. However, the global trend of offering free transactions indicates that market pressures could drive down these fees.

Opportunities for growth abound. Currently limited to person-to-person (P2P) transactions, PayShap's potential reaches far beyond. As fintech solutions integrate with the platform, the scope for added functionalities and innovative financial products, such as extending lines of credit, becomes possible. This expansion would not only drive financial inclusion but also encourage wider participation in the digital economy.

Merchants, in particular, stand to benefit from PayShap's offerings. The platform promises to increase participation beyond urban demographics, allowing small vendors and businesses to thrive. Additionally, the safety of not carrying cash is an undeniable advantage in regions where personal security can be a concern.

A New Frontier: The Coexistence of Cash and Digital

As PayShap strives to reduce reliance on cash, an interesting debate emerges: Will cash and digital payments coexist or will one eventually outshine the other? Countries like Germany, despite being technologically advanced, remain heavily reliant on cash. PayShap's mission to address the challenges of cash-carrying opens up a new discourse on the evolving nature of payments.

In conclusion, PayShap's journey symbolizes more than just a shift in payment methods. It encapsulates a vision for a transformed financial landscape that bridges gaps, fosters innovation, and empowers individuals and businesses across Africa. As it continues to weave its tapestry of change, PayShap is paving the way for a future where financial transactions are no longer barriers but bridges to progress.

To learn about FSS Products, write to us at products@fsstech.com.

RBI’s New Digital Payment System - Enhancing Digital Inclusivity in India

fsstsprod — Wed, 02 Aug 2023 09:10:07 +0000

RBI’s New Digital Payment System - Enhancing Digital Inclusivity in India fsstsprod Wed, 08/02/2023 - 14:40

The Reserve Bank of India (RBI) has announced that it is planning to build a new digital payment system that will function with minimal infrastructural requirements and allow digital payments even during times of crises.

What is LPSS?

Called LPSS, Lightweight and Portal Payment System, the digital payment system was first mentioned in RBI’s Annual Report. The new system is expected to be markedly different from the existing systems, which it will require to be to fulfill its primary objective of not stopping digital payments in any circumstances – not even natural disasters or wars.

We believe that this system, once it is put into place, will go a long way in making digital payments achieve the wider reach around India that RBI has always aimed for.

The Har Payment Digital campaign

Back in March this year, Mr Shaktikanta Das had launched the “Har Payment Digital” campaign as part of The Digital Payments Awareness Week. The goal of the campaign, as is obvious from its name, was to make digital payments the norm across India.

You and me, the ones who live in urban India, are probably now habituated to digital payments. We whip out our phones to scan a QR code and make a UPI payment as if it's second nature to us. From buying that latest TV or the fanciest set of clothes to coconut water from a roadside vendor, we pay digitally with so much ease using either our cards or our phones.

Digital payments have a long way to go

But that is still not the case in other parts of the country. According to RBI’s own survey of 90,000 people, 35% of the respondents said that they were aware of digital payments but don’t use them. What might sound even more shocking is that 23% weren’t even aware of digital payments. Yes, 23%!

As you can imagine, digital payments still have a long way to go in India. Of course, RBI understands the concerns that Indians have around adapting digital payments. One of the major concerns being that digital payments aren’t always reliable – what if they don’t go through?

This, of course, is something that RBI doesn’t want to happen, especially not in a situation of crisis. Which is where LPSS comes into play.

How will LPSS work?

LPSS is planned to be made available on a “need basis”. We’re not exactly sure about the mechanics of LPSS as yet; we’re looking forward to learning more about it from RBI in the coming future, but we do understand that LPSS will be compatible with the payment platforms available today.

As per RBI’s repprt, LPSS will be developed as a lightweight and portable system to “ensure near-zero downtime of payment and settlement system in the country and keep the liquidity pipeline of the economy alive and intact by facilitating uninterrupted functioning of essential payment services.”

LPSS is also expected to work for bulk payments, interbank payments and provision of cash to participant institutions.

While we commend RBI’s vision in looking to build something like the LPSS, the larger question remains around the infrastructure that LPSS will work on. The system is expected to have minimal hardware and software so that it works in every type of situation, which will help in enhancing consumer trust in digital payments.

Of course, no one wishes any crisis situation on the citizens of our country. Buit given the times we live in, it is best to stay prepared for such situations. And RBI’s vision to make sure digital payments don’t fail when people would need them the most is exemplary.

Here’s hoping we see more on LPSS soon.

To learn about FSS Products, write to us at products@fsstech.com.

Real-Time Payments - The Driving Force of Modern Developing Economies

fsstsprod — Mon, 03 Jul 2023 09:46:17 +0000

Real-Time Payments - The Driving Force of Modern Developing Economies fsstsprod Mon, 07/03/2023 - 15:16

In today's digital age, real-time payments have become a key driver of economic growth and development, particularly in developing economies. Overtime, clear areas of benefit have emerged that are directly and positively impacted by the successful implementation of real-time payments in a country. Some of those areas are:

Better Resource Allocation through Direct Benefit Transfers:

Real-time payment solutions facilitate direct benefit transfers, enabling governments and organizations to allocate resources more efficiently. In developing economies, this is particularly impactful for social welfare programs, where direct payments to individuals or households ensure that aid reaches the intended recipients without intermediaries. Real-time payments reduce delays, administrative costs, and potential leakage, resulting in more effective resource allocation and improved social development outcomes.

Value-Added Services: Request-to-Pay and More

Real-time payment solutions offer value-added services that enhance the overall transaction experience. One such feature is request-to-pay, which allows businesses or individuals to generate payment requests and send them to customers. This streamlined process eliminates the need for manual invoicing, reduces the risk of errors, and expedites payment collection. Additionally, real-time payments enable businesses to integrate additional services such as loyalty programs, discounts, and personalized offers, further enriching the customer experience and driving business growth.

Accessibility and Convenience:

Real-time payments provide unparalleled accessibility and convenience for individuals and businesses. With instant payment solutions, users can initiate and receive payments anytime, anywhere, through various channels such as mobile apps, online platforms, or even QR codes. This accessibility enables businesses to reach new markets, expand their customer base, and operate seamlessly in an increasingly digital economy. Individuals benefit from the convenience of instant fund transfers, allowing them to settle payments promptly and efficiently.

Improved Financial Management:

Real-time payment solutions empower individuals and businesses with enhanced financial management capabilities. Instant access to transaction history, real-time balance updates, and notifications enable users to have a comprehensive overview of their financial activities. This level of visibility aids in budgeting, cash flow management, and decision-making processes. Real-time payments also provide businesses with valuable insights into customer spending patterns, helping them tailor their products and services to meet customer demands more effectively.

Increased Financial Inclusion:

Real-time payments play a crucial role in promoting financial inclusion, particularly in areas with limited access to traditional banking services. With instant payment solutions, individuals can bypass the need for a physical bank account and transact digitally. Mobile money platforms, powered by real-time payments, have become an effective means of providing financial services to the unbanked and underbanked populations. This inclusion not only empowers individuals but also stimulates economic growth by expanding the consumer base and enabling more people to participate in economic activities.

Simplified Cross-Border Transactions:

Real-time payments simplify and expedite cross-border transactions, promoting international trade and economic cooperation. Traditionally, cross-border payments have been marred by high fees, long settlement periods, and complex processes. Real-time payment solutions, leveraging advanced technologies like blockchain, enable faster, more secure, and cost-effective cross-border transactions. This streamlined process reduces friction in global commerce, facilitates business growth, and strengthens economic ties between nations.

Spurring Economic Growth:

Real-time payments serve as a catalyst for economic growth by facilitating increased consumer spending, business expansion, and entrepreneurship. The speed and convenience of instant payments drive consumer confidence, encouraging higher spending levels. This, in turn, stimulates demand, fuels production, and boosts economic activity. Real-time payments also empower businesses with efficient cash flow management, enabling them to invest in innovation, hire more employees, and contribute to job creation, thus fostering economic development.

There are several examples of developing nations who have been benefited earlier with the successful implementation of real-time payments in their countries.

India, Kenya, Brazil, Ghana, and Mexico are only some of the examples that have launched their own real-time payment interfaces to drive financial inclusion and economic growth.

India's Unified Payments Interface (UPI) revolutionized digital payments
Kenya's M-Pesa transformed mobile money services
Brazil introduced PIX, a real-time payment system, while Ghana launched GhIPSS Instant Pay (GIP) for instant transactions
Mexico's CoDi system enables QR code and mobile phone-based payments

These interfaces have empowered individuals and businesses with convenient and secure payment options, reduced dependence on cash, and accelerated financial inclusion. By embracing real-time payments, these nations are fostering digital transformation, driving economic development, and creating a more inclusive financial ecosystem.

Now South Africa has joined the bandwagon with its PayShap and the country hopes to witness a similar success and growth in the region. Just like any growing economy, speed, scale and security would be the primary drivers of this success.

Did you know - FSS’s Real-time Payments solution is benchmarked to process more than 5000 transactions per second Want to know more, click here.

As a leading B2B payments technology company, we remain committed to leveraging advanced technologies and innovative solutions to empower businesses, individuals, and economies, promote financial inclusion, and contribute to the prosperity and progress of developing economies worldwide. Through the adoption of real-time payment solutions, we can usher in a new era of economic development, digital empowerment, and financial well-being for all.

To know more about FSS Products, write to us at products@fsstech.com.

Middle East – The Next Playground for RTP Innovation

fsstsprod — Mon, 09 Jan 2023 09:59:27 +0000

Middle East – The Next Playground for RTP Innovation fsstsprod Mon, 01/09/2023 - 15:29

As per a recent study, RTP market in the Middle East is expected to grow at CAGR of 13.7% over the next 5 years till 2027. PwC also had earlier predicted that the Middle East RTP market would grow from $1.2 Bn in 2018 to $5.2 by 2023. And from the present trends, it seems the numbers will be met easily.

The Middle East region has seen some massive growth in real-time payments (RTP) over the past few years, with banks and other financial institutions rapidly adopting the technology to provide customers with faster and more efficient payment solutions. This shift can be attributed to a variety of factors like:

The rise in adoption of digital banking,
The dominant digital native population,
The emergence of new payment technologies, and
The increasing demand for convenience and speed.

Evolution Of Digital Transformation in The Middle East
The shift started with the adoption of digital banking in the region which transformed the way people in the Middle East accessed and used financial services. Even after being a country with one of the highest smartphone penetrations, the consumers were limited and habituated to traditional banking and payment methods such as cheques and cash. However, with the rise of digital banking, consumers could now access a wide range of payment services easily. This has had a huge impact on the way people made payments and completed transactions in a matter of seconds, digitally.

Moving ahead, technologies such as mobile wallets, contactless cards, and digital currencies made it easier for consumers to make payments quickly and securely. These innovations are now leading towards massive behavioural shifts and growing consumer expectations from governments and payment service providers.

Middle East and The RTP Bandwagon
The demand for real-time payments in the Middle East is increasing rapidly and there is a strong reason for it. Globally, RTP has revolutionized the way people make payments, do commerce, and has opened up a great wealth of opportunities for banks and other financial institutions. Additionally, increasing number of partnerships between banks and other financial institutions is making a highly integrated, conducive environment for digital payments to flourish at fast pace in the region.

Finally, governments and financial regulators in the region are increasingly introducing regulations and initiatives that are aimed at making payments more secure and efficient and promote real-time payments in the region. They are also investing heavily on the development of infrastructure that supports real-time payments, such as digital banking platforms, payment gateways and other related technologies.

Take UAE for example. UAE has recently released an innovative payment platform called the UAE Instant Payment Platform (UAEIPP). This platform is designed to facilitate faster, easier, and more secure payments for individuals and businesses within the country. The platform allows users to quickly send and receive payments without the need for intermediaries, such as a banking professional or money transfer services. The platform also features a range of services, including instant money transfers, bill payments, and the ability to set up recurring payments. It is primarily designed to facilitate instant funds transfer at the smallest denomination and initiate a population level behavioural change. The current rollout and the given trends are expected to generate a high CAGR of 36.5% in the coming 5 years.

Similarly, there are other success stories as well from the region. For example, Bahrain at 34.2% recorded one of the highest RTP shares by volume in the region. Saudi Arabia, even though a new entrant to the market, witnessed a massive RTP acceptance and is expected to grow at 22.1% CAGR for the next 5 years.

Given these trends, the Middle East is set to be the next playing ground for RTP led growth and innovation.

Playground For Innovation – Opportunity for The Banks
To add to that, further innovation, and policies around ideas like Open Banking, Blockchain, Digital Currencies, etc. will accelerate this growth by manifolds and that is where banks can hope to win the customers. Customers today are looking for a highly integrated, digital payments journey which the modern-day Fintechs are providing, but the consumer also seeks trust and assurance, which the banks provide.

Banks today need to forge strategic partnerships with technology providers who can not only help these banks create integrated payment journey and seamless experience for their customers, but also help them build solutions that are better suited to cater the needs for fast, connected, borderless commerce environment of tomorrow. Mobile is slowly becoming the primary channel of all payments, and banks that can operate with a mobile-first approach and deliver payment and banking services to the customers on the go, will be creating strong moats for themselves.

The real-time experience is no longer just about faster payments. It is about a growing ecosystem of payment services, built on the strong foundations of a dynamic digital infrastructure - which multiple countries in the Middle East are investing heavily upon. It is only a matter of time now before we witness the growth of a completely new generation of payment service providers offering a host of innovative solutions on the back, of this infrastructure for the digitally native population of the region. Banks and payment service providers who are actively working with the technology providers to equip themselves for this future will reap the benefits of it in the long run. FSS as a payments technology provider for over 32 years and a strong presence in the MENA region, is actively working with the top banking institutions of the region and helping them realise this dream

To learn more about it, write to us at sales@fsstech.co.in

RTP and The Cross-Border Payment Experience

fsstsprod — Mon, 14 Nov 2022 07:49:42 +0000

RTP and The Cross-Border Payment Experience fsstsprod Mon, 11/14/2022 - 13:19

Real-time payments have witnessed massive acceptance globally. More and more countries are joining the real-time bandwagon every day, and rightly so! Domestically, real-time payments have been able to bring significant changes in the money-transfer landscape within countries that have been able to implement RTP successfully. India’s UPI is the biggest and most successful case in point. However, international money transfer is yet to witness changes and growth at such a large scale, even though the value that real-time payments can bring to international payments is probably as high, if not more, as domestic payments simply because of the economic impact it would be able to create for all players, public as well as private.

Why has cross-border real-time payment taken time? The reasons are too many and too subtle.

Broadly speaking, for any payment, there is a payer, a receiver, a currency, and a processing body (leaving aside the finer details like communicating and recording protocols like message format for now). In a domestic payment, the payer and receiver are from the same region and operate under the same banking system which allows easy account identification and verification for the transfer. Both parties operate on a single currency; hence no conversion hassles and forex requirements delay the process. Lastly, both the parties, and essentially the payment partners i.e., the banks, operate under a common processing system that processes, records, and reconciles the transactions, making the whole transfer process complete and seamless.

For cross-border payments, however, it’s not that simple. Let’s see how.

Currency: One of the key hold-ups that remain for cross-border payments is currency conversion and the requirement of Forex reserves with the payment partner for both parties.
Banking Systems and Protocols: Banking systems need to operate on the same messaging protocols for speedy payment data transfer to ensure genuine real-time payments whereas, in cross-border scenarios, it may not be the case.
Identification and Payment Security: Different countries operate under different legal systems, and hence fraud management and accountability become critical matters, especially in cross-border payments.

However, with changing business and payment scenarios, consumer expectations are also changing rapidly and both financial institutions, as well as governments, are making a note of it. We are witnessing more and more countries joining hands on integrating their real-time payments systems to ensure safe, speedy, cross-border real-time payments among their systems. One of the examples is the coming together of South-Asian countries like Singapore and Thailand and partnering with India to integrate their regional RTP Systems with UPI.

Affordability and Accessibility are the pillars on which the success of any RTP system depends. And these can only be achieved through strategic partnerships and technological innovations. Innovations that are primarily focused on improving the overall payment cycle and value chain of the payments business and at the same time reduce the cost of making that real-time international payment.

And that’s essentially the crux here. For cross-border real-time payments to be successful, innovation at the payments infrastructural level becomes paramount, i.e., cross-border real-time payment innovations are dependent on infrastructure like payment rails, central banking setups, etc.

While there have been steps at a larger level that have helped further this process, like implementing common messaging standards and newer integrations within the central banking systems, a certain amount of innovation and development is needed at a domestic level to make smooth cross-border RTP possible.

Real-time payments have three core elements – Speed, Volume, and Automation and each country participating in the cross-border real-time payments needs to ensure that it has a payments infrastructure that can sustain it.

The infrastructure should support real-time or near-time payment processing and settlement between partners to ensure there isn’t any lag or delay.
Any RTP infrastructure usually manages high payment volumes at a domestic level, however, the governments should ensure that when the volumes rise with the additional international payment traffic, the system holds up.
Lastly, the system should be smooth enough to reduce manual intervention to the least possible levels and automate critical processes like conversion, reconciliation, and settlement in a timely manner to avoid discrepancies at an international level

Further, the infrastructure should be built in a manner that improves the customer experience right from the beginning of the payment cycle, i.e., registering and validating the payment account, to simpler steps to complete the transaction and reducing friction points, to securing the payment and preventing any form of RTP frauds.

The future of real-time cross-border payments depends on multiple factors. It is the interoperability of systems, a mutual partnership between govt., the ease of currency conversion, and operation regulatory frameworks guiding the flow of payments. But at the center of it will always remain a strong and steady technology stack that can suit any payments landscape and adapt to any system.

Technology partners like FSS with strong payment domain expertise not only help design this kind of infrastructure and technology stack for the central banking organizations but also help them successfully deploy and implement it, and further extend it at an international level.

With international payments and global trade growing rapidly, it is only a matter of time before all the countries will join the RTP bandwagon. But it will be the countries who join it first, who reap the benefits of economical technology, better implementation, and larger global acceptance. FSS, in this regard, is helping institutions globally to initiate their RTP journey and achieve success.

To learn more, write to us at products@fsstech.com

The Real Time Payment Rails – Changing the Game with Digital Overlay Services

fsstsprod — Fri, 12 Aug 2022 11:39:40 +0000

The Real Time Payment Rails – Changing the Game with Digital Overlay Services fsstsprod Fri, 08/12/2022 - 17:09

Payment rails are the far-side of a payment transaction, the hidden layer which moves money between a payer and a payee. And just like with locomotive rails, there are multiple ways to transfer money from a payer to a payee.

When transfer is done via account rails instantaneously, it's called a real-time payment. Historically, the payment transaction communication has been one-sided and real-time payments bring end to end communication. Real-time payments connect the payment with payments data in real-time. The transformative power of instant movement of money and access to its data opens up avenues for offerings for both consumers and corporates that add value through improved customer experience and additional sources of revenue which were previously not available.

As we see standardization and instant payments becoming the norm, the market is opening to non-banks as well. So as the base rate for payments and bank revenues are declining, new entrants are conveniently picking the more profitable payments, leaving banks with declining revenues yet still loaded with the responsibility of funding the pipeline. Banks now need to seek new ways of making money from payments, and they are doing that by looking at value-added services to overlay on payment transactions. They are investing in building the infrastructure to support these services on real-time payment rails today to leverage the future scope of overlay services. Digital overlay services are offerings over-and-above the regular payment transaction performed on real-time payment rails which provide an ancillary service. Overlay services stand to benefit all parties – networks, financial institutions, and the end customer.

These services will enable banks charge the customers as well as provide with essential services, providing a one-stop shop to customers for all transactions. This will help banks retain the critical mass of their banking consumers, preventing them from looking elsewhere.

Enabling Commerce with Real-time Payment Rails

Merchants benefit from using instant payments at the point of sale instead of using a card. It benefits both the customer with payments happening on the fast lane within seconds which cards cannot achieve. For merchants, supermarkets have to pay an interchange fee for all card transactions which for every customer amount to significant charges. Instant payments eliminate all intermediary charges. In addition to that, usually cards have a separate loyalty scheme and the retailer usually does not get access to the data. Instant payments enables a retailer to collect data at the point of sale and offer overlay services in real time, unlike weekly or on daily basis. This also enables the possibility of introducing an open banking ecosystem. UPI can be used as a reference for open banking having also been implemented at a national level. The real reason this stands to work and scale successfully in all markets is because this will be done by banks, building robust scalable infrastructures with the help of payments technology providers and adopted nationally according to their regulations, leveraging the trust of existing banking users as well as provoking to bring the unbanked to the banking segment, all this while keeping the sensitive user information safe.

At the corporate levels, banks can offer real-time tracking of outbound and inbound payments, at any time of the day, 365 days a year. Services offered on the cloud with interactive dashboards will not only open new revenue streams but also enable innovative and forward-looking services, seeking inspiration from all the innovation happening in the personal finance space.

Banks have been in talks of implementing these services for a while now, and while there are several regulatory and technological challenges, the vision is quite clear and everyone acknowledges the evident shift to real-time payment rails. Rise of IoT based invisible payments, embedded payments, virtual cards at the point of sale or online etc. is disrupting the payments experience for the end consumer. At the same time, with new technology players looking to disrupt the space before banks, they do not have the liberty to wait too long lest they should lose the first mover advantage. The biggest challenge and opportunity are going to lie with the banks’ decision to pivot their revenue sources and stay profitable in the long run.

FSS Instant Payments

FSS Instant Payments is a fast, secure, 24/7 active, account-to-account electronic fund transfer solution designed to scale at a population level in a fast paced real-time payments environment. The solution acts as a PSP middleware and provides a modular approach to accommodate multiple payment journeys and provides API-based integrations for digital overlay services. Click here to learn more.

Growth of Real Time Payments

fsstsprod — Wed, 20 Apr 2022 07:05:49 +0000

Growth of Real Time Payments fsstsprod Wed, 04/20/2022 - 12:35