Page 56 - Pay Magazine s2014
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pay world
The Need for Speed
pulls from your account using ACH. In a push scenario, the payer must initiate the push of funds from his account to a recipient’s account. And, as long as there are proper authentication procedures in place, the risk of fraud is low, experts suggest. (The card net- works have invested heavily in sophisticated fraud analytics to identify suspicious activity.)
But, in a push model, the payments typically are irrevocable—no chargebacks, no insufficient funds and no unauthorized returns on debits. Consumers may be in for
a rude awakening if they make a mistake “pushing” a payment out to the wrong recipient or for the wrong amount, for example.
Chris Dunne, director of market development and industry relations at VocaLink, says there’s an oppor- tunity to verify the transaction
We believe that
if you design a payment system with the idea of getting ROI, you will come up with features that are more valuable
to end users.
—Steve Ledford, The Clearing House
information in the U.K.’s real-time Faster Payments service before you “hit send,” but if you pay the wrong person, it can be a challenge to get the funds back. VocaLink runs the platform for the Faster Payments scheme, which began in 2008. (See sidebar on page 52.)
“Generally speaking, our fraud rates are low. However, if you’re moving money quickly, that has an obvious appeal to fraudsters,”
a POS SOlUtIOn?
Dunne notes. That’s where bank authentication methods come into play. “I’ve got an RBS app on my iPhone 6 and my thumbprint will validate me as the account owner before I initiate a Faster Payment, so the bank is pretty confident that I’m the one initiating the payment from my phone.”
TCH’s Ledford agrees that banks are in the best position to auth- enticate users. TCH also will be
Although the focus on faster pay- ments globally tends to revolve around P2P or B2B solutions, some experts believe there could be merchant demand for access to these newer rails. “Faster payments are good for merchants because they are cheaper and the merchant is guaranteed immediate payment (card companies charge for those two factors: guarantee and imme- diacy). In this way, faster ACH payments constitute a threat to card systems,” says Samee Zafar, a director in the London office of Edgar, Dunn & Company. “Today ACH networks cover mainly online (or remote) payments. POS payments are still card-based because of the way the POS machines are con- nected to card companies and not ACH systems, except for some markets like Germany.”
Zafar’s example of the German market points to potential in smaller domestic markets, but changing POS terminals is a major undertaking.
What’s more, card networks already have significant market share, global interoperability and consumer behavior on their side. Several years ago, de-coupled debit in which merchants used cards to pull funds from consumers’ bank accounts via ACH got a lot of attention but never really took off. Those ACH payments were not real-time nor were they based on a credit-push system. A few start-ups now are targeting online merchants for ACH payments, but the POS is a harder nut to crack.
“The entire payments ecosystem is interested in understanding how real time could be leveraged,” notes Elizabeth McQuerry, partner at Glen- brook and CEO of the International Payments Framework Association. “In the U.K. where Faster Payments is more mature, they recently added merchant payments at the POS through Zapp. Making this happen in a scalable way requires an overlay like Zapp. Otherwise you’re just sending a P2P payment.”
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