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The Need for Speed
SWIft enterS real-tIme retaIl DOmeStIc PaymentS
Global financial messaging platform SWIFT is getting in on the real-time retail payments action, using what it describes as innovative peer-to-peer technology, reusing and reconfiguring SWIFT components, and building on SWIFT interfaces to drive efficiencies for customers. This move is a strate-
gic response to the clear global shift toward real-time retail payments, accord- ing to the Brussels-based member- owned cooperative.
The New Payments Platform Australia (NPPA) Steering Committee has selected SWIFT to provide the infrastructure for its new Australian fast payments infrastruc- ture. The platform will provide Australian businesses and consumers with a fast,
versatile, data-rich payments system for everyday payments, according to SWIFT. The NPPA is being developed by 12 financial institutions in Australia and will go live in December 2017.
Beyond Australia, SWIFT is exploring how to deploy its real-time payments capabilities in a standardized way across multiple markets.
nacHa’S mOVe tO Same Day acH
building in authentication and other security standards, such as account number tokenization, that its owner banks will have to meet.
ROI & Monetization
Although the costs will be sig- nificant, especially in the midst
of the EMV migration, Ledford says many banks view real-time payments as a strategic invest- ment. That said, ROI is still impor- tant, he notes. “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.”
Still, experts say it’s clear that consumers aren’t likely to pay for real-time P2P transfers. “If I’m a bank, consumer P2P is not some- thing I can charge for,” says Anne Driscoll, vice president of market- ing and sales at Dwolla. The Des Moines, Iowa-based startup, which made a name for itself by offering P2P transfers for $0.25 per trans- action regardless of the amount, has opened up its FiSync platform to enable banks to offer real-time funds transfers, among other services. The company also sits
on the Fed’s Faster Payments Task Force Steering Committee.
Banks are interested in real- time payments because they must be relevant to millennials and digital natives, who expect mobile and online services to be in real time, Driscoll says. While the consumer focus may be more strategic for banks
In May 2015, members of NACHA—The Electronic Payments Association, which sets rules for the U.S.’s ACH network, approved Same Day ACH, an amendment to the NACHA Operating Rules. The rule enables a ubiquitous same-day capability for virtually any ACH transaction. Many reloadable prepaid programs rely on the ACH for card loads. Same-day, real-time loads may reduce prepaid card issuers’ risks, because many issuers provide immediate access to funds even if the funds haven’t yet been credited through the ACH.
Same Day ACH will be implemented in a phased approach. In Phase 1, ACH credit transactions will be eligible for same-day processing, supporting use cases, such as hourly payroll, P2P payments and same-day bill pay. In Phase 2, Same Day ACH debits will be added, allowing for a wide variety of consumer bill payment use cases like utility, mortgage, loan and credit card payments. Phase 3 introduces faster ACH credit funds availability requirements for receiving depository financial institution (RDFIs); funds from Same Day ACH credit transactions will need to be available to customers by 5 p.m. RDFI local time. Phase 1 is scheduled to begin Sept. 23, 2016.
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