Over the past couple of years, there has been a lot of discussion around faster and real-time payments. I think this development stems from the fact that for many years, payments have not really changed. The United States has remained stagnant; to this day, checks still dominate B2B transactions. So it came as no surprise that faster and real-time payments were a major focus at this year’s NACHA Payments Conference.
FASTER AND REAL-TIME PAYMENTS
NACHA itself of course is in the market with Same Day ACH, which has been operational for a while now and reports that the number of transactions are up 15 percent so far in 2018 from all of last year. I think one reason Same-Day ACH is working is because all of the financial institutions are included, and can offer it.
At the same time, The Clearing House (TCH) is now operational with its Real-Time Payments (RTP) system. Though the system launched last fall there are still some big questions around how to get a broad implementation, particularly at the corporate level.
After talking to some corporate practitioners about this, there seems to be a disconnect between the developers of RTP and the banks, and the corporates. I heard one corporate say that banks “just don’t get it.” What he meant was that banks don’t seem to fully understand what it takes for corporates to make changes to their existing payments infrastructure. It would be great if it just took a good business case for it to happen, but in many cases that is not even close to being enough. You actually have to do it as well. We are not just talking about dollars but also time—time that most corporates don’t have. They just don’t have a number of extra people they can task with planning and executing necessary changes.
I think it is safe to say that businesses aren’t quite ready, or, there is not a solution ready for them to actually implement. The typical wait-and-see approach may be the best one, at least for now.
OTHER EMERGING TECHNOLOGIES
Another major topic in payments is technology. Application programming interfaces (APIs) are emerging as more and more important for the payments industry. I have been writing about APIs for some time and the key trends for usability of this technology seems to circle around better views of data, client experience and security. The Federal Reserve also noted that APIs are a key part of its strategy going forward.
It is also clear that artificial intelligence (AI) is gaining momentum. Corporates are more comfortable letting AI handle simple things, such as setting up reminders and alerts. However, they remain somewhat apprehensive about trusting AI with financial matters. But I think that will change over time.
Blockchain technology is a topic that continues to be discussed—particularly how it can be used for different tasks, and not just transferring of funds through digital currencies.
Discussions of technology in the payments and treasury industries will most certainly continue to expand. I’m looking forward to discussing them in depth at AFP 2018. You can check out sessions in the Payments Track here.