Latest news with #instantpayments
Finextra
29-05-2025
- Business
- Finextra
EBAday 2025: What's next for instant payments?
Two expert panels at EBAday 2025 explored what makes an effective implementation plan, the persistent global and regional challenges, and the growing benefits of instant payments. 0 This content has been selected, created and edited by the Finextra editorial team based upon its relevance and interest to our community. Future proofing instant payment adoption In the panel session 'Instant payment adoption: future-proofing our business', speakers Antoine Cuypers, director strategic alliances & key accounts, Intix; Daniel Stanton, managing director & global head of transactional FX - cross border RTP and clearing - global payment solutions, Bank of America; Jonny Keir, head of payments execution, NatWest Group; Kevin Flood, head of European growth office, FIS; and Sophie Giorgi, head of payment systems and infrastructure relationships, Crédit Agricole, discussed what constitutes a good implementation plan for instant payments, moderated by Jude Pinto, chief delivery officer, Payments Canada. Pinto began by posing a question to the panelists on the starting points that had to be overcome for adoption. Cuypers mentioned the regional discrepancies in adoption, 'there's a bit of discrepancy between adoption in different regions, interpretation on adoptions, different rulebooks etc, there are regions really looking into the cross border elements, whereas other regions are purely focused on their own domestic payments'. Flood highlighted the impact of regulations on the push for innovation in Europe. 'I don't want to wait for something to clear out. I don't want to wait for my transport transaction or the movement I want to see. I think regulations help push it. I think some of them open up opportunities'. Giorgi further commented, 'after the success of the SEPA, they really wanted to launch a new payment which would be real time and now the regulation is coming, we are on the way, and I think next year we will see the success'. On the importance of customer trust, Keir explained 'from a national payments provision perspective, there's a huge focus around customer choice. You can have the best technology in the world, but unless you have a customer proposition that is embedded, that is state of literary, that is low friction, then you won't.' Stanton then emphasised the consumerisation of client expectations, 'adoption and interest is really being driven by customer demand and supply, what we refer to as the consumerisation of client expectations. We are all consumers as individuals, and we have this instant gratification aspect to who we are, so instant access of information, instant availability of value.' The panel concluded on the need for data sharing to facilitate collaboration among financial institutions, summarising the importance of producing payments in a secure and relevant manner. The advantages of instant payments The following panel 'The advantages of instant payments', was moderated by Christophe Vergne, Europe market development executive payments, Capgemini. Speakers included: Andrea Pennacchia, head of banking and PA solutions, Nexi; Conor Colleary, senior vice president, Oracle Financial Services; Elena Gomez, managing director UK and Europe and domestic payments head, Citi Services; Helena Forest, executive vice president - global product & commercial - real time payments, Mastercard; and Martin Runow, head of European product TxB, Goldman Sachs Bank Europe. Vergne kicked the session off on emerging market success stories. Forest highlighted Thailand as a successful market example with strong government support and the introduction of digital ID for interoperability. Forest further commented, 'what we've learnt from the 12 markets we support today is there isn't one solution that fits all. Countries are at a different starting point of their journey. They pursue a slightly different agenda as part of that adoption, and operate in different regulatory as well as just general ecosystems when they started this journey. All these factors play a significant role in the success criteria needed to secure growth.' From a European perspective, Gomez explained: 'It's incredibly important the network is able to support volumes that are 24/7 and fully reliable, as reliable as the other rails already in work. Obviously the demands of instant payments are very different to the demands of batch payment, so these roles are incredibly strong at a clearing level and also at a bank and individual operating level.' Although banks face challenges in adapting to instant payments, Pennacchia viewed this as a valuable opportunity to upgrade systems, with regulation being used a tool: 'I see, and we see in our clients, this is an opportunity because instant payment is now very important for banks, so investments are upgraded. This is the opportunity for banks to launch or relaunch the evolution of their payment systems. I think rules sometimes help and force the market to change,' said Pennacchia. Vergne moved the conversation onto the importance of merchant adoption, and the need for seamless integration of instant payments with existing systems. Colleary highlighted the importance of embedding instant payments within ERP systems, 'bring the service to where your customers are, not just at the merchant, but embedding the service within ERP systems to allow instant payments directly from where they're actually doing their business.' Runow emphasised the challenges of changing legacy systems: 'If I get a better service for the same price, naturally, I'll take the better service, but if the better service involves changing the core of my suppliers and data setup, it becomes a different story. With corporates and corporate treasurers, change management, resources, IT budgets, are very precious. The more high tech and fast growing the company, the less the Treasury function gets any of that money, so changes are hard work, as an industry we see a lot of inertia.' Finally, Verge concluded with the importance of understanding specific market contexts: 'There is no one future solution, no silver bullet, no single strategy that could be rolled out across four geographies. It's about understanding specific context of the different markets, listening to the clients, and finding value propositions.'
Finextra
27-05-2025
- Business
- Finextra
EBAday 2025: Strategising for instant payments and financial crime
The afternoon sessions in the main stream focused on strategising for instant payments and financial crime. 0 The first panel, 'Implementing Instant Payments: Strategies and Challenges', was moderated by Rita Camporeale, European Payments Council, and featured the following speakers: Anne-Fleur Felissent, Société Générale; Arantza Yague, HSBC; Craig Ramsey, ACI Worldwide; and Katja Heyder, EBA Clearing. Camporeale began by outlining the Instant Payments Regulation and the urgency it imposes on European organisations as we have already passed the first deadline. The new version of the SEPA Instant Credit Transfer (SCT Inst) scheme will come into force on 5 October 2025, along with the Verification of Payee (VoP) scheme, meaning financial organisations have a full schedule in the upcoming five months. So how have organisations approached implementation? Felissent outlined three steps with which Société Générale approached their own implementations of various transformation projects: First, the design of the offer and addressing the customer journey, meaning the app, banking tools, and end to end processes. Second comes the technical integration, ensuring the real-time checks and fraud filtering, as well as the interfacing and connection of the APIs. Lastly, testing. Yague highlighted the difference between retail and corporate that she's observed. 'Firstly, the pricing is going to make corporates more keen to make use of instant payments. Equally, the fact that there is no €100,000 cap is going to allow them to make treasury payments of any amount, but the corporate journey is very different to that of the consumer. Crucially, it's going to be more of a file journey.' Ramsey highlighted his perspective on industry adoption and readiness as a technical service provider. 'By 2028, we're expecting 13% of all payments in Europe to be instant payments. It's not just about preparing for the IPR, it's about truly understanding what's going to change in the business as we move forward in terms of actual readiness. I'm going to go out on a limb here: I don't think most banks have implemented a solution for IPR that will still be around in three years' time. I think many have put sticking plasters over their systems in order to be compliant.' Heyder of EBA Clearing gave insight into what has happened since the first IRP deadline, including the ability to receive instant credit transfers among others, has passed in January of this year. 'You can see the increase accelerating, and you can see the first impact of the IPR. However, the SCT Inst is still growing itself, so I don't think we can really talk about a migration. Individual banks are on their way, but it's not yet an industry migration.' An open-ended poll question revealed a mind-map of the audience's most prominent challenges of implementing instant payments. Liquidity, fraud prevention, VoP, and fund recovery emerged as the biggest struggles. Felissent commented: 'I would have also chosen liquidity as one of the main challenges, especially when the cap on instant payments will be removed. Today, banks do not have 24/7 access to their liquidity in central banks, so there is the issue to source this liquidity. In addition, the account dedicated to instant payments is not remunerated,' adding an extra layer of complexity for treasurers when it comes to optimisation. The other large issue that PSPs are facing is fraud. Ramsey emphasised that the rise in fraud is not because of instant payments per se, but because of the nature of fraud in itself. 'We see fraud focus on instant payments because it's a new thing. Whenever a new scheme has been launched, suddenly there's fraudulent activity there. A lot of people say you need to educate the populace, but that's not going to help. The populace always thinks its educated right up until the point they realise they've become a victim of fraud.' And while VoP is one measure to help with fraud prevention, it will not solve the whole fraud puzzle. 'We're seeing that fraud in SCT Inst is nine times higher than in SCT,' Heyder commented. 'The [VoP] deadline is the first challenge, because October is just around the corner. But VoP in itself will not stop fraud. Looking at the data, 10% of fraudulent transfers would not pass VoP, but on the other hand, 50% of fraudulent transactions would pass VoP. The challenge banks will face is how to keep the good friction. The question of fraud prevention strategies was then picked up by the next panel. Financial crime and fraud in payments As financial crime evolves, so must payments security. Moderated by Deepa Sinha, BAFT, the panel titled 'Financial Crime and Fraud in Payments' featured Damien Dugauquier, iPiD; Evert Vandenbussche, KBC Global Services; Monika Jacob-Schnitzius, Deutsche Bank; and Olivier Jolyon, EBA Clearing. Jacob-Schnitzius began with a short summary of how financial crime has evolved over the last five years. What we have been experiencing, is 'a fundamental change in which crime, including financial crime, is committed. Financial crime is being shaped by global instability, market uncertainty, digitisation, and emerging technology. Digital platforms and technology are facilitating criminal systems. You can even say that a shadow industry has developed over the years, with professional fraudsters developing methods to steal data and sell it. The fact that a term like 'fraud as a service' exists speaks for itself.' Dugauquier elaborated: 'I live in Sinapore, which is where people have lost the most amount of money to scams over the past few years. We're talking about, on average, $4000 per citizen, per year—which is the equivalent of a monthly salary. It really is very prevalent in life. It didn't used to be like that, so what changed? For one, Covid has removed the fear of spending money online, which fraudsters are exploiting. But mainly, the business case for scammers is too good. Scammers aren't based in Singapore, they have built scam centres, which are also linked to other types of crime, such as kidnapping and human trafficking.' Vandenbussche highlighted the complexity of generative AI as deepfakes are becoming increasingly harder to identify. One of the means of effectively working against this is 'working together, making use of services like FPAD, to share data and intelligence. We have to go beyond the boundaries of the transactions that we see taking place in the scope of our functions.' Jolyon emphasised the necessity of building 'AI models that will help detect fraud and patters very early in the game. That's what we're doing with FPAD, detect patterns and feed information to banks that can then use it in their own systems to detect fraud. Technology will play a key part in orchestrating all that information, and then as a next step will be sharing the information.' Yet the panelists highlighted regulatory hurdles when it comes to effective data sharing—namely the balance between fraud prevention and data privacy. Dugauquier commented: 'We often like to blame the banks for everything, but it's not fair that banks are caught between data privacy and then also becoming more liable for fraud. If banks should protect their customers, we then also need to let them exchange more data to make this possible.' Speaking on the topic of liability, the conversation turned toward the changing liability for authorised push payment (APP) fraud. 'APP fraud payments are fundamentally based on social engineering, which is why it's so difficult to catch,' highlighted Vandenbussche. 'On a European level, I understand we want to make banks more liable, and I do think they have a role to play in that. On the other side, a lot of these scams are going through social media, so there is a lot of other industries that should also take measures to prevent this scale of scams. As a PSP you cannot handle that [alone].' Summarising what's next, the panellists agreed that the future of identifying fraud lies in technology and industry collaboration. Jacob-Schnitzius commented: 'Fighting financial crime and fraud is no longer a competitive advantage. It must be a collaborative effort amongst banks, industry, and authorities.' Dugauquier aptly finalised: 'Fraud is a little bit like a bottle of ketchup. If you squeeze somewhere, it goes somewhere else.'
Finextra
15-05-2025
- Business
- Finextra
ECB sets back deadline for non-bank PSP access to Target
The European Central bank has postponed a deadline for allowing non-bank payment service providers (PSPs) to access central bank-operated payment systems, including the Target settlement system. 3 The ECB says the six-month postponement is due to delays in some EU areas countries in transposing the necessary legislative changes into law. Initially set for introdcution in April, the new Eurosystem policy follows the enactment of the Instant Payments Regulation, which amended the Settlement Finality Directive to broaden the scope of participation in designated payment systems to include non-bank PSPs. The broader access criteria for Target was aimed at enhancing the efficiency of the European retail payments market, fostering competition and innovation in the European payments landscape, and supporting the uptake of instant payments in the European Union. "The amendment to the Target now expected to enter into force in October 2025," states the ECB. "The Eurosystem considers this postponement necessary to avoid legal risks concerning the eligibility of non-bank PSPs to access Target, including T2 (for settling payments) and TIPS (for settling instant retail payments)."
Finextra
06-05-2025
- Business
- Finextra
US digital payments: How are new and traditional payments rails merging?
0 This is an excerpt from The Future of US Digital Payments 2025: ACH & Beyond. It's been an exciting few years watching the launch and take off of instant payments in the US after many years of discussions about the US being 'behind'. With the start of RTP in 2016 and the introduction of FedNow in 2023, the infrastructure is now in place to truly get us off and running. However, growth has been slow in terms of adoption by banks and transaction volume. After all the discussions and industry push for the US to have this infrastructure and how the US has lagged behind others, why is adoption taking so long? Is it the established usage of current rails - Wire and ACH specifically - that are impacting this growth, or is it something else?' Background ACH and Wire have both been in operation in the US for many decades and as is the case with instant payments, the US has two key providers: The Clearing House and the Federal Reserve. Domestically, wires are traditionally used as a wholesale product—primarily for high-value payments between banks. They're also used for other significant transactions, such as home purchases or funding large deals. ACH, on the other hand, is the system with the largest transaction volume in the US, handling over 30 billion payments annually. ACH primarily serves the retail system, handling payments like bill pay, payroll, and other use cases. Both of these payment types have developed extensive infrastructure over the years – not only within financial institutions but also within corporations and their payment service providers. The wire schemes are Real-Time Gross Settlement (RTGS) systems, meaning each transaction settles individually (though CHIPS uses a liquidity net settlement approach), whereas ACH is a batch processing system, where most transactions settle over a day or more, with some transactions settling during same-day ACH windows. While this makes ACH closer to real-time, it still falls short. One key difference with instant payments is the rule that ensures funds are made available to the end recipient in near real-time, within seconds or minutes. Neither ACH nor Wire offers this feature. The use cases At first glance, it may seem that existing rails like Wire and ACH cover all payment use cases, but the reality is more complex. While many use cases do move across these rails, there would be significant benefits for both senders and recipients if these transactions were processed through instant payment systems. Instant payments provide easier liquidity management, immediate access to funds, and lower costs (when compared to a wire transfer). However, moving use cases and the associated payments over to new rails isn't always a straightforward process. For other use cases like splitting a bar tab, the US has created industry solutions that address this gap. These include Zelle, a real-time payment messaging network owned by EWS, which, while not offering real-time bank settlement, functions similarly by making funds available to end users immediately. Other examples are PayPal and Venmo, which are wallet-based solutions that allow individuals to make real-time payments. While these existing solutions help address the demand, there are still strong reasons why it could be beneficial to move payments to instant rails. Notably, the bank settlement synching with the customer settlement mitigates the credit risk that exists in current models. Additionally, these systems are secure and backed by bank funds, allowing for higher transaction limits (RTP at $10 million and FedNow moving to $1 million). As with any new rail, new use cases will likely emerge that we haven't yet anticipated. For example, during the Covid-19 pandemic, the urgent need for instant emergency fund transfers became a significant issue - an example of a problem that these new rails can solve instantly. Another example is the gig economy, where instant payments can allow workers to be paid immediately after each transaction (e.g., an Uber driver) rather than waiting for the usual payday cycle. So, what's the issue? While there are clear benefits to moving payment use cases to these new rails, there is also a substantial cost. To implement this effectively, banks and industry providers need to consider significant modernisation of their technology stacks, as well as adjustments to their procedures and policies. In the current environment, this isn't an easy request. With everyone focused on return on investment, it's challenging to make a strong business case for bearing these costs while adoption remains low. However, without more banks adopting these changes and making necessary investments, the growth in adoption will continue to be slow. Banks and other providers should explore ways to invest in these rails at a lower cost. Many providers offer services in this space. For example, cloud-native solutions are designed not only to handle these rails but also to accommodate future growth. With a multi-cloud solution providing resilience and high performance, a technology provider removes the burden of banks having to build their own infrastructure for connecting to these rails. It also allows banks to separate the modernisation of their banking systems from the actual connection, insulating them from future changes and allowing them to focus on their core business. Conclusion While existing rails today handle many payment types and use cases, the new instant payment rails will bring substantial benefits, both for new use cases and for improving efficiencies in existing systems. That said, as with any product, when driving innovation, it's tempting to stick with the familiar - what you 'have today'. ACH and Wire do provide that sense of security, which can act as a distraction for banks as they work to build their business cases for these new payment rails. Ultimately, however, demand and competition will push both consumers and businesses toward the real-time payment world. We will see payments evolve across all rails, including FedNow and RTP.
