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The emergence of real-time payments

At least 11 real-time systems have been built or have gone into development over the last decade, including 6 which have been developed in the last 3 years alone. Australia are currently at the tender stage for a New Payments Platform and the United States are in the industry consultation phase.

 

6 reasons to reform
payment systems

In the World Bank’s ‘Outcomes of the Global Payments Systems Survey 2010', 6 key factors were identified as having triggered the reform of payment systems worldwide. The most important factors were the need to improve efficiency, responding to technological innovation and a need to reduce systemic risk.

Findings from Lipis and Lipis research on Market Potential for real-time payments in 2013 found that a number of central banks, governments and payments associations are currently concerned with the development of financial inclusions initiatives, modernisation of payment systems, decreasing the use of cash for payments and promoting competition within financial services.

For automated clearing houses, the most important factors driving change are: the desire to increase relevance within the payments chain through the delivery of new technologies to grow their business, to circumvent the threat from card schemes and non-banks who are seeking to move their products into traditional and new payment domains, to avoid commoditisation occurring within traditional clearing and settlement services.

Business steps
 

The benefits of
real-time payments

The launch of a national real-time payments service, such as the Faster Payments Service in the UK, provides the foundation for a range of new banking and payment offerings, particularly in the mobile and online commerce areas.

While a basic real-time service brings benefits in its own right such as 24/7 instant payment transfers, it is the overlay services, such as payments initiation services, that utilise and leverage the real-time capabilities that underpin the banks’ business case and provide maximum returns on investment.

24 7 immediate payments transfer
 
 

The platform to underpin government agenda

Governments are among the largest users of the financial system in any modern economy. Tax collection, welfare payments, defence procurement, healthcare, education and innumerable public services all use the financial system and this equates to approximately 30 per cent of most countries automated clearing house volume.

Solution evolution statistics
 

Mobile payments

Consumers across the globe are adopting a 24/7 mobile lifestyle, evidenced by the fact that m-Commerce is growing 10 times faster than e-Commerce. It is critical that the underlying payments infrastructure is fit for purpose and capable of meeting the technological demands of overlay services in the digital age.

Solution evolution statistics
 
 

VocaLink: building and running real-time systems

VocaLink is a global payments partner relied on by financial institutions, corporates and governments to provide high availability and resilient payment solutions.

We operate class-leading payment clearing systems and ATM switching platforms which underpin the majority of UK electronic payments – we provide a national grid for payments. Our proven capability of implementing real-time payment systems in the UK has led to the development of immediate payment solutions for other countries.

 
 

Download the case study

When Faster Payments launched it was the culmination of almost a decade’s worth of work to improve the speed of payment processing in the UK, starting with the Cruickshank Report and the Office of Fair Trading’s creation of the Payments Systems Task Force.

In 2005 the contract to build and operate the real-time central infrastructure on behalf of the FPSL was awarded to VocaLink. In one step it propelled the UK to the forefront of payments technology globally and the service remains the world’s leading 24x7x365 retail real-time payments system.