Marc Terry joined VocaLink in December 2010 and is responsible for the strategic leadership and development of the company’s Commercial Services business. Key responsibilities include managing VocaLink’s core contracts for Bacs, Faster Payments and the UK Government. Marc has more than 20 years’ experience in both the cards and payments industry, moving from sales, marketing and business development positions through to general management. Marc’s experience includes over 17 years with the international provider of payment systems, ACI, encompassing both EMEA and America’s responsibilities. Marc will further address this topic at the upcoming Global Payment Summit 11-12 June in Singapore. Readers of The Paypers can receive a 30% discount (code GPS30) on the delegate fee.
What are real-time payments and how is this different for banks and their customers?a. Key featuresb. How is this different from the ‘old way’?
Marc Terry: Real-time payment systems offer the ability for 24/7 instantaneous bank account-to-bank account credit transfers across different channels, providing a source of competitive advantage for governments, banks and corporates. To expand this, overlay services, such as digital payments initiation propositions, utilise and leverage real-time capabilities that underpin the banks’ business case and provide maximum returns on investment. The underlying infrastructure enables banks to launch game-changing products and services that provide real customer value and position the banks, in particular the bank account, at the centre of the payment process. The latter is extremely important as many non-banks are beginning to extract great value from the payments process and more importantly the customer relationship.
The full extent of the benefits of a real-time service will vary because it is largely dependent on the vision and motivations of the key stakeholders and how the core infrastructure is implemented. For example, if developed using the ISO20022 messaging standard, a richness of data can be captured to generate efficiency and commercial value for participants and end users. The underlying real-time infrastructure needs to be designed in a way that is conducive to the development of new services that create value for end-users. Ensuring frictionless access to the real-time infrastructure is critical.
How can real-time payments transform transaction services?c. Banks viewd. Policy makers and central bank viewe. Embedding mobile revolution?
Marc Terry: From the perspective of the banks, by moving to real-time account transfers they can position themselves perfectly to leverage new technologies. These innovations range from those developed by individual financial institutions, such as Barclays’ PingIt, to collaborative initiatives including the Payments Council’s Paym service in the UK. The real value resides within the development of these overlay services to end-users. It is these overlay services that have the propensity to generate new revenues for banks, in particular the person-to-business propositions.
At a macro level, the introduction of real-time payment systems offer tangible benefits to a national economy through increasing liquidity and efficiency of the payment system, which in turn will support GDP growth. These benefits will have a particularly positive impact on government (in the form of increased taxes and lower costs to the treasury or finance ministry), but will also have applicable benefits to central banks and other payment industry stakeholders.
The most pronounced benefit to an economy is likely to be the impact of increasing the velocity of money. In simple terms, this means that by moving to real-time payments from batch systems, money can be used to make a greater number of purchases or other transactions within the same elapsed timeframe. This effectively increases the productivity of money. The scale of the benefit however will largely depend on the existing infrastructure and speed of payments.
Consumers across the world 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 structure is fit for purpose and capable of meeting the technological demands of overlay services in the digital age. Real-time technology is playing a leading role in driving the development and proliferation of mobile payments. Zapp, an independent VocaLink subsidiary, will allow mobile payments between the bank accounts of consumers and merchants, using existing mobile banking applications providing secure payments when it goes live later this year. The initiative will put the bank account back at the heart of payments.
What are the approaches for national communities?f. Collaborative vs individual approachg. Regulator pushh. Leap frogging from fragmented situation
Marc Terry: While banks continue to invest in their own technology, a collaborative approach is necessary to develop world-class payments systems. In the UK, VocaLink has a special role as a ‘national grid’ for payments. The company connects all of the nation’s banks, and in turn provides a vital link between businesses, consumers, the government and other organisations. Having defined networks that enable public authorities, banks, businesses and consumers to be connected is essential in keeping economies moving.
What are the key learnings of past years in UK and your expectation for the introduction in Singapore?i. UK learningsj. Singapore ambitionsk. Experiences during implementation
Marc Terry: Demand for the Faster Payments Service in the UK has grown every year since its launch in 2008 as more consumers and businesses appreciate the benefits of real-time payments. We are now starting to see an increasing demand for real-time payments in other countries, with at least 11 real-time systems in operation or development over the last decade. FAST has gone live in Singapore, Australia is seeking to implement a New Payments Platform and the US has recently announced they are in the industry consulation phase.
What are the top three messages for your contribution to the Global Payment Summit?
• Implementation of a real time payments infrastructure is essential• Creating payment structures that can address the needs of the digital age• Collaboration and ubiquity are vital ingredients of a successful payments implementationPlus – political desire to create a road map (ie. government support or that of a central bank are to drive this through and make it ubiquitous).
Every day we send out a free e-mail with the most important headlines of the last 24 hours.
Subscribe now