How much choice is too much choice? The second day of AFP in Nashville, Tennessee, saw BNY Mellon’s Sumner Francisco, Finzly’s Karuna Kathir, PTap Advisory’s Peter Tapling and Walmart’s Sarah Arnio, take to the stage to discuss the adoption and benefits of Faster Payments and the differences between rails such as instant payments, same-day ACH, and push-to-card transactions.
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The panel highlighted that 75% of US accounts are reachable via Faster Payments, and while organisations like Walmart are leveraging it, challenges persist around high costs in comparison to ACH, and a lack of understanding of value in terms of speed and efficiency. The speakers also opined on open banking and the ISO 20022 standards, that were emphasised for improved data sharing and security. The session acted as a call for corporates to explore Faster Payments and engage with their banking partners.
Speaking to the audience, Francisco reminded them that BNY were one of the organisations that remitted the very first real time payment in 2016, and sent out the very first Request to Pay instruction. “Our position is to be at the forefront of these emerging payment types, including everything that’s considered Faster Payments,” Francisco said. Others, however, are not so plugged in and this is unfortunately the standard across the board in the US.
Explaining why Faster Payments adoption has been slow, Francisco asked: “What are the applications of Faster Payments? What is the new and how have we not been thinking about it? I think there’s also similarities between wires, ACH and Faster Payments as they all have a public sector settlement and private sector settlement system.”
Kathir explained that there are three reasons why uptake has been gradual. “One is simplification. As professionals, we don’t care how the money is delivered. We care that the money is delivered. The moment we keep adding more and more rails to it, it’s confusing. The current systems have organically grown; now for RtP and FedNow, that doesn’t work. The second problem is that RtP and FedNow are not available to all accounts, which means they put doubt in everybody’s mind as they are unsure which accounts they can reach and what account they cannot reach. The third is education.”
Arnio added that “ubiquity is important for a corporate. For us to be able to promote this, even internally, to make the developers implement this, if you’re only reaching 50% of accounts, it’s not enough. A company like Walmart needs to be able to reach 95% of Americans at least, and that’s an issue. We’re at a tipping point where the majority cannot be reached through Faster Payment networks. When you think about the technology adoption curve, you have the early innovators, the early adopters, and I think we’re still ramping up to early adoption because a big chunk of us are in the ’let’s wait and see’ bucket.”
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