David Chance, Vice President, Product Strategy & Innovation, Fiserv, analyses which trends will drive changes in the payment sector.
Changes in the way payments are initiated, processed and settled are being driven by a core set of global trends that are consistent in direction, but differ in terms of adoption speed across regions and markets.
These trends include a focus on immediacy, the push for standardisation, a recognition of the value of payments-related information, and the desire for simplification.
While real-time and instant payments remain the focus of discussions on payment speed, these discussions are expanding to include practical questions about funds accessibility at the time required by the recipient and the finality of the payment.
Common standards facilitate the automation of payment processing, leading to enhanced efficiency and reduced errors. As the push for standardisation continues, the ISO 20022 standard will grow in significance due to its global reach and ability to support messages outside of the payment itself, including requests for payment, notifications, e-invoices and query requests.
Standardisation of payments also enables the collection of intelligent information that can be monetised. A significant amount of information is tied to payments – who, what, when and how much – and artificial intelligence and machine learning are becoming more important in its analysis and ability to provide real insight.
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A significant desire to simplify payments is driving modernisation strategies.
We see two modernisation models emerging. The first involves adapting existing multiple payment schemes to ISO 20022 and addressing existing risk profiles. While this can help, the second model is genuinely evolutionary, separating the payment initiation from the clearing/settlement process.
This allows users to continue to use the payment initiation process to which they are accustomed (for example, corporate payroll files or consumer cards) while providing a streamlined payment environment based on a simple instant push credit transfer.
Payment providers that understand how these trends will affect their businesses and customers will be ahead of the curve in 2020.