Chapter 9

“RTP is so much more than an infrastructure; it’s an enabler for problem-solving”

Chapter 9 Real Time Payments (RTP)

The Emerging Payments Association (EPA) Asia is a commercial membership association of payments industry influencers. EPA Asia is part of the growing EPA global network. It runs more than 30 events each year, delivers eight projects annually to drive change, helps to connect the ecosystem, encourages innovation and profitable business growth. The EPA’s vision is for Asia is to be the regional Knowledge Hub for payments innovation. As it sets out to be the most influential trade body in emerging payments, the EPA’s mission, to collaborate to innovate, has the potential to improve lives everywhere.

Technology is only innovative for a period of time and then it becomes commoditised.  So there needs to be a purpose and a “good” problem for the technology to solve.  

RTP is more than a payments infrastructure; it is an enabler for problem-solving, including:

  • Financial inclusion
  • Driving digitisation, and
  • Fostering innovation.

Building a digital economy will require concurrent actions across several fronts from development of infrastructure to building a strong governance framework.

Elements required to support the success of RTP

In addition to infrastructure development, there are additional elements that are required in order to support the success of RTP:

  • Regulations and policy
    • Regulations and policies that govern participation, consumer protection, privacy etc.
  • Nation-wide campaigns
    • Marketing campaigns to drive consumer awareness and adoption
    • Consumer education on how to detect fraudulent digital payment requests
  • Ecosystem development
    • Development of peripheral systems and capabilities for digital transformation e.g. digital ID, digital government services
    • Upgrades to business operations, security and fraud capabilities to deal with 24/7 instant payments
  • Robust use cases
    • P2P
    • P2M
    • B2B
    • Government transactions
  • Interoperability across payment instruments and rails
    • Otherwise excellence gets trapped where it can be monetised

 

Financial inclusion

Digital payments are a stepping stone on the financial inclusion journey for the unbanked and underbanked members of society. 

There are many socially beneficial use cases of RTP, including:

  • Government welfare disbursements
  • Wallets powered by QR codes
  • Convenient instant / mobile payments driven by proxies like Mobile Number, Email, or National ID number.

Driving digitisation

There are many benefits to digital payments where they replace high volume cash and cheque payments.  Spillover benefits include shrinkage of the shadow economy and lower cost of payments (especially removing the cost of cash handling) to all parties. 

  • QR based retail payments
  • E-commerce electronic payments on delivery
  • Proxy-based business payments

Fostering innovation

RTP are a creative and vital aspect of a vibrant payment ecosystem which can spur innovation and collaboration.  In turn, this can resolve inefficiencies in the financial system. 

  • Invoice / Receipt presentment for bill and supplier payments
  • SME auto-reconciliation and payment
  • Cross-border payments
  • Low value high volume payments in real time

RTP Use Cases

  • Wallet based QR payments
  • End user instant access to funds
  • P2P by proxy
  • Government payments to people in need and inter-government agencies
  • Gig economy – paying taxi drivers, food delivery riders at the end of each shift
  • Employee wellness – instant access to wages
  • Businesses – real time receivables and payables, e-invoicing, smart contracts
  • Rich user experience and data fields (overlay of Open Data strategy)

RTP Challenges

  • eKYC and Digital ID
  • Fraud – account to account payments require an individual dispute between consumer and merchant rather than the mediation of the scheme. This is non-trivial at scale.  Fraud is one of the biggest concerns.  Different risk profile for purchase of goods rather than bill payment.
  • Merchants want ubiquity, speed and least friction for both instore and online
  • Privacy – more so in a developed economy
  • Prioritisation and catalysts for change – if it’s not broken … ?
  • Settlement – clearing other than via a bank

Role of Regulators

  • Enforcing interoperability of domains otherwise you have islands of excellence only available to those who can pay
  • Pricing as a regulatory mechanism only works in developed markets; in developing economies to build the infrastructure there has to be an incentive to invest
  • Fair competition without distortion where the payer and payee benefit the most, not the intermediaries in the middle
  • Choice
  • Round tables and promotion of collaboration
  • Share best practices and what is coming out of the sandboxes

Discussion Points

Being agnostic as to the underlying rail is the real problem we need to solve for in RTP.

Modernisation of payments infrastructure is not an end in itself. The goals are driving a digital economy, innovation and financial inclusion. (Thailand and India are leading the way globally here.)

RTP democratise access to funding.  This is disruptive to banks who try to guard the customer relationship.

RTP facilitate government welfare payments, digital wallets, QR code based payments, and convenience from use of proxies like mobile phone numbers and emails instead of bank account numbers.

In the ASEAN region, we have RTP in Singapore (2014), Thailand (2017), Hong Kong and Australia (2018), Malaysia (2019) and the Philippines in currently going live in 2020.  Bangladesh, Laos, Myanmar, Brunei and Indonesia have all issued tenders for national RTP as they need help to handle low value, high volume payments in real time.

QR streamlining of reconciliations, request to pay, bill payments etc. are higher value problems with higher returns. 

Providing connectivity from banks is a problem … but beyond that creating use cases, driving adoption and sustaining consumers continued use of the platform are challenges that fintechs (and techfins) relish. 

 

Rama Sridhar Mastercard Growth & Transformation Strategist| Leadership-Digitization & Payments, Digital Inclusion| SG100 Women in Tech | Board Director | Forbes Business Development Council As a business leader in technology, I have built my professional life in the worlds of payments and financial services. Over a varied 30-year career, I have brought to bear expertise gained across three industries, multiple geographies and organizations, to drive transformative change and non-linear growth. Many leadership roles, and experience in managing large P&Ls, have shaped me as a business head with the strategic and commercial acumen to scale ideas to their full potential, create robust business and operating models, and steer mid- to large-sized corporates to execute new growth strategies – pursuits that I’m very passionate about. I thrive on accelerating growth for new businesses, turning distressed situations around and building sustainable growth solutions. In my current position at Mastercard, I lead our growth diversification efforts, to maximise participation in digital ecosystems, create strategic partnerships with government, public and private institutions to modernize payment infrastructure and accelerate digitization of payment flows across all national ecosystems. The Digital & Emerging Partnerships and New Payment Flows business works with a startup mindset, and with every stakeholder in the digital commerce ecosystem – digital tech platforms, governments and central banks, digital banks and fintechs. Through powerful strategic partnerships, we use technology to advance digital ecosystems and payment flows, and create more financially inclusive economies. Finally, my favourite part of my work is mentoring talent, especially women in technology, to help them unlock their potential to achieve corporate leadership excellence.

Simone Joyce

CEO/Founder at Paypa Plane

I am the CEO of Paypa Plane, a payment technology company, I co-founded in September 2017. Paypa Plane is the bank-grade platform where traditional scheduled payments and digital, data-rich and real-time payments work together. Paypa Plane is designed for banks and payment service providers looking to rapidly evolve their product offering without changing their core systems and was founded to create a better scheduled payments (aka recurring or ongoing) ecosystem for banks, payment service providers, businesses and payers. Elected to the Fintech Australia Board of Directors 2019 and as Chair in 2020, I also lead the Payment Working Group for Fintech Australia, sit on the Eftpos Fintech Advisory Committee, the ASIC Digital Advisory Committee and the Emerging Payment Asia Regulatory Working Group. I have had many years of experience in payment and Fintech-focused companies and have been recognised over the years for this work – most recently becoming a Finnies Awards finalist for Outstanding Fintech Leader of the Year and Female Fintech Leader of the Year (2021), winning the Paris Fintech Forum Fintech Award (2020) and the Brisbane Lord Mayor’s Global Entrepreneur Grant (2019).

Partner at
DLA Piper Norway



Co-Author and Fintech Advisor


Co-Founder & COO at
Jazzpay Inc



Katie
Global Head of Government Relations at
NIUM


Head of Engagement at
New Payments Platform (Australia)


CEO & General Manager - eBay Payments | Int'l Hub at
eBay

Head Of Product Management, Mobile Financial Solutions at
Comviva

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Amrop Carmichael Fisher



Executive Manager eCommerce at
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Director of Commercialization for Innovation and Customer Solutions in AP at
Mastercard