The faster payments trend shows no signs of waning across the globe. According to an article from Finextra, some are now requiring new rails for real-time payments worldwide. Furthermore, the European Commission has drafted a law calling for regulation of instant payment services.
What’s slowing full-scale adoption is the disjointed processes between banks and fintechs. Banks are not currently offering a one-stop shop for financial services. Fintechs tend to conduct their operations within closed ecosystems and lack interconnection with other providers.
In this disconnected environment, it may delay payments. Also, the situation may restrict data access. Furthermore, cross-border payments are a challenge. In response to some of these challenges, an up-and-coming solution has been proposed—an initiative called P27, which is spearheaded by Danske Bank, Handelsbanken, Nordea, OP Financial Group, SEB, and Swedbank. The goal is to offer an open access, ISO 20022 compliant infrastructure to facilitate real-time payments, both domestically and cross-border, using a multitude of currencies.
Its purpose is to integrate the complete payments infrastructure via a platform that enables payments to move instantly. To start, this will take place between Denmark, Finland, and Sweden. It will follow the Single Euro Payments Area (SEPA) standards, ushering in the coherence of payments in Europe.
PaymentsJournal has covered other initiatives to support real-time payments in this article.
“RTP are expected to take off in 2023,” said Sophia Gonzalez, Research Analyst at Mercator Advisory Group. “Consumers, merchants and financial institutions alike see the value in RTP – consumers do not have to wait multiple days to see a transaction clear on their financial statements, merchants have instant access to earned funds, and issuers can better reconciliate with RTP processing. Strategically, small banks and fintechs should take advantage of the readily available open-access infrastructure to facilitate RTP. If they do not, they risk being left in the dust by financial giants.”