Instant payments (IP) harbour strong promise through real-time payment processing, 24 hours a day, 365 days a year and with immediate availability to the beneficiary. Instant payment is playing an important role in transforming banks and interbank infrastructures. The first phase of instant payment is the implementation of the SEPA Credit Transfer Instant Payment scheme (SCT-IP), i.e. real-time processing of credit transfers (SCT), and its adoption on a European scale. According to the European Central Bank (ECB), instant payment could account for 23% of all credit transfers in Europe by 2023. However, instant payment is not the ultimate goal, but forms part of the pathway to other value-added services such as request to pay (R2P) or QR codes based on real-time payment capabilities. Using instant payment to underpin the technology paves the way for other innovative solutions that can add further value to businesses and improve customer experience.

R2P offers a new flexible service for settling transactions either between businesses or between individuals and businesses or between individuals. As an overlay to an existing payment infrastructure, R2P allows an applicant to communicate in real time and send an electronic request to an approver who may be presented with a number of payment choices, such as paying in full, partial payment, requesting an extension, refusing or sending a message.

This new payment service offers real flexibility to the payer in terms of payment choices, but also substantial advantages for the payee, thanks to simplified reconciliation and easier invoice management and consequently cost structure optimisation.

If you want to know more, click here to read our white paper on Request to Pay.

The Payment Services Directive (PSD2) is part of the open data banking movement, already initiated by banking mobility services and through the French Digital Republic law dated 7 October 2016. This law has enshrined the right to portability allowing consumers to retrieve their personal data from digital service providers and transfer the data to other providers. This right has since been reinforced by the European General Data Protection Regulation (GDPR), which came into force on 25 May 2018.

The growth of banks’ online services has logically included the banking sector within the scope of application for this new regulatory framework. Since 25 May 2018, the right to portability allows consumers, particularly those using online banking services, to retrieve all of their files or consumption data related to transactions. Online service providers must take all of the necessary measures in this respect, particularly in terms of programming interfaces and providing the information needed to change provider.

This confirms the utility of application programming interfaces (API). APIs and more particularly open APIs appear to be a real alternative to web scraping and provide a balance between security and innovation in account aggregation and payment initiation applications. However, there is still a long way to go to achieve API and data structure standardisation, allowing interoperability between services within the European ecosystem. However, open banking in Europe is becoming a reality, opening up a new era of innovation in financial services and extending the scope for new payment solutions.

If you want to know more, click here to read our white paper on open banking.