For the past few years, the global payments industry has been in the midst of an historic transformation. Between rapid advancements in instant payments technology, and widespread corporate initiatives surrounding ISO 20022 compliance and integration, a future comprised entirely of faster, more secure transactions could be right around the corner.
In a recent webinar, Volante convened with a panel of experts to discuss recent trends in the payments space, as well as how they relate to an increased focus surrounding real-time payments and ISO 20022. Here are just a few key takeaways:
Electronic Payments Are Gaining Momentum
Up until the pandemic left them with little choice, many corporations remained hesitant to transition away from paper-based methods into electronic payments. But after initiating the shift, it seems as though the benefits may be coming into focus.
As Dan Gonzalez of The Federal Reserve noted, “everyone has a mobile phone in their hand,” and when you couple any number of personal financial management tools available today with the ability to make and receive payments instantly, consumers end up with significantly more control and optionality when it comes to how their manage their finances.
Corporations are Zeroing in on Payments Modernization & Extensibility
Many corporations today remain tethered to legacy systems that aren’t easily extensible to modern payment solutions. However attractive faster transactions may be, many businesses will first need to solve for interoperability before utilizing real-time payment rails, such as The Clearing House’s RTP network or even the pending FedNow Service set to launch in 2023.
According to Tim Mills from Regions Bank, corporations will be turning to the ISO 20022 standard as a roadmap for broader payments modernization and extensibility efforts. Because the standard enables interoperability and streamlines cross-border transactions, widespread utilization could lead to the increased adoption of real-time payment systems. “I think [ISO 20022] is going to drive further adoption around faster payments,” Mills said. “The idea of getting extensibility along with speed is a compelling business case for corporates.”
Payments-as-a-Service (PaaS) Platforms May be Easing Transformation Efforts
Importantly, most corporate entities won’t be attempting to perform complex systems migrations on their own, and as a result we are witnessing considerable growth in the Payments-as-a-Service industry (PaaS). Even if we may be moving uniformly toward ISO 20022 compliance and real-time payments integration, every organization will have individualized needs, and very few possess in-house teams that are capable of pulling off such a transformation without consuming an unreasonable amount of time and resources.
As Volante’s own Deepak Gupta points out, corporations want everything from reliable ISO 20022 compliance solutions to real-time capabilities, but they would prefer to have those capabilities set up and managed by some who already has the tools and experience necessary to get it done.
Interested in learning more about emerging trends in the US payments space? Access the full webinar here.