Optimizing your Chances of Real-time Payments Success

29 March 2018


“Been there, done that, got the scars to prove it!” Experience is a great thing, but it’s sometimes painful to get it the hard way. It’s quicker, less expensive, and generally more pleasant to learn from other peoples’ mistakes. At Icon we make sure that our staff have been at the sharp end of difficult projects so, when they work on projects, our clients can benefit from their hard-won experience.

Real-time payments are a prime case where experience makes a massive difference. Our team have built up experience on real-time payments projects over more than 10 years, working on some of the biggest and most demanding projects in central infrastructure organizations and Tier 1 banks, in the UK and internationally.

Icon staff have played a variety of key roles in the design and build of real-time payment systems in the UK – the first instant payment system in Europe; Singapore – one of the first real-time systems to use ISO 20022 messaging; and the US – supporting value added features specifically for B2C and B2B payments. For example, I led the Voca architecture for UK Faster Payments. I then went on to design the Vocalink IPS system which is implemented in Singapore and now in the United States also. Icon’s Director of Services, Darren Capehorn, as the Lloyds business representative on the UK Faster Payments Technical Design Committee, where I represented Voca.

Many organizations that launch into a real-time payments project get bitten by Rumsfeld’s “unknown unknowns” – they don’t know how much they don’t know. They assume that real-time payments are pretty much like batch payments, and if they plug in a new gateway, they’re good to go. If only that were true!

Some examples of the differences that require a new way of thinking include:

  • Each real time payment is delivered as a single message. This is very different from a file containing a single payment instruction. We have seen banks try to handle real time payments as mini-batches – it killed their systems, and they had to go back to the drawing board.
  • Every real time payment requires an immediate response. Unlike traditional payments that are fire-and-forget (also known as pay-and-pray), the sender has to wait for a response from the receiver, which might be positive or negative. The initiating customer must be notified if the payment fails. Many bank channels are not designed to handle real-time feedback.
  • Payments must be definitively accepted or rejected within a few seconds (depending on the scheme). This raises challenges around handling of sanctions hits (which often turn out to be false positives). In any case, many banks don’t have the ability to do sanctions and fraud screening in real time, which is a must for real-time payments.
  • Real-time communication networks do not offer guaranteed delivery. Applications must be prepared to handle message loss or timeout, and always ensure that each payment is properly completed. Again, this requires a very different approach from programs that simply crunch through files.

“If it ain’t broke, don’t fix it!”

Organizations that try to adapt an existing system to deal with the stringent demands of real time payments face an uphill struggle – you might be able to make the elephant dance, but it’s not going to be easy! One of the UK banks decided to build their own Faster Payments solution, and they were the only bank that was not ready for the official launch date. A Spanish bank also struggled to build their own Faster Payments solution as they failed to appreciate responsiveness required by scheme rules and reality of processing large volumes of instant payments. Owing to these factors UAT was delayed significantly.

But the idea of scrapping and replacing the existing system is even scarier. What can an organization do to resolve this dilemma?

The answer is based on the old saying, “If it ain’t broke, don’t fix it”. Your existing system is processing legacy payments just fine – so don’t replace it, complement it with a solution that’s purpose-built for real time payments processing. That’s exactly where Icon’s IPF fits in – a no-compromise instant payments system, designed by a team with years of real-world experience, that runs alongside your existing systems.

IPF uses cutting-edge architecture and technologies to deliver a dedicated RTP solution that is easy to configure and integrate, getting you to market quickly and giving you the flexibility and power to adapt quickly to the needs of the future. As you would expect from a team with Icon’s pedigree, the solution also delivers the performance, reliability and security to guarantee an unbeatable customer experience.

Find out more about the product here or contact us to learn how IPF can help you optimise your chances of RTP success.

Tom Hay