Request to Pay – the potential is clear
This week Icon Solutions had the pleasure of hosting a discussion around the UK’s New Payments Architecture, focusing on the Request to Pay (RtP) service which is due to be launched in April 2019. It addresses the detriment identified by the Payments Strategy Forum: that a lack of control over payments remains a major concern for some end users, especially those in the gig economy. It allows billers to send requests to payers who can then respond in a flexible way.
RtP is being implemented as an “overlay” service using peer-to-peer secure messaging via APIs. It is purely a messaging service, independent of the means of payment used to settle the request, which means it can be implemented over today’s payment rails and does not need to wait for the full New Payments Architecture to be deployed. There will be no central infrastructure, and it is up to commercial organisations to create payer and payee repositories and the apps to access them.
When a payer receives a request, they have five options: 1) Pay in full; 2) Pay part; 3) Request more time to pay; 4) Reject payment (and optionally block biller); and 5) Message the biller. Payment could be electronic (Faster Payments or Bacs); by card; or even by cash via Paypoint of Payzone.
There was some discussion of the possible use cases for RtP. Although the initiative currently focuses on resolving detriments, there are other use cases such as e-commerce which are likely be more commercially attractive and support for these will be essential to ignite the two-sided market.
As yet there seems to be little awareness or buy-in from billers, and concern was expressed that support for RtP would require significant changes to ERP and billing systems, so involvement of those vendors is essential. A study suggested potential savings between 18p and 36p per bill compared with paper billing, and RtP guarantees correct reference information which simplifies reconciliation in biller systems, so it should be attractive to them.
In the US, The Clearing House is promoting a similar mechanism called Request for Payment. Unlike the UK, that uses the “payment rails” of Real-Time Payments, so access to the system by payees is currently under discussion. Direct Debits are not widely used in the US, so there is possibly more potential for Request for Payment to displace the many existing mechanisms.
The plan in the UK is for push payments to replace the current Direct Debit pull mechanism, but this would be done to retain the current user experience for billers and payers, and also to protect the Direct Debit Guarantee that underpins its popularity. A parallel was drawn with the replacement of the recent Cheque Clearing system which happened invisibly to users.
The discussion closed with general agreement that RtP has great potential, and that more awareness is needed to build the critical mass necessary to make it a success.