Evolution to Revolution: Real-Time Payments Initiatives Unfold

The Australian Payments Clearing Association (APCA) was the latest multi-stakeholder group to approve a real-time payments initiative in support of evolving consumer and business needs for accelerated transacting. As noted in Javelin’s recently released report, Real-Time Payments 2013: Struggling Toward Revolutionary Change, many of the payments mechanisms in use today — as well as the networks that support them — were developed before the era of “always on” connectivity, before Internet commerce, and prior to the ubiquity of mobile devices. These new market components, however, are driving a global paradigm shift that is beginning to snowball.

The APAC initiative, which was approved in February 2013, will promote development of a core payments and messaging infrastructure governed by a newly-formed industry clearing utility. The utility, which will be operated on a sustainable cost-recovery basis, will utilize ISO messaging standards and incorporate an address reference tool to enable payments to be directed without a recipient account number. Industry testing is anticipated by 2015 with live production in early 2016. The initial focus will be on consumer payments through mobile channels.

While it’s encouraging to see another global initiative coming to fruition there are others in place internationally that are already demonstrating success. In the U.K., for example, the Faster Payments Service (FPS) was launched in May 2008 and grew to represent more than 85% of U.K. phone and Internet payments by year-end 2011. FPS volume further climbed 54% from 2011 to year-end 2012. Javelin’s Real-Time Payments report also reviews a number of domestic and global initiatives that are active in the market today, although many at the quite nascent level. Technology changes and market expectations, though, will force the pace of change to accelerate and soon APAC’s 2016 scenario may seem too long a roadmap for enabling a competitively viable real-time alternative.