When Immediate Payments Go Bad

“I want it now.” Sounds like a petulant teenager, doesn’t it? But actually, it’s the sound of consumers and corporations around the world demanding immediate payments solutions.  

While immediate payments are already mature in some markets, in others they are still maturing, and for some countries, they are not even in the plans yet.  But one thing is for sure, immediate payments are one of the most important developments the payment industry has seen in years and their course will change the way that we all do business now, and in the future.

Many banks are not quite sure whether to start their immediate payments journey from within the retail side of the bank, or from within its corporate side.  But in reality, the payments will cross both customer types— never has there been a less appropriate time to run the bank in silos as in this instance.  If approached from the corporate space, the focus is high-care and highly efficient, exception processing. But if coming from the retail space, the focus is high-volume and low care (of course a bank loves all its customers).

But experience is now showing us a new module, one that includes high volume and high care.  However, many banks don’t have engines geared up for this and their legacy systems can’t be adapted, either. A high value, high care engine is usually not geared up for the through put needed to support immediate payments volumes.  Likewise, the high volume engines aren’t capable of delivering on the customer support needed.

Some banks expect immediate payments to be processed without a bank exception path.  But that’s not accurate anymore.  Sure, many payments are attended and therefore are either good or bad at the point of initiation.  But what about unattended payments?  And core processes, like Sanctions checking with time to handle the exception, are also needed.  And what’s more, as the maximum value that can be put through an immediate scheme is increased, the ability to handle some of those payments with a valid exception path will become essential. (The UK is moving to £250,000 this year and is expected to go to £1 million next year. Australia, on the other hand, has no limit at all). Consider this, a consumer buys a house through immediate payments; will banks honestly send back a reject without some kind of extra care, first?

So the best of both worlds is needed.  A real-time, high volume engine, which also has the necessary business intelligence and exceptions handling required to provide a viable solution to customers.  And once that is rolled out, banks will soon realise that perhaps one engine does fit all, after all.  Perhaps they can break down the silos of technology to start to share components; each department with its own business focus, rather than each with its own IT focus.