In a panel session discussing the current state of play of Request-to-Pay in the Nordics, Finextra’s head of research Gary Wright spoke with Per Nilson, business development manager at Bankgirot, Anders Olofsson, head of PaaS at Tietoevry Banking, and Paul Francis Walvik-Joynt, senior vice president of real-time payments at Mastercard.
With Swish in Sweden, Vipps in Norway, and Siirto in Finland, Nordic consumers are utilising retail instant payments through these wallet solutions - but where does Request-to-Pay (RTP) infrastructure come in? Wright started off the panel by enquiring where RTP currently sits alongside existing products.
Nilson began by stating that existing services such as direct debit or payment request as an e-invoice can already be looked at as variants of Request-to-Pay, but when it comes to the SEPA Request-to-Pay mandate, there are many things left to clarify.
“Firstly, what are the the primary use cases that you're aiming for?” Nilson outlined. “Secondly, do we have clarity on the rulebook schemes we should implement? You heard from Camila in the opening speech that we are having an NPC rulebook for Request-to-Pay. However, we have said in NPC that people align to mostly SEPA Request-to-Pay. Thirdly, there must be a will from banks who sit on the consumer side to prioritise and put resources into this.”
Walvik-Joynt agreed, stating: “The question we have to ask ourselves is what is happening with the consumers and what do they want? I’ve been doing banking for many years and the new generation is expecting that everything that they do and the way they transact, is right here, right now. Anything that is deferred or delayed is difficult for them to understand. So if you look at it from a consumer perspective, there is two camps around this that we need to be focused on, and the use cases of how this will be implemented. There’s not going to be a single owner of doing this. It’s about cooperating, forming partnerships, and doing this in such a way that the consumers will benefit from it. Is it real-time? Is it batch? Can they co-exist? Can we modernise in such a way that we can capture both ends of that stick?”
Responding to this, Olofsson commented that Request-to-Pay should be dis-aligned from payments, because it’s agnostic to any payments type. He also mentioned that banks have been focusing on how to help the consumers at the expense of corporates. “We’ve had an era of low interest rates where working capital management has been neglected in the banks. Now with the increasing interest rate, it's all changing, and that's where I see Request-to-Pay being a good instrument.”
Following this, there was discussion between Olofsson and Nilson around direct debit and the innovation around products associated with RTP. Wright was quick to jump in, prompting that - while it’s evident we’re still trying to find use cases for RTP - there are also points to be made for keeping alive existing products that can be refreshed or replaced.
“One of the shortfalls of credit transfer is that it's expecting the payer to compile all the data for the transaction,” Olofsson responded. “Funnily enough, when MasterCard and Visa are pushing push payments, I started realising that the account to account space would get great benefits moving to a pull mechanism. The one who is getting paid has all the relevant data that would be submitted along with the payments and then you have to simply respond with an instant or batch or whatever payment type you want. We have new standards that can facilitate all that data. I think that could be a great opportunity for banks to help corporates reconcile their payments and where we have the opportunity to reverse how the payment chain currently works.”
Walvik-Joynt was quick to agree with Olaffson, commenting that it may be too early for consumers to see the benefits of RTP, but it is a huge opportunity for corporates. “We have done a couple of things in the Philippines domestically with Request-to-Pay which is quite interesting both from a consumer and a corporate perspective. Thinking back to Camilla’s opening statement around the domestic schemes that we have, that is one building block. Rails is another building block, and the use cases of these schemes are really the key to it.”
Nilson raised the point that payments itself are not the use case - but the result of a use case. “Who woke up this morning and thought, ‘I have a need to make a payment’? People don’t have a need for making payments - they have a need for purchasing something that requires a payment. There are four S’s for this - both from a consumer and a corporate perspective. I want it to be Simple. I want it to be Seamless. I want it to be Secure. Then when it comes to the payment, I want to be able to Select which schemes or methods to use when I get the request to pay.”
As a last point of discussion, Wright then turned the conversation towards what conversations treasurers should be having around Request-to-Pay from a corporate perspective.
Olofsson started out by saying that banks need to figure out their strategy and who they want to enable - the merchant, the corporate, or even the individual - in how they want to get paid. As a last point, he added that banks should have the conversation on how they can improve their working capital management with Request-to-Pay.
Walvik-Joynt added that there are three elements that are important. Firstly, what does RTP mean in terms of managing liquidity of the services provided to corporates, and how banks can streamline this? Secondly, how can banks reconcile this? Thirdly, he stated “if you have the liquidity measures, if you understand that these can be combined with proper cash management, and you can reconcile this in a good way, then you create transparency. That is easier to manage, because today, that’s one of the challenges they’re looking at.”
Wright summarised the session but saying that this panel didn’t set out to give all the answers, but to drive the discussion. The fact is, there are many moving parts and already a number of products that can be used, but more can be done with them. But what is still missing is an overarching mind that joins it all together.