The future of the payments sector will largely be defined by the power of new technologies. That much is certain. But just how will the industry evolve and what upcoming technologies will have the greatest impact? These are the key questions that will dictate the winners and losers over the next decade. Forward thinking organisations need to not only consider the future of payments, but how they can take full advantage and tap into the opportunities they’re creating.
Here are 3 payment technologies all organisations should be thinking about as they progress into the future.
Request to Pay (RtP)
Offering the opportunity to connect consumers and retailers before a transaction is made, Request to Pay (RtP) is a secure messaging service designed to offer consumers added control and flexibility.
By giving them options on how they’d like to pay, businesses can gather information on customer preferences and adapt to better align with the requirements of their market. These options typically include, Pay in full, Pay in part, Request an extension, Decline the payment and Send a message. Covering the entire spectrum of actions, the RtP system gives the consumer full transparency on what they can do next, helping them make the best decision for their circumstances.
As the finance industry refocuses on delivering a better digital experience for businesses and consumers alike, these data-driven technologies will grow in influence and value over time.
Confirmation of Payee (CoP)
Designed to reduce and prevent Authorised Push Payment (APP) fraud, the Confirmation of Payee service allows payment providers to check if the name of the individual or organisation matches the identification details of the account paid. This prepayment check ensures the recipient details have not been manipulated or misconstrued.
In the event there is an inconsistency, the system will conduct an evaluation with two possible outcomes. First, the names will be compared to determine if they have similarities, (known as a ‘fuzzy match’), if they do, then the payer will be asked to confirm the name is correct. Alternatively, if the names are completely different, the payer will be advised to directly contact the recipient in order to ensure all details are correct. This contingency system offers excellent added security as it prevents money changing hands before queries have been rectified.
By providing an additional verification stage, CoP makes fraud that much more difficult, reducing the success of impersonation attempts and the impact of financial crime.
Payment Initiation Service Providers (PISPs)
A Payment Initiation Service Provider (PISP) is an organisation that is authorised to initiate payments through a consumer’s bank account on their behalf. These intermediaries sit between clients and banks with the express purpose of providing value-added services. This is achieved by initiating transfers from the payer’s account using the bank’s own applications (enabled by Open Banking reforms).
With PISPs, consumers have access to new financial tools that can streamline payment solutions, reducing the need for manual inputs. For example, an app can be used that automatically distributes funds across several accounts based on a pre-set algorithm.
Using PISPs, financial data becomes much more transparent, easy to access, and simple to manage ensuring payments are faster, safer and cheaper.
Request to Pay, Confirmation of Payee and Payment Initiation Service Providers are all having significant impacts on the payment industry. Offering innovative new ways to deliver value to businesses and consumers, the cumulative impact of these technologies will fundamentally change the payment industry, making it more diverse, competitive and valuable.
Download our free guide to UK payments in 2020 to learn more about the future of payments.