Guidelines for the next generation of Real-Time Retail Payments Systems (RT-RPS)
In a world where the use of mobile technology is consistently increasing, people expect to be able to buy products and services wherever they are and whenever they want it.
To be able to offer some kind of solution to these customers, some countries and regions around the world have already implemented a real-time retail payment system (RT-RPS). Other countries and regions are working in their retail payment systems to allow real-time transactions too, because that represents an excellent alternative to cards, which are usually the only way to pay online and at points-of-sale.
In a scenario with RT-RPS the economy might have a potential growth, as the businesses have the benefit of a sped up cash flow, reducing the need of short-term loans and reducing the price of their products and services.
Now we can talk about some of the main trends that are impacting the current no-real-time retail payment system, what are the main challenges in developing RT-RPS and some design guidelines to make it work.
The growth of the use of smartphones and internet in general to do business online, anywhere and anytime, lead the customers to expect a similar experience when making payments online, simple and immediate. This is forcing the banks to find alternatives to the way they currently manage their payment business. Specially because new digital providers are entering the market, offering customers more agility and better experience when doing business, as they are not hindered by the extensive list of regulations and fees that banks are founded on.
The need to make immediate ubiquitous payments faces a lot of challenges, but new technologies, like blockchain and distributed ledgers, are emerging to make it easier to implement new payment systems that are simple, fast, resilient, secure and cost-effective.
Thus, to make that happen, it is necessary to provide the rails so that banks can offer a real-time 24/7/365 service that has low latency and high transaction volumes and that accepts all payment types and have a good operational support, providing convenience and confidence to end-users. There are also the needs to enable an easy integration of overlay/value-added services and to ensure that interbank settlement risk is efficiently managed, being cost-effective, ubiquitous and leveraging common industry standards, using a lean and open architecture and API and adhering to the ISO 20022 message standard, providing richer data.
Building a system with all these requirements is a great challenge, specially when facing legacy infrastructure and operational constraints.
Nobiletec is a multi-national consultancy firm specializes in B2B, B2C and P2P FinTech solutions.