Payments as a business, therefore, needs to redefine itself as having a much broader purpose. One built around meeting a host of requirements. These include transparency of service: how much will arrive? When? At what cost? Real-time communication of progress, the interactive ability to enquire into a transfer, the reconciliation of received value to account and the incorporation of the purpose of the payment so that the beneficiary knows what the funds are being received for. All at a substantially lower cost.
Users of the service — senders and beneficiaries — care about the outcome, in their own terms; they do not care, and never have cared, about the underlying complexities.
Mr Cousins said his vision for the retail world involved: “Payments that are cheaper than those today, and that meet the needs of different segments; that is, from the poor or un-banked to the well-educated professional segment. With domestic payments, many more transactions are processed — hundreds of times more than with international payments — so domestic ACHs have better economies of scale. Thus it makes sense to internationally integrate those domestic ACHs by enabling them to communicate with each other directly through a single common standard.
“Then regulated payments service providers, such as banks and other authorised payments institutions, will have a different method of clearing payments internationally, with characteristics that differ from those of correspondent banking and are particularly better for low-value transactions. The IPFA has established standards that enable such an approach.”
Regulators in Europe have sought to introduce more diversity and choice, by creating a new regulatory framework for specialist payments service providers.
Hundreds of “alternative” providers have also emerged, providing far greater choice. Work needs to be done in other jurisdictions so that such regulated providers are encouraged there; and work also needs to be done to give such organisations fair access to the national clearing and settlement systems, and to settlement accounts.
As businesses become more savvy, they will increasingly shop around for the best foreign exchange rates, as well as the lowest fees and best service. Whether banks adapt, perhaps by collaborating more, or whether a Silicon Valley-mentality corporate gets there first, remains to be seen.
The payment itself will become more commoditised. There is plenty of evidence that consumers value timely and useful information, such as the status of the payment. Smart devices make obtaining and presenting that information possible. As the market evolves, it is likely to become both bigger for providers and better for consumers.
Neil Burton is director of product service strategy, Earthport