Instant, Immediate, Real Time Retail Payment Systems (IIRT-RPS)

Instant, Immediate, Real Time Retail Payment Systems (IIRT-RPS)

 

There are Five different kinds of Payments

  • B2C Business to Consumer
  • C2B Consumer to Business
  • B2B Business to Business
  • Domestic P2P Peer to Peer
  • Cross Border P2P Peer to Peer

 

From Real-time payments are changing the reality of payments

IMPS

Existing Real Time Retail Payment Systems around the Globe

From THE U.S. PATH TO FASTER PAYMENTS FINAL REPORT PART ONE: THE FASTER PAYMENTS TASK FORCE APPROACH

IMPS2

Planned Real Tine Retail Payments Systems around the Globe

 

From Global Trends and Developments in Instant Payments

imps3

Current Payments Ecosystem

  • Faster Payments
  • ACH
  • Cards
  • Closed Loop
  • Distributed Ledger

 

From 2017 Advanced Payments Report

IMPS4

Evolving Landscape of Payment Systems

From 2017 Advanced Payments Report

imps5

 

New RTP Developments

 

From Federal Reserve Payment Trends Update

imps6

USA – The Clearing House RTP System

From Federal Reserve Payment Trends Update

imps7

USA – How Payment Platforms Compare?

  • Wires
  • Next Day ACH
  • NACHA Same Day ACH
  • EWS Zelle
  • TCH RTP
  • Mastercard Send

 

From Federal Reserve Payment Trends Update

imps8

Key Sources of Research:

 

 

Real-time payments are changing the reality of payments

Deloitte

Click to access us-cons-real-time-payments.pdf

 

 

 

THE U.S. PATH TO FASTER PAYMENTS
FINAL REPORT PART ONE: THE FASTER PAYMENTS TASK FORCE APPROACH

Federal Reserve

2017

Click to access US-path-to-faster-payments-pt1-201701.pdf

 

 

Zelle

https://www.zellepay.com

 

 

 

Real-Time Payments for P2P
.
Eric Foust
Early Warning
Mike Wolf

2017

Click to access 12.10-Zelle-53-RTP-conference-deck-005.pdf

 

 

Banks Re-enter the P2P Payments Fray: With Mobile, Will this Time Be Different?

By Terri Bradford, Payments Research Specialist

Fed Reserve

Click to access psr-briefingjan2017.pdf

 

 

 

Faster Payments Finds Its Future

NACHA

2016

Click to access Faster-Payments-Tracker-December-2016.pdf

 

 

 

Faster payments: Building a business, not just an infrastructure

McKinsey

https://www.mckinsey.com/~/media/McKinsey/Industries/Financial%20Services/Our%20Insights/Faster%20payments%20Building%20a%20business%20not%20just%20an%20infrastructure/Faster%20payments.ashx

 

 

The Road to Faster Payments

As Real-Time Payments Rise, Payment Hubs See a Resurgence

The Clearing House

2017

https://www.theclearinghouse.org/research/banking-perspectives/2017/2017-q4-banking-perspectives/payment-hubs

 

 

 

Real-Time Payments and Settlement Comes to the United States

How U.S. Banks Can Realize the Full Opportunities of Immediate Payments for Their Customers

D+H

2016

Click to access D+H-US-Real-Time-Payments-and-Settlement-whitepaper-coauthored-PNC-TCH-15-April%202016.pdf

 

 

 

Real-Time, Cross-Border Payments Survey

2017

IPFA

Click to access Real-time-Cross-Border-Payments-Final.pdf

 

 

 

Strategies for Improving the U.S. Payment System Federal Reserve Next Steps in the Payments Improvement Journey

Federal Reserve

2017

Click to access other20170906a1.pdf

 

 

 

Strategies for Improving the U.S. Payment System

Federal Reserve

2015

Click to access strategies-improving-us-payment-system.pdf

 

 

 

Strategies for Improving the U.S. Payment System
Feb 2016 Progress Report

Fed Reserve

2016

Click to access usfed-criteria.pdf

 

 

Strategies for Improving the U.S. Payment System

Progress Report | January 2017

Federal Reserve

Click to access sips-progress-report-201701.pdf

 

 

 

Strategies for Improving the U.S. Payments System

Claudia Swendseid

2016

https://www.minneapolisfed.org/~/media/files/news_events/events/payments-swendseid.pdf?la=en

 

Strategies for Improving the U.S. Payment System

2015

http://aftweb.com/aws/AFT/asset_manager/get_file/110552

 

 

Making Payments Faster in the United States

Clearing House

2015

https://www.theclearinghouse.org/~/media/puertoricosamedayach2015/making%20payments%20faster%20in%20the%20us%20tim%20mills.pdf?la=en

 

 

 

The Clearing House RTP System “Back to The Future”: Emerging Payment Systems Legal and Regulatory Issues

2017

Click to access back_to_the_future_emerging_payment_systems_-_krebs.pdf

 

 

The Federal Reserve Faster Payments and Secure Payments Task Forces
2016 Smart Card Alliance Payments Summit

April 5, 2016

Click to access PACIFICA-7_TUE_445_AADLAND_Smart-Card-Alliance_Faster-and-Secure-Payments-Task-Forces_4-5-16.pdf

 

 

 

Understanding and Regulating Twenty-First Century Payment Systems: The Ripple Case Study

Marcel T. Rosner
Delaware Court of Chancery
Andrew Kang
University of Michigan Law School

2016

https://repository.law.umich.edu/cgi/viewcontent.cgi?article=1239&context=mlr

 

 

 

US Retail Payment Instruments and Systems

Structure, Transformation & Public Policy

NY Fed Reserve

2015

Click to access 15-Retail-Payments-2015-Littman.pdf

 

 

 

Digital Payments Strategy for U.S. Retail Banks

Cognizant

2015

Click to access Digital-Payments-Strategy-for-U.S.-Retail-Banks-codex1358.pdf

 

 

US Real Time Payments Technology Playbook

The Clearing House

2016

https://www.theclearinghouse.org/-/media/tch/pay%20co/rtp/tch%20rtp%20technology%20playbook%20111716%20v1.pdf?la=en

 

 

 

16 in 2016: Trailblazing trends in global payments

McKinsey

2016

https://www.mckinsey.com/~/media/McKinsey/Industries/Financial%20Services/Our%20Insights/16%20in%202016%20Trailblazing%20trends%20in%20global%20payments/16%20in%202016%20Trailblazing%20trends%20in%20global%20payments_2015.ashx

 

 

 

Earthport

https://www.earthport.com/

 

 

 

Flavors of the Fast

A trip around the world in immediate payments

FIS

Click to access Flavours_Of_Fast.pdf

 

 

 

Global Trends and Developments in Instant payments

Edger Dunn

14th February, 2017

Click to access MPE-Track-A-Afternoon-Session-Global-Trends-and-Developments-in-Instant-Payments-Ulf-Geismar-14-02-2017-VF-1.pdf

 

 

 

EXECUTIVE GUIDE TO IMMEDIATE/ REAL-TIME PAYMENTS

Accenture

Click to access executive-guide-to-immediate-payments-tl.pdf

 

 

 

INTERNATIONAL PAYMENTS IN A DIGITAL WORLD

Accenture

2017

Click to access Accenture-International-Payments-Digital-World.PDF

 

 

 

Ripple as an Innovative Solution to the Ways We Pay

RIPPLE

Click to access candian_comment_letter.pdf

 

 

 

Instant revolution of payments?

The quest for real-time payments

Deutsche Bank

2015

Click to access Deutsche-Bank-Research-Instant-revolution-of-payments-The-quest-for-real-time-payments.PDF

 

 

 

Retail payments and the real economy

ECB

Iftekhar Hasan, Tania De Renzis
and Heiko Schmiedel

https://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1572.pdf?0568b27871896eb01f54b0c4c40a8f63

 

 

 

NATIONAL RETAIL PAYMENT SYSTEMS TO SUPPORT FINANCIAL INCLUSION

AFI

2017

Click to access DFS_GN_29_stg4.pdf

 

 

 

Real-time payments for real-time banking
How banks can seize the full opportunities of immediate payments

Accenture

2015

Click to access Accenture-Banking-Realtime-Payments-Realtime-Bank.pdf

 

 

 

The New Payments Platform: Fast-Forward to the Future

Cognizant

Click to access the-new-payments-platform-fast-forward-to-the-future-codex1299.pdf

 

 

 

24/7 Domestic Real-time Payments

SWIFT

Click to access 16577_Expl1_SWIFT2020_2.pdf

 

 

Innovations in retail payments

Report of the Working Group on Innovations in Retail Payments

BIS

May 2012

Click to access d102.pdf

 

 

Fast payments – Enhancing the speed and availability of retail payments

BIS

November 2016

 

Click to access d154.pdf

 

Is a Global Real-Time Payment System Possible?

TCH

2015

https://www.theclearinghouse.org/research/2015/2015-q3-banking-perspectives/global-real-time-payments

Federal Reserve Payment Trends Update

2017

Federal Reserve Bank of Richmond

Click to access 04192017%20Retail%20Payments.pdf

 

 

 

THE IMPORTANCE OF THE RETAIL PAYMENT SYSTEM

Hal S. Scott

Nomura Professor and Director, Program on International Financial Systems Harvard Law School

December 16, 2014

 

https://dash.harvard.edu/bitstream/handle/1/16883011/hal-scott—mastercard-retail-payment-systems.pdf?sequence=1

 

Mechanism Design for Near Real-Time Retail Payment and Settlement Systems

Zhiling GUO
Singapore Management University, ZHILINGGUO@smu.edu.sg

Robert John UFFMAN
Singapore Management University, rkau man@smu.edu.sg

Mei LIN
Singapore Management University, mlin@smu.edu.sg

Dan MA

2015

 

http://ink.library.smu.edu.sg/cgi/viewcontent.cgi?article=3494&context=sis_research

 

 

 

2017 Advanced Payments Report

Edgar Dunn & Company

2017

http://edgardunn.com/2017/06/2017-advanced-payments-report/

Network Economics of Block Chain and Distributed Ledger Technology

Network Economics of Block Chain and Distributed Ledger Technology

 

Quadruple Accounting System

Morris Copeland, and Hyman Minsky emphasized quadruple entry accounting system envisioning interrelated interlocking balance sheets of economic agents.  Interlocking balance sheets create a network of economic agents.

I attach a slide from a presentation by Marc Lavoie given at Minsky Summer school in 2010 at the Levy Institute of Economics (Bard College).

 

Minsky

 

There are several FINTECH innovations which are bringing about dramatic changes in the financial services business.

  • Block Chain and Distributed Ledgers
  • Payment Banks
  • Retail P2P Payment services
  • Mobile Payments
  • Secured Wallets
  • Domestic Real Time Payments and Transfers
  • Cross Border Near Real time Money Transfers

 

Block Chain and Distributed Ledgers, in my opinion, are/can be implementation of quadruple accounting principles envisioned by Morris Copeland and Hyman Minsky.  Two economic agents engage in financial transactions which are recorded in distributed ledgers.

Some of the key components of distributed ledger technology are:

  • Peer-To-Peer Networking
  • Cryptography
  • Distributed Data Storage

In contrast with centralized ledgers, distributed ledgers store data at each node in the P2P network.  So there is no need for an intermediating institution.  From a payment system perspective, each node in the P2P network can be thought of as a bank.   Each node will have its own ledger and balance sheet which will record assets and liabilities.

Ripple is a Cross Border money transfer solution which is based on block chain technology.

 

Recent rise of retail P2P payment services such as

  • Xoom
  • M-Paisa
  • PayTM

indicates a trend toward real time payments/money transfers domestic and international.  This trend also indicates decoupling of these services from traditional deposit/lending banks. XOOM is a service provided by PAYPAL for international Money Transfers.  Money transfers are within a few minutes.

In USA, there are new P2P services offered to facilitate faster near real time payments/money transfers through mobile and online interfaces.

  • Venmo (Paypal)
  • Zelle (clearXchange Network)
  • Square Cash
  • Braintree (Paypal)

There are also social media payments available now through which consumers can quickly send money using social media applications such as

  • Facebook (through Messanger app)
  • Snapcash (through SnapChat)
  • Apple PayCash (through imessages app)
  • TenCent via WeChat

 

Rise of payment banks such as PayTM is one such example.  Reserve Bank of India has granted PayTM a payment bank status.  But transfers are still between bank accounts of transacting consumers where deposits are kept. Payment Bank acts as a technology provider and acts as an intermediary.

As per the RBI guidelines, payments banks cannot lend they can only take deposits or accept payments.

There are four payment banks in India now.

  • PayTM Payment Bank
  • Airtel Payment Bank
  • India Post Payment Bank
  • FINO Payment Bank

 

Mobile payments using secured wallets is another such example.

  • Consumer to Business payments and transfers
  • Consumer to Consumer payments and transfers
  • Google Wallet
  • Apple Pay
  • Android Pay
  • Alipay

 

Cross Border Payment Solutions:

  • XOOM
  • Earthport
  • TransferWise
  • RIPPLE
  • Remitly
  • WorldRemit

 

 

Please see my other related posts:

Next Generation of B2C Retail Payment Systems

Cross Border/Offshore Payment and Settlement Systems

 

 

Key sources of Research:

 

Minsky and Godley and financial Keynesianism

Marc Lavoie
University of Ottawa

2010

Click to access Lavoie.pdf

 

Block Chain:  A Primer

2016

Click to access MPRA_paper_76562.pdf

 

Distributed Ledger Technologies/Blockchain: Challenges, opportunities and the prospects for standards

Advait Deshpande, Katherine Stewart, Louise Lepetit, Salil Gunashekar

2017

www2.caict.ac.cn/zscp/qqzkgz/qqzkgz_zdzsq/201708/P020170818579005375876.pdf

 

Banking on Distributed Ledger Technology: Can It Help Banks Address Financial Inclusion?

By Jesse Leigh Maniff and W. Blake Marsh

2017

Click to access 3q17maniffmarsh.pdf

 

 

Distributed ledger technology in payments, clearing, and settlement

Mills, David, Kathy Wang, Brendan Malone, Anjana Ravi, Jeff Marquardt, Clinton
Chen, Anton Badev, Timothy Brezinski, Linda Fahy, Kimberley Liao, Vanessa Kargenian,
Max Ellithorpe, Wendy Ng, and Maria Baird (2016).

Finance and Economics Discussion
Series 2016-095. Washington: Board of Governors of the Federal Reserve System,

2016

Click to access 2016095pap.pdf

 

 

Distributed Ledger Technology: beyond block chain

A report by the UK Government Chief Scientific Adviser

Click to access gs-16-1-distributed-ledger-technology.pdf

 

Bitcoin, Blockchain & distributed ledgers: Caught between promise and reality

Deloitte

Click to access au-deloitte-technology-bitcoin-blockchain-distributed-ledgers-180416.pdf

 

 

Distributed ledger technology in payment, clearing and settlement
An analytical framework

BIS

2017

Click to access d157.pdf

 

 

The Truth About Blockchain

HBR
January–February 2017 Issue

 

https://hbr.org/2017/01/the-truth-about-blockchain

 

THE USE OF BLOCKCHAIN IN CLEARING AND SETTLEMENT

MARECHAL Baptiste

 

 

Peer-to-peer payments: Surveying a rapidly changing landscape

By Jennifer Windh

August 15, 2011

 

Click to access 110815wp.pdf

Next Generation of B2C Retail Payment Systems

Next Generation of B2C Retail Payment Systems

 

Before advent of Web and Mobile based applications, people use the following for making payments for retail expenses.

  • Cash
  • Cheques
  • Money Orders
  • Credit and Debit Cards
  • ACH Transactions

 

After 1st generation of online commerce, payments, and banking websites, mobile solutions are leap frogging  the web apps particularly in developing countries to help people at bottom of the wealth pyramid who may not have computers but have smartphones.

 

Ist Gen:  e-commerce, e-payments, e-banking

  • Online commerce sites such as Amazon, eBay
  • Online payments such as Paypal
  • Online Banking at various Banks websites such as Wells Fargo
  • Magnetic Card readers and EMV Chip card readers

 

There are these networks around the globe for small value retail payments.  UnionPay in China and RuPay in India are now directly competing with other well established providers such as MasterCard and Visa.  The main motive is financial inclusion of unbanked people.

Debit Cards /Credit Cards (Small Value Retail Payment Systems) Networks

  • Mastercard
  • Visa
  • American Express
  • Discover
  • RuPay (India)
  • Union Pay (China)

 

2nd Gen: m-commerce, m-payments, m-banking, m-pos, m-transfer

USA and Other Countries (Excluding China and India)

m-payment Apps

  • Google Wallet
  • Apple Passbook
  • Android Pay
  • Samsung Pay
  • Apple Pay
  • Chase Pay
  • Citi Pay
  • Microsoft Wallet
  • Lemon Wallet
  • Square Wallet
  • Isis
  • Chirpify
  • Geode
  • Paypal Venmo

 

There are several solutions worth mentioning which do not yet fit in any broad categories.

Other solutions

  • Adyen (Amsterdam)
  • Tipalti
  • Razorpay (India/USA)
  • Boku
  • Poynt (USA)
  • Klarna (Stockholm)
  • Gocardless (London)

 

Chat/SMS based payment solutions are very popular in China and now being integrated in applications such as Facebook.

Chat based Payments

  • Tencent Wechat (China)
  • Facebook
  • Snapchat
  • Vodaphone M-PESA (SMS based)

 

There are newer Proximity based payments solutions using two technologies – BLE and NFC.  There are now several solutions based on each of these technologies.

Proximity Payments (No Contact)

A.  Payment solutions powered by iBeacon technology (Bluetooth Low Energy)

  • Powatag
  • Paij
  • PassMarket
  • TruBeacon
  • Labwerk

B.  NFC powered Payment Solutions

  • Apple Pay
  • Android Pay
  • Google Wallet
  • Moneto
  • Mastercard Paypass
  • Visa Pay Wave
  • ISIS
  • Quick Tap (UK)
  • Girogo (Germany)
  • Sure Tap (Canada)
  • Touch2Pay (New zealand)
  • CardMobile (Austria)
  • PayBox (Austria)
  • T-Money (South Korea)
  • Suica (Japan)
  • PASMO (Japan)
  • MTS (Russia)
  • Cep-T Cuzdan (Turkey)

 

m-POS apps using scanning hardware for reading of credit/debit cards of customers at businesses is a popular service provided.  Square leads the pack.

Mobile Card Readers (m-POS)

  • Square
  • Cartwheel Register
  • EMS+
  • Spark Pay
  • Flagship ROAMpay
  • Elavon
  • Creditcardprocessing.com
  • Moolah
  • Flint
  • Paypal Here
  • Chase Paymenttech
  • Yowza Merchant
  • Cayan
  • PayAnywhere
  • CDGCommerce
  • Quickbooks Gopayment

 

There are now several companies which offer money transfer service to accounts across the globe.

Overseas Money Transfer

  • Transferwise
  • Western Union
  • World Remit
  • Paypal Xoom
  • MoneyGram
  • Square Cash
  • Azimo Money Transfer

 

 

India

Mobile Payment applications have mushroomed in India.  India is on leading edge in providing real time mobile payment system available 24/7.  Some of the services providers have been given licensed to start Payment Banks dedicated to payment operations as opposed to Deposit Banks.

Mobile Payments

  • Paytm
  • PhonePe
  • Snapdeal Freecharge
  • MobiKwik
  • AirTel Money
  • BHIM
  • Oxigen
  • ICICI Easypay
  • Flipkart Money
  • DBS Rupizo
  • Micromax Udio
  • Payzapp
  • Citrus
  • ICICI Pockets
  • Bookmyshow
  • Ola Money
  • DBS Wallet
  • Jio money
  • Amazon Emvantage
  • PayUMoney
  • Vodaphone M Pesa
  • ItzCash
  • Trupay

 

There are many applications introduced by Banks who provide access to users accounts on a smartphone.  Some of them are listed below.

Mobile Banking

  • ICICI Bank imobile
  • State Bank of India Anywhere
  • HDFC Bank
  • Bank of Baroda mPassbook
  • PNB mBanking
  • Indian Bank Indpay
  • Kotak Mahindra Bank
  • Yes Bank
  • Axis Bank

 

In 2016, ICICI Bank introduced first NFC based mobile app in India.

NFC based m-payment solutions

  • ICICI Bank Pockets

 

 

There are several retailers who have introduced Mobile apps for payments.  Some of them are listed below.

 

Specialized Retail Payment Apps

  • Zomato (India)
  • Starbucks (USA)
  • Walmart Pay (USA)
  • Dunkin Donuts (USA)
  • Taco Bell (USA)
  • CVS Pay (USA)
  • Kohl Pay (USA)
  • Amazon Payment (USA)

 

Here is a list of Online Payment Solutions.

On-line Payment Solutions

  • 2CheckOut
  • Stripe
  • ACH Payments
  • WePay
  • Authorize.Net
  • Dwolla
  • Paypal

 

 

China

China has large population of smartphone users who do use m-payment apps such as Alipay regularly.  Many others are trying to get a foothold in this market with partnerships with Chinese UnionPay.

m-payment

  •  China UnionPay (CUP) Cloud Quick Pass
  • Alibaba Alipay
  • Tencent Wechat
  • Tencent TenPay
  • China Mobile
  • China Unicom
  • 99Bill
  • YeePay
  • Paypal
  • Lakala
  • LianlianPay
  • Ping An Pay
  • PayEase

 

NFC based m-payment

  • Apple Pay (CUP)
  • Samsung Pay (CUP)
  • Huawei
  • Xiaomi (CUP)
  • LG

 

 

Key Sources of Research:

 

Top 10 Trends in Payments in 2016

Capgemini

 

Click to access payments_trends_2016.pdf

 

 

Cashless Payment System in India- A Roadmap

Ashish Das, and Rakhi Agarwal

2010

 

Click to access PaymentCardAugust31.pdf

 

 

Fast Retail Payment Systems

Stephanie Bolt, David Emery and Paul Harrigan

2014

 

Click to access bu-1214-6.pdf

 

 

Report of the Key Advisory Group on the Payment Systems in India (KAG on PSI)

31st May, 2012

 

Click to access Report%20of%20KAG%20on%20PSI.pdf

 

 

NEFT, RTGS, UPI: What should you use to transfer money?

http://www.4-traders.com/DCB-BANK-LTD-9059622/news/NEFT-RTGS-UPI-What-should-you-use-to-transfer-money-23784479/

 

 

Meet the top 20 hottest payment companies

http://www.raconteur.net/technology/meet-the-hottest-payment-companies