Instant Payments Uncovered

Welcome to the Voice of MPE, the official podcast of Merchant Payments Ecosystem, the European number one Merchant Payments Conference and community. This podcast brings you exclusive interviews and discussions with top leaders and professionals from the entire payment world. Don't forget to subscribe to our podcast, Voice of MPE. For more information, visit www.

merchantpaymentsecosystem.com. Hi and welcome to Instant Payments brought to you by MPE, where we dive into the world of finances. I'm Fahim, today's moderator, and we will talk about Instant Payments, how it's transforming businesses, regulations, shaping the different outcome of the consumer base and also the merchant base as well regarding seamless cross-border transaction.

Joining me today is Mangala Martinez, the MDE of Payment Consult Network, and Fabian Mansfield, Chief Acceptance Strategy Officer of EPI Company. Welcome and thanks for being here. Let's start with the introduction from you guys. Sure.

Thanks, Fahim. As Managing Director of Payments Consulting Network, we work with a lot of merchants. And I guess my interest in this topic of instant payments is because it's a topic that's of interest to merchants more and more at the moment, particularly in Australia, where I do most of my work. They're looking at reducing, how do they reduce card costs, card processing costs?

And with the launch of the new payments platform several years ago, and more recently Pay2 to allow recurring payments on the instant payments platform, and now looking at even QR code options for e-commerce transactions. So that's why it's becoming quite important for us. Thank you, Mangela. And now Sabian.

Thanks for having me here. I'm responsible for the acceptance market strategy, as you said, for an EP company. Our product is Vero. And we were founded to build a European solution based on instant payment, based on STT-Inst to create one solution for you, but getting all the features into it, which is necessary to really build an accepted payment solution for merchants and consumers.

Awesome. Thank you, Fabian. Let's talk about the business impact of instant payments. Instant payments has been a game changer with some of the countries like, for example, PIX in Brazil, UPI in India, Blick in Poland.

Just wondering, what do you think about instant payments future, especially from the maybe region-wise like either Asia Pacific or Europe. So maybe Mangala, let's start with you. Could you give us some insight about how instant payment can actually be beneficial for the consumers and also to the merchants as well? So it depends on how it's implemented.

So if I look at Pay2 in Australia, which is for recurring payments, the benefit to the consumer is they can control the mandate for making a recurring payment through their banking app. So on the previous system you could sign up to do a direct debit to your account and lose control in many respects as a consumer It a very clunky process to cancel that direct debit Whereas under the new system with instant payments you can cancel it or change it via your banking app. So it provides a consumer with a lot more control.

And then from a P2P payments perspective, you can now get risk to make and receive payments instantly versus having to wait 24 hours or sometimes three days under the old systems. There's a lot of benefits from a consumer perspective. Going forward in Asia Pacific, particularly in Southeast Asia, the instant payments platforms of a couple of different countries are now interconnecting. So Singapore's PayNow is connected to PromptPay in Thailand as an example.

It's also connected to Malaysia's instant payments platform in India's UPI. So now you can do P2P payments across markets instantly at a much lower cost than the traditional bank transfer as well. So that's a couple of the benefits from a consumer perspective that we're seeing in Asia Pacific. Great.

And just a follow up question about Asia Pacific. Do you think the region around Asia Pacific, especially for the countries like Thailand or India, are they struggling with some kind of expertise in terms of connecting the banks or are all the 100% of the banks connected to each other? So are they having the approval rates for all? Often they're regulator or government led initiatives.

So you have all the banks connected from start. Similarly in Australia, it was pushed by our regulator, the Reserve Bank of Australia, to implement an instant payments platform. And so the industry got together and did it over several years because it is a huge investment. So it's often hard to justify and put the business case together on your own in terms of the industry and sometimes it's forced on you.

Absolutely. Because there's a greater community need for that sort of instant payments platform, particularly in markets where there's a large unbanked community and you're trying to shift payments from cash payments to electronic payments. Yes. I think it's pretty difficult if the government is not backing up the project.

So obviously, I'm sure it is something very crucial for us. Moving to the technology side of the instant payments, Fabian, could you tell us more about what are the challenges you face when you try to reach out to the banks or even from the technology perspective? How do you see the future being easier for the customers, especially peer-to-peer, compared to right now? In Europe, as we are focusing on Europe, it's heavily depending on the country and the existing solution.

So in Europe, we have a very heterogene landscape besides the fact that we have unified rails, the SEPA, SEPA Instant, SEPA Credit Transfer, SEPA Direct Debit. But the solutions in the countries are unique if there are some local solutions. So, for example, in countries like the Netherlands, they have a very good functioning system, Ideal. They have companies like Piconic International.

We had in France Paylib So different systems working differently and different experience for the users and different interfaces where they did P2P transactions But there was no one solution and it was also not really covering all the use cases So when these banks that are backing up and the two service providers, acquirers that are behind the EAP company, we said that we need to have one solution that is covering all these cases and is covering all these countries. country. So we acquired in the first step, Ideal and Peconic International.

And later on, the French banks also migrated Paylib into our solution. So we do have a very good starting point here to have broad access because for a P2P solution, it's crucial that it's accepted. For example, it's only one bank starting with a P2P solution. Then it's not working because you need to ask people, okay, are you at the same bank than myself and then I can do the P2P.

So for us, it is important that we do have at least a market coverage on the issuing side of 75%. And these are currently the status in the countries where we are starting or even more. And we are also having, of course, in countries which are more used to do P2P via banking apps, like in Belgium or even as I said, France, much more traction than in countries where it was until now very so it's not usual for end consumers to do p2p via banking app else in germany they do it via transfer or using paypal so that's something new so we need to build from a different level our user base but we did started rolling out the p2p solution in july last year which is slow ramp up and we're now having 40 over 40 million users we are starting migrating all the ideal users next year.

We are starting the migration in Belgium for Piconic International users. So that's a step by step where we really create this community of users that are able to use these P2P functionalities and adding also P2P functionalities where people that have a small business, a side business can then use their mobile phone just to receive funds and getting a PDF and voice and these functionalities. So that's something built on us in the EU countries, but we're also expanding in other countries in the European Union, which do not have the EU because we consider ourselves as a real European solution.

And that's something which is really necessary to have not only the focus on some countries, but really have this wider look and have this stepped approach. So starting with the P2P, the S3T, the instant settlement on the other account is very important, But then also make these instant payments commerce ready by entering the e-commerce, m-commerce, with all the use cases, with delayed payments, with authorized payments and so on. But also giving consumers something like customer protection, which they're used to have from PayPal or from debit credit cards.

Right. As you mentioned that the consumer, the instant settlements, talking about the fraud from the perspective of instant payments, what do you think about today? like because sometimes the customer is making a payment even if it a good customer tries to make a payment no nothing in the bank payment gets confirmed and in the end of the day the merchant doesn get the money Mangala maybe from you what do you think about this How we can overcome this and do you think that the future of instant payments which also fablins at instant settlements could improve in the next couple of years?

I don't know if I've seen the issue around merchants not getting paid. I think some of the issue that we've seen is there's been inconsistency in how issuers may implement it and also how they do the fraud checks and also the value of transactions that they're willing to accept as an instant payment versus delayed settlement. And a lot of that has to do around fraud checks. So if it's a new account or if it's a large dollar value, sometimes a bank will actually delay the settlement until they can do the relevant fraud checks, which in many respects is a good thing, but it can cause confusion for consumers and merchants when there's that uncertainty in terms of when the settlement will actually come through.

But we're seeing a huge number of scams happening, particularly people who aren't familiar with payments, doing payments and what checks they should be doing, particularly the elderly. So I think these sort of delays, while they may lead to inconsistency, are important. I think that's always important to have a consistency. Fabian, what are your thoughts on that?

So, yeah, that is something which is already an issue with normal transfers because there is a lot of scam outside where Ford is trying on the social level to get money. And we have already with SCT, with credit transfers, the issue because if the amount are low enough, then the Ford measures also sometimes do not hit. And it will be increasing this more instant payment usage. That's also something where we say, okay, with our layer, with our scheme on top of SCTNs, we can implement fraud measures and our fraud systematics to see unusual patterns early enough.

And also to have to this four-party scheme concept of reliability on both sides to protect consumers and to have possibilities to get money back if there is fraud cases but also technical issues and so on so that's the advantage if we use an infrastructure but improve it by adding a layer on top of it yes merchants like kingwin which i represent at the moment are getting a lot of unpaid orders with instant payments so we're looking forward for a great technology in the future with this said we come to an end of our podcast thank you mangala thank you fabian and This has been a great discussion.

And of course, we're looking forward for our listeners to have more of these kind of conversations. And thank you so much. And stay tuned at MPE. Thanks for having us.

Thanks. Thanks a lot. Sure. Thank you for tuning in to the official MPE podcast.

If you've enjoyed today's episode, hit the subscribe button to stay ahead of the payments game. For even more content, connect with Merchant Payments ecosystem on our official social media channels. Subscribe to our newsletter. See you at www.

merchantpaymentsecosystem.com.