The Request To Pay Revolution
Time to Choose Your Partners!
As I explained in my first blog on this subject published in late 2021, Request to Pay (R2P) is a new method for settling bills between people, organizations, and businesses. For years, old-fashioned paper and e-mail invoices have been used to list services and request payment for those services. But R2P is about to change that by helping us to move to a more interactive and dynamic process.
R2P allows billers to engage with the payer in a secure, standardized way rather than sending them an invoice with little or no context or interaction. This should lead to quicker and more successful outcomes for both billers and payers whilst enhancing the bank’s value to each player in the chain.
To deliver that value, Banks will need to support the R2P process through many advances in their technologies to leverage the new market standards, whilst at the same time maintaining support for key services such as:
• Attaining PSD2 SCA while offering a smooth customer journey with negligible friction.
• Meeting e-Commerce or Point of Sale requirements for real-time settlement or via an authorization and account funds’ earmarking’ (with the latter adding further complexities).
• Assuring Consumers that disputes can be quickly and efficiently handled.
• Competing against the higher consumer protection and rewards that card-based payments provide.
• Achieving interoperability and scale with open banking schemes to reduce costs and complexities for providers.
Temenos has started engaging with the market on Request To Pay. Much of the initial discussion is focused on educating institutions about the services available and what they need to do to support them.
There are several issues to resolve with R2P. It must protect the consumer and payer while delivering an unbroken payment journey and allocating liability for banks and PSPs. R2P also clarifies the imperative for banks and PSPs to employ scalable real-time payment monitoring technologies that dynamically adapt to new fraud and risks.
R2P Impacts Three Key Processing Areas Within the Bank
1) R2P influences the channels in the bank which support the customer. These must be updated to support the initiations by the billers and the actions of the payers.
Every bank will have both Billers and payers, but some may have a specific focus on billers and some on payers. This will dictate priorities. Ultimately, the bank will have to update its various mobile, internet, and even B2B channels.
This may drive the need for new components and new approaches in bank channels depending on the current capability.
2) Secondly, there is the need for an R2P processing engine within the bank to manage the communication flows between the biller and payer. This engine should link the different payers and processing points involved in the flow, enriching the exchanges where appropriate through careful choice of vendor, managing the routing of requests and thoroughly supporting the standards published in each market.
In my experience, unlike the channel piece, this is not something that currently sits inside any bank’s existing application landscape. It requires a new platform within the bank. The bank must manage the data flows between the billers and customers to ensure security of communication, the traceability of those flows, and active exception management.
These flows provide an insight into how the customer behaves and where analytics can be mined to identify sales and marketing opportunities. It is also a business opportunity for the bank. Therefore, it is essential to manage the data carefully and curate the information.
Ultimately, a successful exchange within the R2P engine between the biller and the payer will generate a payment order. That payment order will be fed into the payment execution platform in the bank.
This is the third processing element for R2P.
3) The third processing element is leveraging the exiting rails, particularly the instant payment rail, for maximum servicing of the biller request. After all, the interactive nature of R2P differentiates it from other collection processes, so executing the payment order through the instant payment rail is the natural fulfillment path for the service.
R2P needs every bank to tie these three processing elements together to be successful. Existing systems will need to be updated, but at the heart of the process is a new engine built to manage the real-time communication between your customer and their service provider (Biller), where payment details are agreed upon and verified, thus enabling the successful generation of a payment order. Ultimately this extends the value a financial institution delivers to their customer, be they a biller or a payer.