As the industry moves toward real-time payments, one area in which there is room for improvement is transparency. That means, for example, immediate confirmation of payment and the payee to avoid lag time.
“It’s all about, ‘How quickly can I service the customer on the other end?’ and ‘How can I improve and make better the customer experience?’” Leslie Bailey, financial crime compliance strategy vice president at LexisNexis Risk Solutions, told PYMNTS.
While the word “frictionless” often gets thrown around, it’s more likely that there will continue to be varying degrees of friction. There are new and innovative ways to speed things up, but there’s also the need for payors to limit their risk exposure.
“There’s lots of progress being made in the space — certainly time is being reduced — but there still is the reality of needing to be mindful of that right level of investment so that you can make sure that you’ve limited your risk exposure,” Bailey said.
Risk Mitigation Hinges on Information
Recent sanctions against Russia have provided an example of why any organization needs to ensure the accuracy of data, know who’s on the other end of a payment, have accurate banking information and see through the chain of transactions. For businesses, that’s key to protecting their reputation and their financial situation.
“That’s where you’re seeing people in our space really taking a look at this and saying, ‘We know that people demand fast, we know that people want protection of their assets — how do we get them there in the best way possible without putting them at risk?’” Bailey said. “That’s what it’s all about.”
Risk mitigation in real-time payments hinges on the information that travels within each of those payments, with senders and receivers having more detailed conversations about each payment, a standardized format and accurate data.
“All those things become so key,” Bailey said.
Real-Time Payments Likely to Draw New Competitors
While there’s a move toward a cashless society, cash and checks are still being used and still have a trust factor.
“Right now, we don’t have everybody across all generations who are inclined to say, ‘Yeah, I’m done with cash. I’m done with checks. I’m going digital all the way,’” Bailey said. “I just don’t think we’re there yet.”
Looking ahead, Bailey said she expects to see continued adoption of real-time payments as well as an increase in competition, with new entrants and new competitors.
“And I think we’re going to see continued access to data,” Bailey said. “You’re seeing it now. You’re seeing more information put out there and I think we’re going to continue to see that.”