Faster Payments Adoption: It’s Much More than the Infrastructure
Reed Luhtanen, Executive Director, FPC
“If you build it, they will come.”
While that advice proved successful for Kevin Costner in “Field of Dreams,” its applicability to faster payments does not transfer as easily. We were keenly reminded of this important fact during our most recent FPC Town Hall, “Value-Added Services for Faster Payments,” where speakers reiterated that faster payments adoption requires much more than just the rails.
“Infrastructure does not equal adoption,” said Hema Jagtiani, Senior Director, Visa, during the Town Hall. Matt Friend, Vice President, also from Visa, reiterated the point. “Infrastructure is absolutely essential. That’s the foundation. But if we’re going to drive adoption, it’s bringing those value-added services on top of it.”
Value-added services are packaged products marketed to faster payments providers with distinct prices, terms, conditions, and user experiences. Value-added services run on and enhance the underlying faster payments core infrastructure. There are consumer-facing value-added services, such as Zelle®, and bank-facing value-added services like risk management tools that prevent fraud across faster payments networks. The important component about both types of services is that they each seek to accelerate adoption of faster payments.
Globally, that strategy appears to be working. Take for instance, India. During the recent Town Hall, Jagtiani detailed that in India, at the launch of its Unified Payment Interface (UPI), a real-time payments platform, adoption was minimal, and very slow to take off. It wasn’t until about three years later—when India rolled out value-added services—that the country saw real uptick in use. By introducing advanced mobile app functionality, better aliasing to send and receive money easier, and an improved user experience, UPI enhanced its services and grew its volume. Additionally, consumer and merchant incentives, cash-back opportunities, and reduced fees/merchant discounts complemented the functionality and incented the network’s use. Today, UPI transactions nearly 3 billion each month – and it’s still growing.
Friend points to these sort of value-added services as critical. He believes we should stop referring to them as “value-added” services and call them what they are: “necessary enabling capabilities.” “Value-added is a misnomer,” he asserted. “It implies they are optional in some way. Without these value-added services in place, the connective tissue that makes it easy to use for consumers, that builds trust, that allows people to expand use cases, and drives efficiency…these are all the things that value-added services bring. It’s these pieces that bring faster payments to life.”
Additional speakers from the Town Hall, which consisted of Members from the FPC’s Network Committee including Jorge Jimenez, Chairman, Juniper Payments; Lou Grilli, Senior Innovation Strategist, PSCU; Laura Weinflash, Senior Payments Executive, Early Warning; Steve Ledford, SVP, Products and Strategy, The Clearing House; Kirstin Wells, Principal Economist, Federal Reserve Bank of Chicago; and Antonia Stroeh, Senior Vice President, New Payment Flows, Mastercard, all shared similar thoughts and considerations for how we, as an industry, can continue to advance faster payments adoption. From open banking and liquidity tools to fraud protocols and QR codes, there were various activities and measures referenced that we can put in place to grow use and adoption of faster payments.
At the FPC, we’ve been actively working on initiatives in line with industry and our panelists’ thinking on how to further faster payments adoption. Take our QR Code Interface Work Group, for instance. The Group is developing a resource that will present faster payments best practices and stakeholder considerations for use with QR Codes. And our Fraud Information Sharing Work Group will soon be releasing its faster payments fraud survey. The Group expects to have initial findings in time for our Fall Member Meeting, taking place September 13 - 15.
We recognize that the faster payments rail – the infrastructure – is just one component of our faster payments future. Faster payments does not have the luxury of the “build it and they will come” mentality. There is work, beyond the development of the rails, that needs to take place to continue the momentum of faster payments, and that’s where the FPC’s focus will continue to be.
If you’d like to help us continue to move forward the “other” necessary components of faster payments adoption, we invite you to become a Member. It is through this work, and the support of industry professionals like you, that we can ensure a future of ubiquitous faster payments for all. Learn more and join here.