Last year, only 25 real-time payment systems were operational worldwide — that number is growing rapidly. By September of this year, 40 such rails were live, with 16 more expected to launch by early 2020.
Demand is also heating up for real-time gross settlement (RTGS) systems. Countries like Norway and Sweden already have systems in place, and Denmark recently joined the club, with Iceland soon to follow. The governor of the Federal Reserve is pushing conversations on getting an RTGS system in the U.S., too.
In the November Faster Payments Tracker™, PYMNTS details the latest payments system debuts and updates.
Around The Faster Payments World
Even as the U.S. expresses interest in a new RTGS system, financial players in the country are also working to improve existing schemes.
Recently, NACHA — The Electronic Payments Association approved three new rules to update Same Day ACH services. The changes, which are to be implemented in 2019 and 2020, would expand the daily time limit for submitting transactions to the network, make funds for some Same Day and next-day ACH transactions available more quickly, and increase the dollar limit on Same Day ACH transactions.
Meanwhile, Early Warning Services’ Zelle network is also getting more robust. The network processed $28 billion in payments during Q2 2018 and can expect that traffic to rise as it adds new participants. Fiserv recently announced that it had helped onboard five more financial institutions (FIs) onto the network.
SWIFT also recently rolled out a new initiative, one aimed at connecting real-time payment systems. The financial messaging service announced in late October that its near-instant, cross-border payments proof of concept performed successfully in tests. The proof of concept enables domestic real-time schemes to process payments made via SWIFT’s global payments innovation (gpi) system, and it enables cross-border payments to be processed outside of traditional business hours.
What Hong Kong’s New Faster Payment System Brings
While these players work to expand and add capabilities to existing payments networks and systems, other financial players are finding that upgrades don’t go far enough to achieve their needs.Instead, they’re putting in the time and dollars to develop a whole new system.
Such was the case in Hong Kong, where the existing RTGS system was only serving high-value interbank transactions, leaving peer-to-peer (P2P) and consumer-to-business (C2B) payments to languish. These payments were typically only processed during work hours, could take days to clear and came with a price tag of up to HK $200 ($25.50 USD) per transaction.
That changed this September, the Hong Kong Monetary Authority’s (HKMA’s) Faster Payment System (FPS) splashed onto the scene, with promises of speedy and free payments — in Hong Kong dollars and renminbi — for consumers and businesses alike.
Preparing for the system’s launch required FIs to get to work building platforms and preparing APIs that enable their clients to leverage the new rail, according to executives from DBS Bank (Hong Kong) and Standard Chartered Bank. They also had to educate clients on best practices when using the scheme. But all that effort is slated to bring big results. Bank executives said the new system is expected to transform how consumers make small, everyday purchases and bring other changes, including speedier insurance disbursements.
Days shy of the system’s launch, PYMNTS caught up with DBS Bank (Hong Kong) and Standard Chartered Bank to discuss how FPS is likely to change commerce and what it took for the banks to prepare for the system’s launch.
The PYMNTS Faster Payments Tracker™ is the go-to resource for staying up to date on faster payment developments and initiatives on a month-by-month basis. The Tracker highlights the contribution of different stakeholders, including institutions and technology providers coming together to make this happen.