With the coronavirus (COVID-19) pandemic hitting the global economy hard, and more individuals and families becoming dependent on emergency funds, time is critical. Many around the world need to send and receive money quickly, at an affordable cost.
Two key aspects characterize fast payments: The transmission of the payment message and the availability of funds to the recipient occur in real time (or close to it), and the service is available continuously. Because the payments can take place over the internet, mobile phone networks, and through quick response (QR) codes, they allow for a convenient and user-friendly experience that is even more advantageous now that millions need to comply with social distance requirements.
Adoption of fast-payment systems is taking place at a rapid clip across various geographies and economies around the world. According to the 2019 FIS Flavors of Fast report, 54 countries had implemented fast-payment systems as of mid-2019. Some of them are now utilizing these systems as part of their response to COVID-19.
The Monetary Authority of Singapore, for example, has launched campaigns with banks to promote the use of its fast-payment system (PayNow) for individual and business payments. Thailand is using its PromptPay system to channel monthly payments to informal workers affected by the pandemic. And one of India’s systems, the United Payment Interface (UPI), is fast-tracking the onboarding process for vendors and merchants who accept fast payments to make it fully digital.
Through initiatives like these, millions are experiencing the benefits of fast payments during this crisis. Merchants can accept fast payments remotely and can instantly access funds in their transaction accounts, just as they would with cash. This is particularly helpful to micro- and small-business owners, who can then pay suppliers on time and fulfill other urgent payment obligations. Emergency funds from governments to individuals and businesses can also happen quickly. Remittances—which constitute a considerable portion of many developing countries’ GDP—can swiftly reach family members in need, at a low cost. For instance, Western Union, a global money-transfer operator, has integrated with India’s UPI system to allow funds from senders in other countries to be transferred instantly to Indian bank accounts, using the receivers’ UPI identification.
Among other benefits, users can send requests for payments and initiate payments using identifiers such as phone numbers. It’s also possible to equip end-users with data and analytical tools to understand their payment patterns. This is because the systems are able to accommodate overlay services through application programming interfaces (APIs).
The rapid adoption of fast-payment systems, however, must be balanced with appropriate safeguards and risk management frameworks. It’s crucial, for example, to put in place clear dispute resolution mechanisms to address concerns, such as when a payment is accidentally made to the wrong recipient. In addition, the risk of social engineering attacks, such as phishing, can be especially high with fast payments. This concern needs to be mitigated with appropriate system tools and end-user training.
True... the past payments system will further evolve and sustain.