2 PAYMENT METHOD PROFILES: PAY BY BANK
U.S. Same-day ACH allowed for credits to be deposited into accounts ahead of settlement and became popular in the mid 2010’s. The governing body of ACH, NACHA, expanded the access to same-day ACH by accepting transaction submissions to the network for an additional two hours every business day; the expansion allowed for transactions to be submitted by 4:45 pm EST. 411 This change went into effect in 2021. The Clearing House (TCH) launched their real-time payment (RTP) system in 2017 the same year the EU launched their Instant Credit Scheme following a global trend noted in the Instants Payments section. The United States Federal Reserve also announced their own faster payment platform in FedNow in 2020. Both systems provided the capability of transactions settling in real time 24/7/365 as opposed to settlement through ACH bank transfer. Private network solutions such as Visa Direct and Mastercard Send had already begun experimenting with real-time payments as well in 2013 and 2015 respectively. 412 413 414 Real-Time Payments Instant Payment Systems (IPS) have been known by many names including near real-time, faster, and instant. These names typically refer to systems that facilitate transactions that settle in minutes or seconds that operate 24/7/365. 415 One of the first systems that met these criteria was the Korean Electronic Banking System in 2001, with Iceland and Chinese Taipei following in 2003 and Malaysia and South Africa in 2006. 416 The United Kingdom adopted a faster payments system in 2008 as the first major example in Europe. 417 Diffusion of faster payments progressed globally with Singapore’s Fast and Secure Transfer (FAST) in 2014 and India’s United Payments Interface (UPI) in 2016. 418 By 2016, there were 20 operating fast payment systems covering some 40% of world population. 419 The first U.S. system for faster payments was Real-Time Payments (RTP) in 2017. 420 That same year saw the rise of SEPA Instant Credit Transfer in the European Union. 421 Australia followed suit in 2018 with New Payments Platform (NPP). 422 Brazil’s PIX was announced in the summer of 2019 and the United States’ FedNow followed in 2020 with operation launch target of 2023. 423 424 The COVID-19 pandemic had a profound impact on digital payments providing an impetus for adoption and use as demonstrated by the success of PIX. Globally, faster payments provide stakeholders flexibility in terms of the movement and availability of funds. Initially, systems were limited to domestic only operation or already connected banking relationships such as member states within the EU. Strides have been made to link instant payment systems in a cross-border fashion between independent geographies predominantly seen in Southeast Asia and India’s UPI. 425 Project Nexus serves as an example with the next target being to connect the instant payment systems of India, Malaysia, Thailand, Singapore and the Philippines. 426 This project will engage the countries’ respective central banks, payment service providers, and the Bank of International Settlements in its development. 427 Project Nexus is a response by the Bank of International Settlements (BIS), as well as regional stakeholders, to the G20 Roadmap for Enhancing Cross-border Payments. 428 Launched in 2020, this initiative is coordinated by the Financial Stability Board (FSB) and the Committee on Payments and Market Infrastructures (CPMI) in tandem with relevant international standards setting bodies. 429 The end target date for the initiative is 2027, with successful implementation delivering tangible enhancements across four key challenges: cost, speed, transparency, and access. 430 The BIS aims to develop a system to connect domestic instant payment systems across countries through a standardized and multilateral approach. 431 In 2021, the BIS published a blueprint for a service to connect IPS across borders, with a working prototype developed in 2022. 432 This prototype connected the Eurosystem’s TARGET Instant Payment Settlement (TIPS), Malaysia’s Real-Time Payments Platform (RPP), and Singapore’s Fast and Secure Transfers(FAST). 433 As more countries develop instant payments systems, the need to standardize and collaborate will only grow more paramount.
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