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As the world becomes more digital, speed in all aspects of financial services is increasingly important. The payments ecosystem is no exception. Faster payments are taking shape across the globe—and may become industry standard.
While faster payments can enhance the customer experience and improve cash flows, it introduces a number of complexities, such as capital costs, and accounting and fraud systems impacts. In the short term, providing the impression of a near-real-time payment through memo posting and verifying the certainty of payment could be implemented sooner, and may meet expected market demand.
This point of view explores the potential benefits and pitfalls of faster payments, as well as key implementation considerations for payments players to pursue as they position themselves for the future of real-time payments.
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If the desired outcome of faster payments is the guarantee of good funds and the mitigation of transactional level risk, then communication of a successfully completed transaction needs to occur in real-time, but settlement can occur later. It may be sufficient in the near term to achieve near-real-time payments meeting the goals, but stopping short of settlement. By providing the impression of near-real-time, or “faster,” payments through memo posting and verification of a completed transaction, payment providers should be able to meet the needs of the market without significant investment in core systems.
August 25, 2014
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