U.S. Needs Real-Time Payments System
The U.S. must transition to an immediate payments system or risk the fragmentation of payments as consumers use digital alternatives such as Amazon and PayPal, says consultant Bruce J. Summers. He proposes a payments system model in which a narrow banking license is provided for digital payment providers to let them hold deposits for payments services. Consultant Edward Woods cites FIS PayNet as an example of the network that real-time payments will be routed through. He notes PayNet has established a sustainable and transparent operating model for a real-time, card-free network that charges originators for transactions they create and pays the financial institutions meeting the requests. Woods says switching automated clearinghouse transactions to real time is too difficult, and it is much easier to develop a new method that will likely be promoted by newer players such as Square and Twitter. The more pressing challenge is getting all U.S. payments stakeholders to get behind a single real-time payments system, and KPMG’s Chris Hadorn believes the U.S. should set up a payments council with this goal in mind.
From “Imagining a Real-Time Payment System”
American Banker (05/20/14) Groenfeldt, Tom