Banking

Real-time payments have real-time benefits especially for small businesses

Throughout the pandemic, a recurring theme has been the excessive time for emergency funds to reach the bank accounts of families and businesses right across the UK.

It’s a golden window of opportunity for real-time payments to make a real difference

Since March 2020, many businesses, especially small local entities which have been forced to stay closed, have faced financial difficulties often exacerbated by the delays in receiving COVID-19 support grants announced by the UK Chancellor Rishi Sunak.

Although a pathway to normality has been announced, many businesses are still awaiting financial support. The global financial strain brought on by the pandemic has only increased the perceived and tangible value immediacy offers when moving money and real-time payments are now more crucial than ever.

A comparison with the United States is helpful. The FIS real-time lending platform processed nearly $8 billion of loan applications for more than 63,000 US merchants and small businesses during the Small Business Administration’s (SBA) Paycheck Protection Program (PPP) – much faster than the pace here in Britain.

A convenient self-service portal streamlined the process for merchants and businesses to apply for the much-needed funds provided through the PPP. Through integration with participating bank lenders, this portal automatically pre-fills merchant data, creating a quicker application process and seamless experience.

Applicants can also readily track the status of their loan application and apply for their loan to be forgiven, so it does not need to be paid back, in the same portal – providing visibility throughout the loan-to-forgiveness process. FIS research shows that about 80% of the loan applications which were processed in the latest round of PPP funding have been submitted through the self-service portal by small businesses. Small- and medium-sized businesses (SMBs) everywhere can benefit from increased efficiencies when using a convenient pre-populated, self-service portal.

Faster payments aren’t only about money – they are also about instant connectivity. They are not just about speed – they are equally about precision, transparency and certainty. While the pandemic sometime will fade into the rear-view mirror, but the value real-time payments offer and their adoption will prove to be lasting.

Increasing real-time payment adoption rates and continual development and evolution of real time infrastructures around the globe speak to the staying power of real time and indicate the true potential that is just beginning to emerge. The FIS “Flavours of Fast 2020” report looked at data from 56 countries and found that across EMEA, the UK had the most, with total daily transactions at seven million daily, and also noted that innovation has further accelerated especially with the development of Pay.UK which formally launched the framework for the development of Request 2 Pay (R2P) services last year.

R2P is an overlay messaging service that sits atop the existing payments infrastructure and not a new method of payment. The expectation is that financial institutions, fintechs, utilities and retailers will all be interested in offering the option to customers, who can sign up to use the service via an R2P app. The service can also be used by consumers to split payment for bills and manage all bills in one place.

Looking beyond the pandemic to business recovery, real-time payments could offer benefits to small businesses looking to drive efficiency and productivity. By helping to combat challenges with late payments and cashflow, real time billing and request to pay technology could help speed up the supply chains and invoicing for hundreds of UK SMBs helping to promote healthy balance sheets.

In Europe, real-time payments adoption has surged with countries such as the Netherlands leading the way. Helping increase real-time payments adoption in the UK is now crucial and as part of FIS’s broader real-time payments strategy, FIS Ventures has invested in UK-based fintech Modulr, and plans to leverage its application programming interface (API) based payments infrastructure to facilitate and automate real-time, business-to-business, payments in the UK and Europe.

It is clear that the future is open and that a golden window of opportunity for real-time payments to make a difference to the everyday lives of consumers and businesses alike exists. By learning the lessons of other countries and seizing on the opportunity within our grasp, a better future is possible.


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