Paul Walvik-Joynt, SVP, Commercialization, Mastercard Bill Pay, speaks at EBAday 2023 about key takeaways from the event, innovations in facilitating bill payments and the importance of creating the best possible experience for consumers and businesses.
FedNow chases real-time payments front-runners
The Federal Reserve’s long-anticipated real-time payments system, FedNow, is scheduled to go live next year.
Yet businesses and consumers will probably have to wait years before they can rely on ubiquitous U.S. instant payments, according to industry professionals who have been involved in the project.
The new bank-to-bank payment rail aims to modernize the U.S. payments system and increase its efficiency by allowing payments to be sent and received in seconds instead of days. That eliminates credit risk tied to time lags and allows businesses and consumers to spend and invest their money sooner.
The U.S. trails a host of countries in implementing a real-time system. Such transactions accounted for less than 1% of payments volume in the U.S. last year compared with a 5.7% share in China, according to an April study by payments processor ACI Worldwide in collaboration with the Centre for Economics and Business Research.
That means the U.S. captured just $1.35 billion in macroeconomic benefits from real-time benefits while China netted $18.65 billion in benefits. China and emerging countries such as India and Brazil are racking up the advantages from real-time payments while Western nations, particularly the U.S., are missing out, according to ACI.
“The U.S. market, relatively speaking, is quite far behind other markets,” said Andrew Gomez, a managing consultant at Lipis Advisors in Berlin.
Open payments firm Volt raises $60m
London-based open payments gateway Volt is targeting Asia Pacific and the Americas after securing $60 million in a Series B funding round led by IVP.
CommerzVentures, EQT Ventures, Augmentum Fintech and Fuel Ventures joined the round.
Founded in 2019, Volt offers seamless access to Open Banking payments in Europe, connecting over 5000 banks across the UK and EU, bringing together a new generation of account-to-account payments infrastructure to a single point of access.
The firm has also landed in Brazil and has Australian market entry planned for later in 2023, as well as its sights set on the US market.
Angela Zhu, partner, IVP, says: “As over 70 countries, including the US, transition to RTP systems, merchants are experiencing the immense benefits of instant, secure, and cost-effective A2A payments.
“With the value of A2A payments in e-commerce transactions set to reach $757 billion by 2026, Volt is well positioned to redefine the future of payments on a global scale.”
JP Morgan invests in trade finance fintech
Wall Street bank JP Morgan has made a strategic investment in a fintech startup focused on trade finance.
Cleareye.ai operates a platform that aims to automate as much of the trade finance process as possible including document analysis and compliance.
JP Morgan is already a Cleareye customer, and for the last year it has been using the fintech’s ClearTrade platform to map data from the nearly 4 million documents it receives annually directly onto the back’s back-office systems.
The strategic alliance between Cleareye and JP Morgan’s trade and working capital group comes at a time when the trade finance market is undergoing a digital transformation in a bid to reduce the amount of manual processes in what is a heavily paper-based market.
“Future proofing trade operations has been at the forefront of J.P. Morgan’s digital strategy in Trade & Working Capital,” said James Fraser, global head of trade & working capital for JP Morgan.
“A manually intensive industry loaded with paper and lacking standardization, burdened by an increasing cost base, needs real innovation in order to transform.”
No financial details of the investment were disclosed.
Swift steps up blockchain experimentation
Swift is working with more than a dozen financial institutions and market infrastructures to test the use of its messaging network as a means to instruct the transfer of tokenised value over a range of public and private blockchain networks.
The fresh initiative follows a proof-of-concept conducted with Chainlink last year on the development of a Cross-Chain Interoperability Protocol (CCIP) that would connect Swift to multiple blockchain networks.
Tom Zschach chief innovation officer, Swift, says there’s unlikely to be a single prevailing blockchain network.
“We would expect to see a multitude of different platforms emerging, each serving different customer segments with their own bespoke capabilities and requirements,” he says. “In such a highly fragmented ecosystem, it would simply not be feasible for financial institutions to connect to each and every platform individually. That’s why the community is working with Swift to develop an interoperability model that would enable access to different platforms globally.”
The new set of experiments will see Swift collaborate with the likes of Australia and New Zealand Banking Group, BNP Paribas, BNY Mellon, Citi, Clearstream, Euroclear, Lloyds Banking Group, SIX Digital Exchange (SDX) and The Depository Trust & Clearing Corporation (DTCC) on a series of potential implementations.
The first use case will involve the transfer of tokenised assets between two wallets on the same public blockchain network (Ethereum Sepolia testnet). The second involves the transfer of tokenised assets from a public blockchain (Ethereum) to a permissioned blockchain. And a third use case will test the transfer of tokenised assets from Ethereum to another public blockchain.