The Royal Bank of Canada is looking at ways to implement #blockchain #technology for #payments between its Canada and U.S. #banks, using a system developed with software from the blockchain consortium #Hyperledger. The system was moved into existing RBC systems a few weeks ago to “shadow” the bank’s primary payment ledger, Martin Wildberger, the executive […]
Bank Innovation
The Royal Bank of Canada is looking at ways to implement #blockchain #technology for #payments between its Canada and U.S. #banks, using a system developed with software from the blockchain consortium #Hyperledger. The system was moved into existing RBC systems a few weeks ago to “shadow” the bank’s primary payment ledger, Martin Wildberger, the executive […]
Bank Innovation
TransferWise had launched a Borderless Account for people and companies that do business across national baoundaries.
Financial Technology
In my view, electronic #payments will accelerate dramatically over the next decade, driven by the “#atomization of payments.” New business models are emerging, enabled by #technology, resulting in increased transactions that will scale and scale. We are fast moving from batch to real-time transactions, with payments made continuously from bank accounts.
Examples may include shopping: in-aisle buying with an instant payment for every item picked off the shelf; self-driving cars, where ownership will diminish, replaced by on-demand rides, and payment for every journey; salaries, typically paid monthly to be paid daily, even hourly; company dividends paid daily (already evident in the BnkToTheFuture investment platform); smart meters will pay electricity daily and so on.
The benefits will be broad: new products and services, improved cash flows, financial efficiency, improved certainty for businesses and individuals, better fraud prevention, reduced or eliminated reconciliations and errors. Changes will be driven by technology and new business models, and will be pervasive and profound. For example, payroll, billing systems and processes will be very different, and often unnecessary, and personal and business cash management will be largely automated.
While it will take years for payments to atomize fully, let’s put some figures to quantify the impact using the UK as an example.
The UK has 19 million households. Assuming they buy 50 items a week (mainly groceries), which translates to 49 billion payments and items purchased. The UK has 37 million vehicles. Let’s assume each averages 10 trips per week—which is 19 billion annual trips and payments. Around 31 million people are employed in the UK—adjusting this for #part-time workers, daily salary payments would amount to 7 billion payments annually. About 10 million people own UK shares, assuming they average 5 shares each—which is potentially 18 billion daily dividend payments annually. Finally, if the 19m UK households have smart meters making daily electricity payments, that is 7bn payments annually.
So, with some very basic analysis, we have identified around 100 billion future UK payments, and have barely scratched the surface. Add in other utilities, daily mortgage and other interest payments, on-demand music, phone calls, TV/video, media and new business models that are yet to be invented, and it is easy to see UK payments reaching up to one trillion transactions per year in the future, and multiplying by relative GDP factors, seven trillion in the US, six trillion in Europe and 30 trillion globally.
There are currently about 38 billion payments in the UK (including cash, cards and electronic) according to Payments UK (now part of UK Finance), so payment volume in the UK could rise 25 times or more.
When this will happen is anyone’s guess—10 years? 20 years? 40 years? But we need to plan for it!
In part two I will explain a precedent for this atomization and its implications, and what the payments industry needs to do.
My thanks to Nick Caplan, Chairman of Faster Payments Scheme Ltd, for the inspiration behind this blog.
The post THE ATOMIZATION OF PAYMENTS: PART ONE appeared first on Accenture Banking Blog.
Businesses are catching up with consumers in moving to #electronic #payments to replace checks and #Chase has signed with #Bill.com, a payment workflow specialist.
Financial Technology
EXCLUSIVE – Now that same day ACH debit payment has kicked off, National Automated Clearing House Association (#NACHA), the steward of Automated Clearing House (ACH), is in the final phase to implement its same-day payment vision for ACH. That phase 3, which consists of mandatory credit availability before 5PM, is set to happen on March […]
Bank Innovation
#APIs, or Application Programming Interface, have seen tremendous #growth, especially in the finance space. The #spike in numbers comes as no surprise with the ever-increasing number of #fintech startups as well as traditional #banks and #financial institutions rushing to integrate APIs in some form or the other. Other factors contributing to this growth, according to […]
Bank Innovation
While the #Federal #Reserve System and participants in its Faster #Payments Task Force extol the benefits of a collaborative, consensus-building approach to developing a real-time payments system volunteerism, they are silent on both the direct and the opportunity costs.
Financial Technology
Although the Federal Reserve system has limited its role in #faster #payments to coaching and cajoling, it may need to play a more active role in driving interoperability, suggests ACI Worldwide’s Craig Saks
Financial Technology
Earlier this year I made a set of #payments #predictions for #2017, which is living up to expectations as a year with new developments and change occurring on all fronts. In this blog, I give an #update on how the payments landscape is shaping up and rotating towards a new world of digital payments.
Prediction: Contactless card transactions in the UK will rise to between 6BN – 9BN transactions in 2017, (compared to my forecasts a year ago of 3BN transactions for the UK for 2016).
Contactless transactions are growing at a huge rate, far faster than most realize, showing a profound change in the way we pay across the globe. They are also spilling over into mobile contactless payments (e.g. Apple Pay) which grew 336 percent in the UK in the first half of 2017 compared to the same period in 2016 according to Worldpay.
Prediction: Voice payments solutions will start making a hit with the public—perhaps through Siri on iPhones, Alexa on Amazon and at POS.
Voice payments and voice commerce are an emerging trend that is here to stay.
Prediction: Alternative payment mechanisms (APMs) such as PayPal, iDEAL in the Netherlands and Klarna (Europe and US) will continue to grow strongly (20 percent – 30 percent) for e-commerce, driven both by convenience and by high fraud rates in card-not-present transactions.
APMs are already more popular than cards in some countries for e-commerce, and this continuing trend shows cards dominance is under threat globally.
Prediction: The UK will continue to lead the world in instant payments. Plans will be developed for a new real-time payments infrastructure that leaps ahead of current implementations in terms of ambition and capability.
Prediction: Faster Payments will process 1.65BN transactions, 15 percent higher than 2016 (1.4BN transactions).
Instant or real-time payment infrastructures are appearing all around the world. Adoption is gradually gaining pace and we can expect years of ongoing renewal, such as in the UK, as they embed and evolve with the demands of the digital economy.
Prediction: #Bitcoin transactions for 2017 will be 150M transactions (up from 83M in 2016), miners’ revenue $ 850M ($ 562M in 2016), the average hash rate will be 5.7gh/s (1.5gh/s average in 2016), $ 120BN will be transacted in Bitcoin ($ 56BN in 2016) and the average number of unique addresses used daily will average 600K (406K addresses daily in 2016).
This is a blizzard of statistics, but they show that the Bitcoin network continues to grow in terms of transactions and users (addresses), that significant sums are transacted over it, and that while miners are multiplying—in fact, tripling—the computing power (# rate) in the Bitcoin network, they are receiving significant rewards for doing so.
The number of Bitcoin transactions is still very low for a payments network, and are constrained by the current network capacity limit (which is supposedly being resolved), indicating that the Bitcoin network is more a store of digital asset value than a payments network. However, while miners’ revenue is dependent for now mainly on block rewards, over time this will diminish increasing their need to compete for transaction fees, and if Bitcoin is to endure, the number of transactions will need to grow significantly.
I suspect that this is part of Satoshi Nakatomo’s game plan for Bitcoin, and if it materializes, Bitcoin will become a mainstream force over the next 10 years as a store of value and as a payments network.
Prediction: Ripple will be the one DLT player in payments that grows, with its #technology moving on from use by #banks for pilots, bilateral exchange and internal payment flows, to use as a new cross-border payments network with growing transaction volumes between networked banks.
Ripple goes from strength-to-strength. While there are some examples of banks experimenting with other DLT, such as R3 in Singapore, no other DLT player comes close to the penetration of Ripple in payments, particularly cross-border payments.
The post 2017 payments predictions: A mid-year update appeared first on Accenture Banking Blog.
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