Finally...Digitally Connecting Billing to Payments!
This article appears in our Q1 2022 issue of Finance Transformation Magazine. To download the issue, click here
Chris Vincent talks about the new Request to Pay (RtP) secure messaging service from Pay.UK and why it's the missing piece of the digital jigsaw which will transform the Order to Cash process.
Request to Pay, introduced by Pay.UK, the Authority who manage the UK's primary payments schemes is the future of billing and payments. It is the brand new eco-system that's available for adoption and pilots from this year. The benefits for billers and payers are significant, from an improved user experience to administration benefits from the sharing of structured (ISO20022 compliant) transaction data.
Exela (formally BancTec) is a business process automation (BPA) leader, leveraging a global footprint and proprietary technology to provide digital transformation solutions enhancing quality, productivity, and end-user experience. With decades of expertise operating mission-critical processes, Exela serves more than 4,000 customers in 50 countries, including over 60% of the Fortune® 100.
Exela is best known for its payments platforms and services that underpin the UK's payments backbone along with cash management services for corporates. In 2017 Exela partnered with Mastercard/Vocalink to deliver the Image Clearing System (ICS), the digital cheque clearing platform, to Pay.UK.
Today, 100% of UK cheques flow through Exela's image and workflow technology under the Mastercard partnership. In 2020, Exela again partnered with Mastercard to develop Request to Pay , the UK's latest payments overlay, designed to digitise and standardise Billing and Payments.
The Future of Payments
Billing and Payments are transforming at pace and this is what every finance and payments professional need to know.
The UK is a world leader in payments. It pioneered real time payments and was one of the first countries to introduce Open Banking, a feature being widely adopted in all major payment zones globally. The UK has now set out its vision for the future with its New Payment Architecture (NPA) blueprint.
Real time payments called Faster Payments, or FPS in the UK underpin the future direction of payments. FPS allows funds to be transferred between two accounts almost instantaneously and at minimal cost. These payments are called Account to Account (A2A) transfers and are important because, like the name suggests, there's no intermediary getting in the way of the payment, no delays, and minimum cost overheads.
Things became more interesting with the introduction of Open Banking, which:
· Allows access and control of consumer bank accounts via
· Has enormous potential to transform the banking and competitive landscape, and to transform the consumer experience.
This is all great! We have a fast and efficient payment system (FPS), we have some enhanced protection against scams through Confirmation of Payee (CoP), and finally we have a more flexible way to initiate the payment - Open Banking.
But what about the process before the payment? Billing and payments is currently a separate, largely un-connected process.
There are a few 'closed' networks for 'payment requests', but only unified and standardised such as Pay.UKs RtP will drive adoption.
Now Bring on Request to Pay!
RtP is not actually a payments system, it's a secure messaging system, a precursor to a payment. It follows standards and accreditations mandated by Pay.UK, the UK's retail payments Authority. Pay.UK also manage the key payments schemes, including FPS, BACS and ICS, so you can see why some call RtP the missing piece of the puzzle.
RtP is one of two NPA overlays, the other is Confirmation of Payee, the scheme that's been name checking payments for the last year.
How Does RtP Work?
Think of RtP as email, but a secure email system where users are 'onboarded' to this messaging system and whereby they, along with all other users agree to some rules, standards, and a pre-defined set of outcomes (pay all, pay part, no-pay, request extension, message biller).
Know Your Client
The Scheme requires providers to perform a level of checks (known as KYC) and bad actors can be blocked or excluded. Part of the Scheme's aim is to enable compliance, trust and automation.
The key here is that RtP finally connects digitally, the payment request to the act of payment initiation. If there is a need to request more info, then this can be requested digitally, all within the RtP messaging eco-system. A digital payment request means that we have richer data associated with the request, such as line items of an invoice, PO numbers or PDF images of bills (or maybe agreements).
The Benefits of Request to Pay:
1. It can utilise FPS, the UK's cheapest and fastest Account to Account payment system
2. Improved liquidity - Immediate funds through Account to Account transfer
3. It allows the Payer to request a delay, reducing 'payment breakage' and Collections cost
4. It can facilitate an electronic dialogue
5. It delivers trust, as a Payee needs to request a relationship with the Payer
6. It can facilitate early payments through dynamic discounting.
Request to Talk
I've been working on the new RtP eco-system for the last three years, helping to bring RtP to market. As an active participant at the industry level, I'm keen to talk to individuals who think their business may be a good candidate for an RtP Pilot. Feel free to contact me if you'd like to discuss RtP or any of the other innovations discussed.
About the author: Chris Vincent
Working in banking, payments and F&A outsourcing, Chris has been helping banks and corporates to transform and automate their billing and payments operations for over 20 years. He has been instrumental in a number of new payment innovations such the UK's Image Clearing System (ICS), Confirmation of Payee (CoP) and Request to Pay (RtP).