Appealing to consumers, and an important addition to point-of-sale (POS) purchases from a business customer's perspective – such are the current reviews for Request to Pay (RTP). The new initiative for a uniform payment request (EPC014-20) in the European area has been defined by the European Payments Council (EPC) in June 2020.
With an RTP solution, customers can now pay for their purchases directly at their customer advisor without having to go to the cash register. The shopping experience will change significantly as a result. In online trading, RTP is a better payment option for the supplier than direct debit; after all, the latter may be revoked. With the credit transfer resulting from the RTP, additional fees, such as those for credit cards, PayPal and similar solutions, are eliminated. This also applies to the additional infrastructure costs of the processors.
Another advantage is that RTP can be used to transport all the information that the following credit transfer must contain from the payment recipient's perspective. The goal is to ensure a payment accounting that is as fully automated as possible. This is achieved by obliging each of the parties involved to forward the data once received to the next instance for further processing. However, in order for private consumers to be able to use this new idea across the board, appropriate mobile applications must first be created for debtors. This will undoubtedly happen – even though quite some time will likely pass until then.
At present, the EPC initiative is still unclear on how the promoted universal accessibility of the debtor can be implemented in a uniform manner. In this case, the basic concept that the RTP recipient can be addressed in any arbitrary way impedes rapid implementation. As is so often the case, the EPC is encouraging the new service providers to take the initiative here. But many questions remain unresolved. The specification leaves questions open and relies on solutions from future suppliers which do not yet exist.
This is precisely where financial institutions have the opportunity to take active action – now! The EBA has already made a proposal that is simple and fully functional for Europe and is implementing it in infrastructure solutions. The concept is simple and based on the SEPA clearing of the European Union. In the EBA's RTP network, the debtors are unambiguously identified with their IBAN. The EBA's payments clearing system can now be used to identify and reach each financial institution of the payer. This gives European financial institutions control over mass payments and provides them with a Europe-wide alternative to the many mobile but incompatible national payment procedures on offer, in particular PayPal.
If the payer's financial institution receives an RTP, it will notify the payer about the payment request via existing online banking channels. Ideally, this is done directly via the financial institution's associated app on a mobile device. The debtor can then pay for the product immediately. However, this still requires updates to the customer systems of companies and payers.
Just like in the B2C business, RTP can also be used in the B2B business. Especially since the introduction is much easier and faster than in the consumer business. With the EBICS protocol, a huge number of companies are already using a channel that can be easily extended for RTP. In many cases, a simple configuration adjustment in the form of new order types is enough. Thus, companies can now send a payment request to another company by submitting an RTP (pain.013) order. The latter also receives the payment request via EBICS. The target address is simply the IBAN, and the rest of the process is performed electronically across Europe – via the existing EBA networks as a central clearing platform. This means that, in principle, every company and every account holder in the SEPA area can be reached.
The associated status return messages signal the invoice issuer in a short time whether the debtor rejects or accepts the sent RTP. In the latter case, the goods can be shipped. The payment does not always have to be initiated immediately; payments at a later date are also supported by the RTP specification. In the RTP process, two different ISO XML formats (pain.013.001.07, pain.014.001.07) are used. If necessary, a recall can also be implemented. Everything can be easily transported via EBICS.
For a convenient use of RTP, the EBICS customer systems and corporate customer portals can now implement the appropriate creation and upload functions and display the status return messages in their interfaces. If there is no response from the RTP recipient, the status can be actively requested at any time. Or a recall of the RTP can be initiated (pain.056).
As existing SEPA credit transfers or instant payments can be used in the process, payments and incoming messages for accounts within the span of seconds become possible. The advantage of an RTP over a direct debit is obvious: no complex mandates need to be created or stored. In addition, payments made in this way cannot be recalled per se. For the retailer, RTP thus reduces the risk of a direct debit revocation, which otherwise exists for a few weeks.
Now is the perfect time for companies to create the right conditions for RTP. In doing so, they will be ready when consumers can use the new payment format at any time and in any place in a mobile manner.
PPI will implement the conditions for a Europe-wide success of RTP in the TRAVIC products in 2021. TRAVIC-Port will enable the creation and upload of RTP, TRAVIC-Corporate will authorise the submitter and validate the RTP order, and TRAVIC-Payment Hub with TRAVIC-Interbank will support the transfer to the EBA network. Through RTP, financial institutions can at least partially regain their formerly central role in payments, which they have lost to alternative methods such as PayPal and others.
Author: Michael Schunk
