Today’s episode was recorded at Nacha’s Smarter, Faster, Payments 2019 event. And on this episode, I have Jessica Cheney who is the Vice President of Product Management and Strategic Solutions at Bottomline Technologies. Now during our conversation as we talk about the added value of faster payments, and how perhaps media focuses a little too much on the word faster.
Ryan
Well Jessica thank you so much for being on the PaymentsJournal podcast today. And so to start things off, can you give us an overview of Bottomline Technologies’ role in the RTP space?
Jessica
Sure. Bottomline Technologies is a leading provider of b2b financial technology that make payments faster, smarter and secure. Specifically to our RTP we provide the customer experience solution that banks used to offer RTP functionality to their corporate customers
Ryan
In your best summation here you know has too much emphasis really been placed on the speed of real-time payments?
Jessica
Well Ryan, there’s definitely benefits to payments that can be sent and received within seconds, such as increased customer experience. However, there’s a lot of value that goes beyond speed that people really haven’t paid attention to. Those additional benefits include immediate and automated payments status updates, which no other payments solution out there provides today. So when a receiver is sent a RTP it should be made aware of the when a payment is sent, a receiver gets that within seconds, but the sender of that payment is also made aware that the receiver has received those funds. So having that round, complete circle really is an added benefit to the sender of those payments. Being assured that the payment was made. When you are making a payment on the day that it’s do, it’s very comforting to know that the payment has fully been received.
The other component of value is the integrated remittance with the payments information. Being able to send additional detail around why payments are being made in the same rail the funds are traveling is another added benefit. The ability to request an immediate payment, request for payment, is a huge benefit to the RTP component of this. But most importantly, I think the piece that doesn’t get enough press is the fact that there are incorporated communication channels between parties, which we dubbed conversational payments. Funds and interactive messages for the first time can travel together in the same rails. Very different from any other payment type out there.
Ryan
Now for the next question. Customer interaction is a very becoming a very pivotal role in payments here. So I’m curious if you can dive in a little bit, how is RTP becoming a new customer interaction model for banks?
Jessica
Beyond the ability to originate and receive a payment for the first time RTP puts secure real-time conversations between trading partners, a business and another trading partner, business and one of their consumer customers. That conversation is happening for the first time directly on a bank channel. So either through their website, or their mobile application, puts the bank in the center of that critical communication between their customers and their customer. It also allows traceability in those conversations because one of the key conversations that are supported in RTP is something that’s called the request for information.
When a payment is made, and the receiver gets that payment, and they have questions about it, typically what an accounts receivable clerk would do would be to either email their counter party, or pick up the phone and talk about, hey, I’ve received this payment, but I don’t understand why there’s an exception. That’s done traditionally, obviously, without the bank in the middle of that. RTP allows those conversations to be tied directly back to the payment that was made. So you get full traceability, but it’s done with the bank in the middle of that.
Ryan
What is the extended value of conversational information, linked payments and remittance?
Jessica
So part of that value is what I just mentioned, that it removes the unstructured follow up to any type of payment that I may have received. I’m not doing that phone call. I’m not doing that email. The RFI integrated allows that that information to be in instant message like capabilities tied back to the payment that was made. What that actually adds to is the ability to utilize the data that’s in those messages to increase AR matching capabilities. So not only do I have certain amount of remittance information that can travel with the payment, when I have a question about that remittance information, I have a structured data response so that I can take all of that data and hopefully utilize some automated, or matching capability and use all of that enriched data. So RTP really is enforcing more efficiency in AR matching that way.
Ryan
Now, when we look at businesses, two of the things that that come to mind really are the cash flow in reducing fraud. So can you break down for me how it is that RTP can help businesses improve the cash flow and reduce fraud?
Jessica
Sure. The first one, enhancing cash flow, you know, everybody talks about wanting to be able to receive payments faster, but nobody wants to make payments faster. That’s actually a little bit of a fallacy. Businesses want to be able to make payments at the last possible moment, that still allows them to maximize any discounts that they can take. So RTP really gets to the heart of that. I can hold on to my cash to the absolute last minute, but still benefit from any discount that a trading partner wants to offer me or I can make payments at the last minute on a due date. So again, maximizing how long I can hold on to them. In terms of fraud, RTP is a credit push model. So right there, banks have an opportunity to reduce the amount of risk monitoring that they’re doing on them for a couple of reasons. One, they aren’t ACH payments, so they are pre funded. It’s a good funds model. So banks don’t have to underwrite RTP originators because of that. There’s also the traceability component of RTP that is allowing us to treat them slightly differently than more fraud susceptible alternatives.
Ryan
Excellent. So for the last question here is around timeline. So what do you think is the timeline for real-time payments payment adoption?
Jessica
Ryan, I think that like a lot of other innovation or technology innovation today, the volume of RTP payments is going to be driven by consumer adoption. Already today the large volumes of p2p based real-time payments are being done, either through Venmo or through Zelle. Because of the way that, our consumer behavior is now influencing the way that we want to do business. It in a happens in a higher and deeper way, because of the way that millennials have now come to age and are now in the management positions of a lot of businesses so their consumer expectations drive a lot of what’s going on in business. Because they make payments in their consumer lives in a real-time basis, they’re going to drive how businesses actually adopt this as well. I also think that the requests for payment component of RTP will drive business adoption as well because they have a huge benefit of putting out electronic invoices in that way. And once invoices are implemented in that channel, the likelihood that they’ll get paid in that channel is much greater as well.
Ryan
Well, thank you, Jessica, for taking the time today for speaking to us about real-time payments, and we hope to have you back on the podcast real soon.
Jessica
I very much enjoyed it. Thank you.
