Request to Pay: What is it and how does it work?
From real-time accounting to automated marketing, virtual assistants and data analytics, technology continues to fuel business growth and customer-centricity and the payments space is no different. A new wave of FinTech is not just looking to give more control to organisations managing cashflow and invoices, but to also empower payers to manage their outgoings and bill payments.
What is Request to Pay?
Request to Pay promises to give consumers more choice and flexibility in how and when bills are paid. It isn’t a new payments rail, but rather a specification for a secure, real-time messaging service that will sit on top of the existing payments infrastructure, notably credit cards and Faster Payments. The service will allow organisations to communicate with their customers, providing more options for how they wish to meet their payment obligations.
How does it work?
Any organisation can sign-up to Request to Pay and customers will be able to access requests or send their own through a web-enabled application. When a customer buys a product or service, the transaction details including a reference, the amount and due date, will show in their app including multiple options for resolving the request: pay in full, pay in part, decline the payment or request an extension. Organisations will need to understand how they wish to cope with the variety of responses given.
What are its Benefits?
Request to Pay promises multiple benefits for businesses, charities and not-for-profit organisations, as well as consumers, with improved communication, reduced admin and streamlined processes. For businesses, it theoretically reduces the risk of failed payments and the time taken chasing them, assuming that consumers co-operate fully. For charities, it can increase donor retention by offering donors flexibility in their payments. And for freelancers and a new generation of workers on more variable income streams, it enables easier budget and cash flow management by providing the ability to stagger payments over time rather then meeting bills upfront and in full on an inflexible schedule.
What are its Limitations?
Since Request to Pay requires authentication after every transaction and opens a direct communication channel with every consumer, it could create as much admin as it promises to reduce. There are no in-built restrictions on how many times a payment request can be made, potentially encouraging toxic relationships between business and consumer. There are concerns it could push vulnerable consumers into debt because it may encourage people to continue with a service they cannot necessarily afford.
When is Request to Pay launching?
Pay.UK has confirmed that Request to Pay is in a closed pilot testing phase currently and, once testing is successfully completed, the rules and standards should launch in early 2020.
Mastercard recently announced that they will launch a Request to Pay service in Q1 2020 through Vocalink in a bid to increase innovation in its bill payments solutions. Exela, a business process automation firm, confirmed they will be the first customer to offer this service to their UK customers.
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