All posts by Mark Ranta

Payments Practice Lead Mark is responsible for working with our market partners and financial institution customers discussing, exploring, and examining market trends and key drivers in the evolving digital payment space. Prior to joining Alacriti, Mark's nearly 15 year career has been focused entirely on the banking and payments space, working for solution providers and research firms supporting both the corporate and consumer banking markets. Mark is a Certified Treasury Professional and holds a Bachelor of Arts from Lafayette College.
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Real-Time Everything

The boon the “Great Recession” has had on the technology space was a hot topic during the pandemic’s quarantine period. Just looking at the sheer volume of companies and products we rely on in our day-to-day life that sprouted in the aftermath of our last recession (June 2009) is mind-boggling. Whether it is ordering groceries from home using InstaCart (est. 2013), food from Postmates (est. 2011), thinking about traveling again while scrolling through Instagram (est. 2010), considering the implications of the coming Metaverse or maybe even looking to lower your loan obligations on SoFi (est. 2011), our real-life and online lives are converging at increasingly rapid pace.

Our lives and experiences in the past 10 years have been drastically changed by smartphones and the app-based ecosystem and economy that followed. And, of course, there has been a theme of instant gratification running throughout. Many of the great ideas that came out of the last recession were focused on making life simpler and gaining instant access to the things we want and need. In line with Moore’s law—an indicator of the speed at which technology advances—the implementation of real-time experiences and companies leveraging real-time technology will make its use increasingly ubiquitous in our lives. 

Payments and banking services, initially slow to react to the new market dynamics of the last decade, have been alive with rapid activity. At the epicenter of this trend is the first new central payment system to enter the market in four decades, The Clearing House’s RTP ® System, which launched in 2017. Putting that in perspective, if you graduated college after 1995, the payment systems keeping our country functioning were already up and running when you were born. For fun, check out what also happened in 1995. 

With the new financial infrastructure in place, we are seeing real-time innovation in banking and payments. Similar to the companies launched as part of the dawning app-based ecosystem in the post-great recession technology boom, banking is poised for its moment of innovation, with early adopters already finding innovative ways to provide value to consumers using real-time payment rails (expedited/immediate bill pay for a premium price, anyone?).

For the most part, it remains to be seen how these innovations will manifest as a better user experience e.g., more visibility into where your money is or where it is going, new products and services from banks such as instant loans, increasingly personalized products or instant payroll. But one thing’s for sure, the foundation of a real-time ecosystem in banking and payments is rapidly taking shape and I’m excited to see where innovators take us over the next decade.

Find out what’s in store this year in the webinar, Payments in 2022: What You Need to Know. 

Updated from a blog originally published July 8, 2020

Alacriti’s Cosmos for RTP® enables financial institutions and organizations to quickly and seamlessly connect to The Clearing House’s RTP® network without the burden of significant infrastructure overhauls or capital investments. To speak with an Alacriti real-time payments expert, please contact us at (908) 791-2916 or info@alacriti.com.

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The Fastest Route to Faster Payments Success

Alacriti is a member of the U.S. Faster Payments Council (FPC) and we continue to be excited to help shape the future of payments.  FPC and payments consulting firm Glenbrook Partners teamed up for a multi-year study following key developments in the U.S. faster payments market. As a result, The Faster Payments Council released this report containing valuable forward-looking insights, some highlights of which we feel are still valuable to review as they relate to consumer bill payments as real-time payments availability and acceptance continues to grow exponentially.  

Bill Payments as a Use Case for Faster Payments 

Many use cases are of interest to the market when it comes to faster payments. However, there was one that stands out to us as top-of-the-list: bill payments. In fact, according to the FPC/Glenbrook Partners report, bill pay was ranked as the top use case by 59 percent of respondents. When we talk about bill payments, there are two models:

  1. The biller direct model – the payor pays the payee directly on the biller’s website or app.
  2. Bank bill pay – the initiation of the payment is done via the payor’s bank’s website. 

There are pluses and minuses for both models depending on who you are asking (the consumer, the bank, the biller, or the vendor); however, one thing is for certain: this disparate model is ripe for disruption and innovation. 

Catering to the “Just-in-Time” Payor

There is a specific callout for the persona within bill payments that will benefit most from the introduction of faster or real-time payments into the model—the just-in-time payor, otherwise known as “the procrastinator” who often waits until the last second to pay bills. 

Addressing “Disappearing Payments” with Transparency

With bank bill pay services, there is a period where the movement of the payment disappears from view. When the customer submits their payment within the bank bill pay system, they typically receive a confirmation that their payment has been successfully submitted, but there is a twenty-four to seventy-two-hour period where the money itself is in transit, either in the bank’s batch-based system, within the clearing and settlement process in the network, at the merchant’s bank or loading into the system of record at the biller. The payment leaves your account but doesn’t arrive in the merchant’s account for one to three days, potentially creating anxiety for consumers as they have no insight into the status of their payment, damaging the customer experience.  

Real-time payments eliminate this anxiety. As soon as the consumer sends a payment, they receive a notification that the payment has reached the merchant, instantly.  This is the digital equivalent of handing cash over to a cashier at checkout, but better since the merchant doesn’t have to undergo a separate, expensive and time-consuming process to collect the money and later deposit it in their account. The process is fully transparent, unable to be refuted, and instant on both ends.  As Glenbrook Partners states in the report, “Faster payments allow financial institutions to provide consumers with a transparent bill pay experience and billers with improved reconciliation.”

These and many other use cases are contributing to the overall increased availability and adoption of real-time payments by financial institutions. If your institution is not currently exploring how real-time payments can be an integral part of your strategy for customer acquisition and retention, the time to consider is now. 

Updated from a blog originally published July 28, 2020

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Looking Back at AFP 2021

After what felt like an eternity without business travel, the last few months have seen the beginning of a return to normalcy (or at least a normal with social distancing and better hygiene practices than we saw in the pre-pandemic world). Normal for us is setting up booths and seeing our customers and prospective customers out in the market at conferences, shows, and seminars discussing and sharing insights on the payments market. To steal a cliché, we didn’t know what we had until we lost it, and getting back to a face-to-face in person reality was for me at least, the biggest piece of the normalcy puzzle we have been missing. Getting to see friendly faces in Washington D.C. at the first AFP conference in this new era, was a welcome return to convention. The show itself didn’t disappoint from the acceleration of real-time payments, to the market’s “new oil” data, they hit the right high notes, and gave us a few key takeaways. 

Takeaway Number 1: The business payments market is HOT right now. This is sort of a cross over trend from Money20/20 but the business payments market is starting to heat up, and is getting faster… one could say, it’s going real-time. As a certified payments nerd, I tend to get really excited about small changes, which usually takes YEARS to actually take hold in the market. When we first started talking about real-time payments almost a decade ago, the point that often went unsaid is that the environment and systems that were built around the payments in the business market are going to change slowly, way slower than the consumer market (which went bonkers for real-time with Venmo and Zelle in the P2P market about 5 years ago). However, I am here to report, the time is officially here for real-time payments in the business space. The AFP conference had session after session covering all aspects of faster payments. FinTech has turned its focus on this space, and banks have accelerated their roadmaps, and 2022 is going to be THE YEAR for real-time business payments. 

Takeaway Number 2: Usage of Data. With faster payments, comes better data. When you move from systems that were cutting edge when the original Star Wars premiered, to systems that were born in the age of supercomputers, needless to say, there’s going to be A LOT more information coming along with the payment. As an industry, we did a really good job in building work-arounds to this problem with ERP solutions and EDI files to go with PDFs sent via email. However, with the new payment rails, data capabilities you could only dream of 10 years ago and the ability to apply that data is now at our fingertips: cash flow forecasting, working capital management tools, eInvoicing and simple reconciliation processes are all areas where the new data capabilities will pay dividends. 

Takeaway Number 3: Collaboration and Partnerships. I have been somewhat in awe of this trend, but it was on full display last week in Washington D.C.. The question of FinTech, friend or foe, has shifted into “Big Tech, Friend or Foe” and has cleared the way for the clean answer to the first which is a resounding FRIEND. Bank and FinTech partnerships, as well as FinTech and FinTech partnerships, were front and center (at least in the exhibit hall and in the press). The rapidly expanding market, and the speed of change in the market, has created an environment where partnerships will dominate the next evolution of payments. As we moved from on prem, to data center, to cloud deployment models— the technology underpinning the engines and services also changed from proprietary code, to standardized messaging, to open APIs. We went from an extremely difficult partnership environment to one where partnerships can flourish! From solving individual niche use cases, to connecting banks to central payments infrastructure, every aspect of the payment flow is now ripe for partnership(s). Nothing is off the table (and it shouldn’t be)!

Bonus Takeaway: 2022 is going to be the year of in-person events. We got a small taste of this over the past few months, with two major shows returning to their normal calendar positions. Next year, it all indicates that we are going for more in-person events. I for one won’t miss the Zoom cocktail hours of 2020 and 2021. Nothing can replace a good meetup amongst friends and colleagues, and we can’t wait to share one with you all in 2022! 

 Read about Money20/20 in Looking Back at Money20/20. 

Today’s legacy and siloed banking technology infrastructure limit financial institutions’ ability to rapidly innovate. It’s time to look at money movement in a new way. Alacriti’s Orbipay Unified Money Movement Services does just that. Whether it’s real-time payments, digital disbursements, or bill pay, our cloud-based platform enables banks and credit unions to quickly and seamlessly deliver modern digital payments and money movement experiences. To speak to an Alacriti payments expert, please call us at (908) 791-2916 or email info@alacriti.com.

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5 Request for Pay (RfP) Use Cases for Billers

Real-time payments is a critical part of payments modernization. Request for Pay (RfP), is financial messaging scheme built on the rails of real-time payments, that enables billers to initiate real-time payments from bill payees with the click of a button. The request includes all relevant invoicing information, and the payee can pay immediately or at a scheduled time, giving them more control over when the funds are taken from their account. It’s a win-win—the biller benefits from irrevocable, good funds, and the payee gets more visibility and control over when the bill is paid. Here are five use cases for billers that are accelerating the adoption of RfP.

  1. “Risky Payments” or Pre-Collection/End of Service Payments – I am not talking about “Risky” in the Tom Cruise sliding across the floor kind of way, but risky in the sense of a WEB Debit ACH payment bouncing back on the biller for NSF or other reasons. The good funds model that RTP operates on means that the payment will only occur if the funds are in the account. This takes away the possibility of incurring a high fee for attempting to withdraw funds that may not be there. It also gives the bill payee the ability to pay the bill WHEN funds are in the account versus having to try to time the ACH delay. Also, the funds are irrevocable once transferred so billers get certainty of funds, which can allow them to continue to continue their services, or deliver goods to the payee.

  1. Payment Option for the “Just in time Bill Payer” – I will admit, I fall into this category from time to time (or all the time). I seldom pay bills before they are due, and try my best to keep my funds in my bank account for as long as possible, and I know I am not alone. With RfP, billers can provide me the ability to wait until the last second to pay, and receive those funds IMMEDIATELY. In today’s bill payment space, there can be anywhere from 1 to 3 days where my biller really doesn’t know: if I sent a check, paid via ACH from my online bank or from their bill payment site, or whether funds are actually in my account to pay the debit (which brings us back up to the first use case). RfP gives billers another option to help their clients pay, how they want to pay with when they want to pay.

  1. One-Off Bills/Invoices – For high value payments, the RfP rails gives billers the ability to send a one off bill or invoice to their consumer and business customers that can help accelerate their accounts receivable cycle. The message is delivered securely through the RTP network, directly to the payees bank account, where they can simply accept the charges and initiate the payment. By combining the eInvoice/Bill information to be sent on the payment network, the payee has everything in one place—no need to chase down the invoice PDF in an email, or try and locate a paper bill to manually enter details on a payment screen at the biller’s site or on their own consumer or business banking account. This use case will continue to grow in importance as the network’s limits continue to rise!

  1. Conversion of Non-auto/Recurring ACH payers – This use case is similar to our second use case, however I don’t necessarily think this group at their core are procrastinators—they just like to be in full control. For many, setting up bill payment for recurring or auto-pay is so they never have to think about the bill. I can raise my hand for plenty of those types of payments, the ones that are basically the same dollar amount every month and don’t put me at risk of an inadvertent overdraft on my checking account. However, for bills that may vary or come infrequently (maybe quarterly or bi-annually), there are plenty of payees that would prefer to validate the amount of the payment, and control when their payment leaves their hands. RfP gives these individuals the perfect tool to centralize their bills and give them even more control on when the payment leaves their account.

  1. Keeping Pace with a Changing Market – As my colleague mentioned in the Top RfP Test Cases, Use Cases, and Case Studies We’re Watching blog post, some of our markets largest banks and Billers are moving towards piloting RfP. As this new payment experience moves from niche to mass market, making sure your bank can support your ability to bill your clients and offer them the payment services they want is key. The payments market is transforming and consumer and business expectations won’t be far behind!

 

Read about some of the exciting RfP test cases that we’re watching right now in the market today in  Top RfP Test Cases, Use Cases, and Case Studies We’re Watching.

Alacriti’s Cosmos for RTP® enables financial institutions and organizations to quickly and seamlessly connect to The Clearing House’s RTP® network without the burden of significant infrastructure overhauls or capital investments. To speak with an Alacriti real-time payments expert about RfP, please contact us at (908) 791-2916 or info@alacriti.com.

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Looking Back at Money20/20

It took 18 months for me to get on a plane again, get back to meeting with friends and colleagues in person, and to talk payments all day with people just as interested as I am. I had the pleasure of experiencing all of these firsts at the greatest FinTech show on Earth, Money20/20. The location for Money20/20 paralleled my feelings for finally traveling. Much like the experience of the tired travelers lost and wandering in a desert on television shows, Las Vegas is a mirage, rising out of the sand with   towering hotels and casinos. This year’s Money20/20 beckoned us FinTech geeks to meet once again, and oh boy, did we ever! From Sunday’s opening sessions, to being asked to leave the show floor on Wednesday afternoon at 2:00 p.m., we gathered and geeked out!

The show was very different this year, and in an amazingly good way. Smaller than the previous iterations for obvious reasons, the show’s design and flow made it feel both intimate and intensely alive and sprawling simultaneously. Unlike previous years, the show’s main stages were all in the exhibit hall, making it easier to drop into sessions while still keeping a full meeting schedule. The folks that came this year truly wanted to be there, and represented the “doer” class of talent in our industry. Conversations got technical, but that meant relationships and partnerships were getting deeper in every booth on the floor as well as in the appropriately named “Connections Lounge”.

After 18 months of only virtual conferences, it was great to have a full immersive experience and finally get a good pulse on what the big trends are in our industry right now. I can tell you just by looking at the sheer volume of attending companies focused on the fraud ecosystem, fraud is leading the pack on the hot industry topic list.

Trend 1 – The Fraud Ecosystem – Whether it was an AI and machine learning focused company or a company uber laser focused on risk scoring a single data field, or trying to validate a digital identity—the topic of fraud was never far. Entire rows of vendors were dedicated to the space, each looking at a different piece of the fraud puzzle. A truly successful fraud strategy requires a layered approach, and the future of the space is going to rely on the ideas and products we saw this week.

Trend 2 – Small Business Banking – Another welcomed shift in focus on the payment space was a more broad focus on the small business payment needs and B2B payments. Long the forgotten client segment sandwiched between corporate banking and retail banking, the small business space is ready to get the full transformation treatment. The FinTech focus on this was evident all week from the session topics to the vendors on the floor.

Trend 3 – Digital Currencies and Crypto – I think the shift away from being “Bitcoin” centric or focused has been welcome, generally addressing how we get better access from the traditional payments and banking space to the crypto space. While not the hot topic it was a few years ago, the more focused approach on bridging the existing gap was welcome.

Trend 4 – Partnerships –  I had called on this trend a few years ago. Maybe it was the design of this event, and the attendees themselves, but the discussions of who is working with whom seemed to be everywhere. From payments, to fraud prevention, to the aforementioned crypto space, the partnership discussions were all over. As the problems we are trying to solve become increasingly complex, this trend is going to become even more important. The saying “it takes a village” couldn’t be more true.

Trend 5 – In-Person Events are Back! – The final trend is maybe the most obvious, in-person events are back and this week didn’t disappoint. The energy was palpable all week and everyone just seemed genuinely happy to have face to face interaction. It was a welcome change to the endless Zoom/Webex/Teams meetings of the past 18 months. Now to finally see the people that are changing the financial services space and designing what that ecosystem is going to look like for the next generation of products and services. 

 For a forecast of 2022 trends, watch the webinar playback, Top Payment Trends to Watch in 2022. 

Today’s legacy and siloed banking technology infrastructure limit financial institutions’ ability to rapidly innovate. It’s time to look at money movement in a new way. Alacriti’s Orbipay Unified Money Movement Services does just that. Whether it’s real-time payments, digital disbursements, or bill pay, our cloud-based platform enables banks and credit unions to quickly and seamlessly deliver modern digital payments and money movement experiences. To speak to an Alacriti payments expert, please call us at (908) 791-2916 or email info@alacriti.com.

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Faster Payments Use Cases – What Does the Future of B2B Payments Look Like?

When it comes to faster payment discussions, the most popular questions we hear are: 

  • What are some use cases of real-time payments?
  • How do I show an ROI on the investment required to start on a faster payments journey? 

These are great questions, and the fact that we get them in some form in every introductory meeting we have shows us that the market is rapidly gearing up to move forward on their real-time payment projects. When it comes to the questions, answering the first is what leads us to the second answer.

So, where to start with the use cases? Identify if your financial institution has any immediate client needs—taking care of low-hanging fruit and listening to your customer or member base is and always should be step one. Quite frankly, if any are pressing enough, you don’t need to read any further. Get going on your faster payments project ASAP! However, if there are no immediate needs, or a scattering of needs that seem to be all over the place I would offer the following advice.

If you are a financial institution that has both consumers and commercial clients or members, the first use cases of focus should be your business clients. This is because, for all practical purposes, business banking is driven by a fee-based mindset while consumer banking is a free-based mindset. Meaning, as you introduce new functionality or enhanced services, your business clients expect to pay for those improvements. Whereas, as an industry, we have, for better or worse, trained consumers to expect to receive services for free.

Second, businesses of all types benefit from faster access to funds, whether it’s improving their working capital management or procure to pay or order to cash processes. Access to immediate and irrevocable funds helps all aspects of B2B payments.  That’s not even going into the value of all of the data and information that can be sent along with the payment in the new payment rails. This will have a great impact on the eInvoicing and Business Bill Payment models that were built around the legacy payment infrastructures we still currently rely on.

As the adoption of faster payments continues, and more financial institutions connect to the RTP network, and additional clearing and settlement channels come online, offering real-time payments will rapidly become a necessity. Businesses will find faster money movement services from other financial institutions that are connected to these networks and realize the potential they bring to their treasury and operations teams. The subset of use cases for B2B payments is massive, and as noted, are traditionally fee-based. So, the ROI of offering these services tends to become an exercise of setting a price point per transaction (or bundled transactions into a tiered service model) and build out your volume models to show revenue, similar to other payment types. However, as noted earlier, the value of the payment rail is in more than just faster funds movement (which is great on its own). It’s also in the data that moves with the transaction, giving financial institutions the ingredients to create net new products and services, and that is where the true ROI resides.

Learn more in Why Banks and Credit Unions Need Real-Time Payments.

Alacriti’s Cosmos for RTP® enables financial institutions and organizations to quickly and seamlessly connect to The Clearing House’s RTP® network without the burden of significant infrastructure overhauls or capital investments. To speak with an Alacriti real-time payments expert about RfP, please contact us at (908) 791-2916 or info@alacriti.com.

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P2P Money Movement – The Retrospective You Didn’t Know You Needed

Person-to-person money movement is right there with mobile payments as the number one trend over the past fifteen years. It’s been a hot topic at every conference I have been to in my career and is never far from the payments discussion at any financial institution I have ever stepped foot in (over 200 globally at this point). The experience and ease of moving money from one person to another have evolved a lot over the years, now occurring  in milliseconds, whether domestic or global. However, it hasn’t always been this easy and still is inconsistent 20 years after the launch of PayPal, which helped start this whole thing. So let’s take a look back at where we’ve been and where we are going. 

The 2000s – P2P Launches 

It’s weird to think that 2000 was over 20 years ago. I know every generation goes through something like this, but 2000 had so much build-up as the 1990s waned that by the time Y2K arrived, we knew things were about to be different. And as Elon Musk and PayPal launched into revolutionizing payments, another equally important trend was unfolding. Everyone suddenly had cell phones, enabling communication no matter where they were at all times. By the middle of the 2000s, cellphones became smartphones, and in the world of payments, three new companies/products solely focused on money movement from an individual to another individual launched, Venmo in 2009, and PopMoney and clearXchange in 2010. The biggest question I recall from this time was, how to generate revenue from what was free money movement?

The 2010s – P2P for the Masses 

 By 2010, digital banking was in full swing. You could deposit your checks from anywhere with a smartphone though most of us were still getting used to doing that at an ATM versus in the branch. Sending friends money was still dominated by either handing them cash in person, sending them a check, or setting them up on your bill pay center to outsource the check-writing process to your bank. This is unless they were on the PopMoney network or serviced by the same bank. For me, P2P started when a friend mentioned Venmo, and the rest of that story, as they say, is history. My circle of friends adopted the app, and the same few dollars have bounced back and forth ever since! Venmo jumped the shark and got to the consumer market, one that clearXchange and Popmoney had been navigating through the financial institutions to reach slowly and steadily for most of the decade. Then clearXchange merged with Early Warning, and the financial institutions got what they were looking for with the launch of the Zelle Network. Also worth noting here, in 2017, The Clearing House (whose ownership overlaps with EWS) launched a real-time money movement network, RTP®, enabling real-time payments to move instantly from any account connected to the network to another. 

The 2020s – Today and Tomorrow 

Today, the original use case of P2P payments, done by both the P2P closed-loop players, is dominated by CashApp and Venmo. Also in the space is the entirety of the GAFA (Google Pay and Apple Pay) crowd and the dominant player in the bank space, Zelle. The question that irked the market back in the early 2000s remained though. How do I monetize these transactions? For many financial institutions, the P2P space still represented a cost. However, the closed-loop players started to adapt their offering. While the money movement from person to person as well as money into the network remained free, the applications started to introduce fees and new features that started to capitalize on their large user bases. Whether that’s merchant acceptance fees, instant transfers out of the wallet to a bank account, or purchasing crypto, the evolution of P2P has moved way beyond the initial use case. However, simplifying the money movement from one bank account to another bank account is a story that will continue to evolve. With the RTP network gaining in reach and the coming launch of the FedNow network, the P2P space will likely continue to grow and expand, and the ubiquity of reach is getting closer to reality. 

Learn more in the webinar, Payments Modernization Update: What FedNow, Nacha, and TCH Updates Mean to Your Payments Strategy.

Alacriti’s Cosmos for RTP® enables financial institutions and organizations to quickly and seamlessly connect to The Clearing House’s RTP® network without the burden of significant infrastructure overhauls or capital investments. To speak with an Alacriti real-time payments expert about RfP, please contact us at (908) 791-2916 or info@alacriti.com. 

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Buy Now, Pay Later – Good, Bad, or Somewhere in the Middle?

If you hadn’t heard of Buy Now Pay Later (BNPL) before, you probably have by now because over the last 18 months, you couldn’t hide from it. Bringing in some of the largest FinTech valuations, the BNPL space is really on fire. For the skeptics, BNPL represents a questionable foray into getting consumers to overspend on things they don’t need or can’t afford. For the proponents, BNPL represents a far better alternative to credit cards, which often feature costly APRs to access the credit needed to make purchases. Realistically, the truth most likely lies somewhere in the middle of these two sentiments, but what does it mean to your financial institution’s payment strategy.

For starters, I will disclose that I have made a few snap purchases over the past 18 months leveraging BNPL provider offers during the checkout process. The offer to make installment payments at zero percent was certainly a driving factor in that decision. Contrary to the pessimistic POV mentioned above, I had the money in hand to make both purchases. However, the offer of essentially a zero percent loan for 24 months (so long as you make your equal installment payments) was an offer I am just not wired to say no to. The experience on both purchases has been amazing, and the installment payments for one of the items continues on its monthly cadence with a nice text reminder that the next installment payment is about to be made. 

So what’s the big deal? Well, for starters, BNPL offerings are moving up into the checkout stream, as mentioned above. The services themselves are being adopted by a large number of retailers that are looking to take advantage of pent-up demand for purchasing. By offering the BNPL option, they give consumers the choice and convenience with an instant credit offering. In the past, only the largest box stores and high-end retailers would offer this in the form of “store credit cards”. The introductory rate on those offers were, in essence, BNPL type installment offerings. However, the penalty for missing a payment or being late was the same as the standard card offerings or even higher APRs (typically between 20-30%). BNPL has found a nice niche with consumers, and the valuations of the space are eye-popping, indicating this isn’t going to be a trend that will slow down any time soon. 

So how does BNPL fit into your payments strategy? As we’ve discussed in our transformation discussions, getting your infrastructure ready to handle new payment types or use cases is a key step in the journey. BNPL is rapidly changing the payment space, taking a POS purchase and injecting a new option to do installment payments right at checkout. With access to new payment types and rails, new ways of conducting commerce will continue to become available. They will likely “disrupt” payment experiences that are dominated by a single payment option today (e.g., any credit/debit experiences that feature high fees/penalties). The key to a successful payments strategy is to be in a position where you can adapt to the market dynamics at play and have systems that will easily connect to or extend to the new market offerings. Making it easy to link your consumer’s account to their BNPL vendor of choice is a great example— your institution remains the primary account for the consumer while enabling them to transact how they want, where they want. This journey is just starting. What is your strategy going to be?  

Read Digital Transformation – Your Guidebook Has Arrived for the phases of a successful digital transformation journey. 

Today’s legacy and siloed banking technology infrastructure limit financial institutions’ ability to rapidly innovate. It’s time to look at money movement in a new way. Alacriti’s Orbipay Unified Money Movement Services does just that. Whether it’s real-time payments, digital disbursements, or bill pay, our cloud-based platform enables banks and credit unions to quickly and seamlessly deliver modern digital payments and money movement experiences. To speak to an Alacriti payments expert, please call us at (908) 791-2916 or email info@alacriti.com.

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Payments Transformation – The Journey from Engines, to Hubs, to Platforms

*Originally published on CUInsight.com

Transformation is a term that is thrown around a lot in our industry, and when you take a look at banking and payments for the past 15 years—it’s understandable. Many of the back office systems and central infrastructure that keep our economy humming along were designed and coded before I was born (along with anyone else born in the 1980s or later). However, “payments transformation” is more than just taking the existing payment operations we have today forward. Transformation involves simplifying, streamlining operations and then transforming the operation. To fully understand this, it makes sense to examine the market as a whole and what the arc of transformation has looked like.  

Monolithic Engines – For payments, most financial institutions traditionally had one specific solution for each type of transaction. They were built specifically to handle either low value/high volume payments (e.g., ACH Payments), or high value/low volume transactions (e.g., Fedwire or CHIPS). On the retail side of the house you would have additional systems for your card portfolio (e.g., credit, debit, pre-paid). Each of these engines was likely deployed on-premise, though in later years many moved to shared data centers. Due to the customizations that many financial institutions made to these solutions, many still run today!

Payment Hubs – If I knew exactly who coined the term I would give them credit, but sometime in the mid-2000s ‘payment hubs’ became a very hot buzzword. Banks and credit unions started reviewing their payment operations and trying to consolidate their payments infrastructure. During this time there was a lot of consolidation through mergers and acquisitions, so this was a period where many financial institutions had two or three engines for each clearing and settlement rail. The payment hub was a way to start that consolidation strategy—bringing the overlapping solutions together in a systemic approach, and attempting to bring both the high value/low volume and low value/high volume systems together from an operational perspective. The biggest headwind payment hubs faced was they were often defined by “rip and replace” projects due to their high price tags. 

Payment Platforms – The evolution of the payment hub discussion has brought us to where we are today. In addition to the heritage payment types that have shaped and defined our money movement experiences for the last 40 years, we now have to adapt to new real-time payment types. Real-time payments are defined by their always-on, always-available nature and their settlement requirements, which puts new demands on  operations. While the payment hub was focused on bringing the heritage payment world together, the payment platform is focused on creating a new base to grow outward from. It builds on the ideals of consolidating operations for payments into a single solution. However, the real value is giving institutions a composable platform in order to deploy and connect to multiple payment clearing and settlement systems. In other words, simply and seamlessly giving them the ability to adapt to market demands as they grow or change. With payment platforms, having to “rip and replace” existing infrastructure was eliminated due to their cloud-based deployment. Cloud-based solutions lower the cost of entry to a point where many financial institutions can start their journey with a single payment type and evolve the strategy to coexist with existing infrastructure within the institution. 

No matter where you find yourself on the payment transformation journey, our market continues to adapt and change. It’s an exciting time to be a part of this industry and I can’t wait to see where these new payment types take us and what new value they create for our economy at large. 

Learn more about payments transformation in the webinar, Payments Modernization Game Plan: Moving Forward with Existing Infrastructure. 

Today’s legacy and siloed banking technology infrastructure limit financial institutions’ ability to rapidly innovate. It’s time to look at money movement in a new way. Alacriti’s Orbipay Unified Money Movement Services does just that. Whether it’s real-time payments, digital disbursements, or bill pay, our cloud-based platform enables banks and credit unions to quickly and seamlessly deliver modern digital payments and money movement experiences. To speak to an Alacriti payments expert, please call us at (908) 791-2916 or email info@alacriti.com.

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Payments Modernization – What to Look for in a Fedwire Solution?

Payments modernization strategies can be tricky. On the one hand, many organizations, from large multinational banks to smaller local credit unions, have well-established payment operations to support existing volume and products today. On the other hand, the U.S. is starting to adopt faster and real-time payments en masse, opening up a slew of questions on how to support the new use cases and growing demand from their client bases—within the confines of those well-established payments operations. This conundrum puts pressure on financial institutions, 9,500+ in all, to rethink their payments strategies, and look to modernization. However, there is still a need to support the existing payment needs for heritage payment types including ACH and Fedwire. Which leads us to our question of the day, what should you look for in a new payments platform?

Fedwire isn’t a new payment type in the U.S. In fact, it’s far from it. I have mentioned in prior blogs that it is the “OG” when it comes to real-time payments in the U.S. since it is and has been our Real-Time Gross Settlement system since well before my time. The system itself pre-dates the Titanic and has moved along a digital journey through most of the 20th century, with upgrades coming as technology advanced from telephonic to internet-based. In today’s market, the solutions that support Fedwire, for the most part, rolled off the production line more than 25 years ago and have been cranking away ever since. As the years have rolled on, the Fedwire process itself hasn’t changed that much. The window still opens in the morning and closes at night, much like it did when bankers would bring their instructions down to the Federal Bank of New York in the early 1900s to settle their accounts and enter their transactions. Overnight the systems on both ends run through their batch-based processing cycles, and they’re up and running again (so long as it is a Monday-Friday and non-holiday).

Today’s market needs have started to stress these older systems, beginning with the rollout of digital banking options in the late 1990s and early 2000s and growing exponentially in the last ten years or so. As technology advances, we are at an interesting inflection point for Fedwire solutions for the masses (smaller regional banks and credit unions). 

From my perspective, new solution searches should focus on the cloud. For starters, it gives banks and credit unions a much lower point of entry in terms of having a Fedwire solution (beyond just a fed terminal in the bank to manually key in payments). Additionally, it allows everyone to stay up to date on third-party upgrades and security updates from a tech behemoth (whether that’s Google, Microsoft, or Amazon). All of whom have deeper pockets than any individual entity or hosting facility would have. Also, the geolocation issues that arise from physical data centers are more or less neutralized with cloud-based computing. 

But the cloud by itself isn’t enough. The next big thing is making sure the product/solution is built for and on the cloud. Taking a big monolithic application and deploying it on AWS or Azure brings the same problems that exist on-prem and in data centers. It is costly to maintain, at least way more costly than a solution built with the tools from the cloud provider, so look for what tools the product uses and what technology it is taking advantage of. For the record, Alacriti is Amazon WAR (Well-Architected Review) certified. 

The final thing is to dig into the engine process itself. Ask, what is the solution’s native standard? For many older applications and Fedwire itself today, the messaging standard of the solution is proprietary. The Federal Reserve announced in 2018 that they would be moving the Fedwire system to the ISO 20022 standard, which is also leveraged in its FedNow network. While the solution today uses a proprietary based messaging protocol, the future of Fedwire is ISO-based, so look to solutions that are also handling the message natively. 

Due to the aforementioned reasons, Alacriti’s payment solutions are both cloud-native and ISO 20022 based. Alacriti’s Cosmos Payment Services supports real-time payments on the RTP network, ACH, and Fedwire payments, giving institutions a future-proof platform for payments innovation. 

More on Fedwire in Will Faster Cannibalize Your Fedwire Revenue? 

Today’s legacy and siloed banking technology infrastructure limit financial institutions’ ability to rapidly innovate. It’s time to look at money movement in a new way. Alacriti’s Orbipay Unified Money Movement Services does just that. Whether it’s real-time payments, digital disbursements, or bill pay, our cloud-based platform enables banks and credit unions to quickly and seamlessly deliver modern digital payments and money movement experiences. To speak to an Alacriti payments expert, please call us at (908) 791-2916 or email info@alacriti.com.

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EBPP for Commercial Clients—How Banks Can Defend Their Turf

Treasury services is a complex labyrinth of needs that goes way beyond just having good rates and available credit. Banks that are successful in the space have great talent in their relationship managers and excellent financial products to meet their clients’ complex needs. They also have the products and services to help their clients manage the money coming in, going out, and maximizing their working capital in between. It’s already extremely complex and is becoming more and more complicated by the introduction of FinTech players that sell services directly to the market. At first, they started to disintermediate the banks on the periphery with services aimed at very specific segments, such as accounting software packages, point-of-sale terminals, bill payment services, etc. However, FinTechs have now begun to move more directly into the core aspects of the relationship with lending services and access to capital. What can banks do to defend their turf? The answer is in partnerships! 

Looking at your portfolio of products and services is a great place to start. When you think about the portfolio, having best-in-class technology vendors (you can think of us as the “good” FinTech) is a key to defending the business. Just having the “check the box” offering instead of best-in-class is how many banks find themselves significantly behind in their digital pay offering. Make sure you’re staying up to date with the space, especially since technology started advancing at a relatively quick rate about 10 years ago. 

An area that we have a particular focus on at Alacriti is our EBPP solution, Orbipay EBPP. The solution gives your treasury customers a best-in-class bill payment system to not only send bill information out to their customers but accept payments back through all of the modern payment options that consumers have grown to expect. 

Having a comprehensive bill payment solution in the treasury sales toolbelt helps to ensure the commercial clients are kept happy and satisfied—and most importantly IN your product portfolio. This is versus your business client’s going out to the FinTech market to replace that part of the puzzle, which puts the core lending relationship closer to “at risk.” Having a great bill payment solution isn’t the only piece of that complex puzzle, but it’s one that has more visibility than most people realize.

Read Busting 5 Common EBPP Myths for a better understanding of EBPP.

Alacriti’s Orbipay EBPP is a customizable electronic billing and payments solution for businesses and financial institutions of all sizes. Ella is an AI-powered chatbot that facilitates seamless, personalized, and context-aware interactions between you and your customers through messaging apps, intelligent personal assistants, and directly on your website. For more information, please contact us at info@alacriti.com.

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Request for Pay (RfP)—Exploring the New Frontier of Bill Payments

When The Clearing House (TCH) launched the first new payment rail in the U.S. in over forty years, most of the focus (rightly so) went to the money movement functionality of the system. TCH’s RTP® Network officially brought the U.S. market to the modern money movement scene. Finally, we had a real-time payment system where money could move from an account at one financial institution to another “instantly.” At the same time, another less-heralded functionality was introduced, and until the last few weeks of news, was largely out of the public eye. That functionality has the potential to revolutionize the bill payment space as we know it, and it is called Request for Pay (RfP). 

Globally, Request to Pay (as it is known in the U.S.) is an emerging “payment” channel. It’s important to note that all of the real-time payment systems globally are based on a credit push model, meaning that the individual or company paying must initiate the transaction. Therefore, you can’t give a company permission to debit your account in the same way the ACH network works.This design is to help mitigate fraud, which is an important feature  due to the irrevocable nature of real-time payments. However, without debit functionality, there’s no way for  a company/person to send a “request” to be paid for a good/service. For example, if applied to a P2P scenario—a request to split a dinner tab or concert tickets. The solution was to initiate a request that can be sent directly to the recipient’s financial institution through the payment network, turning the payment rail into a super messaging system as well! 

The potential utility for RfP is significant—around 65% of the 15 billion bills consumers pay annually are not recurring payments. They’re performed as a one-time exercise. And about 75% of those non-recurring bill payments are done through a biller website. That’s a lot of user names, passwords, and inputting of information for each consumer—a stark contrast to the centralized RfP experience.  

Many of you likely have already experienced this workflow in the closed-loop P2P offerings we all use in our personal lives. When you open up the app to send money to a friend, there are options to pay someone or request to be paid. Now imagine this at a grand scale where the request can actually go to ANY bank account in the U.S., and you can see why both financial institutions and businesses are so intrigued. This capability unlocks the possibilities for both consumer bill payment experiences as well as business invoicing and treasury payables and receivables. The functionality is not only in TCH’s RTP network but is also supported by Zelle and will be a key concept in the Federal Reserve’s FedNow network. 

In some markets, non-bank RfP solutions are already available and target businesses directly. So already, it’s important for financial institutions to take this opportunity sooner than later. RfP holds a lot of promise, allowing financial institutions to create new revenue streams and engage consumers in a new way. 

Learn about the different ways your financial institution can connect to RTP in RTP: How to Connect?

Alacriti’s Cosmos for RTP® enables financial institutions and organizations to quickly and seamlessly connect to The Clearing House’s RTP® network without the burden of significant infrastructure overhauls or capital investments. To speak with an Alacriti real-time payments expert about RfP, please contact us at (908) 791-2916 or info@alacriti.com.

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Will Faster Payments Cannibalize Your Fedwire Revenue?

It’s been four years since the launch of The Clearing House’s RTP Network, and as the market continues to embrace and grow the network, one question that many bankers have asked me over that time is, “What will happen to Fedwire?” It was a fair question in 2017 and becoming an ever more readily asked question in 2021, especially as the Faster Payments market matures and new rails come online (we are talking about you, FedNow)! But what will happen to that revenue is a great question. It’s something that many financial institutions will have to grapple with in the coming months and years as the use cases for faster payments grow exponentially and clients start to embrace them—both at a business level and for consumer money movement expectations.

Why would Fedwire revenue be at risk? Well, for one, it’s the “OG” faster money movement system in the U.S.—if you needed to move a large sum of money during business hours, you inevitably used Fedwire to do it (or its cousin from TCH, CHIPS). And I’ll tell you what, it worked! Even as a consumer, I could send money instantly through the Real-Time Gross Settlement system for a small fee of $30-$50, which, if you are moving money for closing on a home, for example, represents a very small percentage fee. The system has worked for the better part of the last half-century and has become a backbone to the U.S’s financial system, used by the largest corporations to move money to meet their needs. Hence the common lingo of “wire me the funds…”

This was all good when the initial use cases of peer-to-peer money movement dominated the discussions on real-time payments ten years ago. Those transactions looked more like the small-dollar or high-volume transactions you’d see in the ACH world that had 2-3 day settlements at the time. However, as the dollar limit increased, the discussion in the U.S. market started to shift. The dollar limit shifted from $25,000 at RTP’s launch to the current $100,000 network limit. Also, there have been announcements about the Same Day ACH limits moving to $1,000,000 next year. There are a decent number of transactions from both the consumer market and business market that, five years ago, were nowhere near the value that was in scope of these new payment rails. With the limits increasing, these transactions are now candidates to move off of the higher cost Fedwire system to the lower cost, modern money movement networks.

So how do you protect the current revenue streams associated with Fedwire? The answer is that you can’t look at the revenue today as you would tomorrow. For one, the rich data that moves with real-time payments in the ISO 20022 model is extremely valuable to business users. As new invoice and remittance data start to move away from email (or even snail mail), users will start to realize the time savings and cost savings associated with the more modern money movement set, which is going to lead to new business models and services that financial institutions provide. Can you charge the same dollar for dollar you did for just the money movement? No… but can you charge for the full end-to-end service and reconciliation for the business? Of course!

Part of payments transformation is breaking down the existing product set and business models in place today and rethinking/rebuilding them for the future of money movement. It won’t be a straight line experience, and there will be growing pains along the way, but the value and ability to think through the full product, solution, and service stack and truly focus on the value creation that is possible with faster money movement capabilities will be the key to unlocking even greater and larger revenue streams. 

For an overview of faster payments and use cases of real-life applications, read the blog Faster Payments: Full Speed Ahead. 

Today’s legacy and siloed banking technology infrastructure limit financial institutions’ ability to rapidly innovate. It’s time to look at money movement in a new way. Alacriti’s Orbipay Unified Money Movement Services does just that. Whether it’s real-time payments, digital disbursements, or bill pay, our cloud-based platform enables banks and credit unions to quickly and seamlessly deliver modern digital payments and money movement experiences. To speak to an Alacriti payments expert, please call us at (908) 791-2916 or email info@alacriti.com.

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Biometrics in Payments—Dropping our Collective Masks

This isn’t a discussion on the benefits of masks… but instead, how to look forward in the payments space, particularly as faces start to re-emerge and one no longer needs to pay with their passcode at the POS (and beyond). Let’s talk about the state of the biometrics space and what we can all collectively look forward to as our payment roadmaps kick back into high gear! Here are the top five trends we’re watching: 

Facial Recognition Payments

Probably the easiest and most broadly used biometric payment methods today in the U.S. are Google Pay and Apple Pay. I know there are a lot of added features beyond just the biometric capabilities of FaceID and Google’s facial recognition and fingerprint capabilities. But the value of just being able to pay by scanning your facial features is something we’ve all missed at the point of sale, and now it’s part of the Orbipay platform as well, making the payment as simple as looking at your phone. 

Vein Scanning Payments

Hitachi’s Finger Vein Technology is one that definitely makes you think of a science fiction novel, but it’s actually real life, and it’s been in-market for about as long as the iPad. The vein scanning technology has evolved and became significantly cheaper over time. While banks have been using it in branches in some European and Asian markets for some time, it still hasn’t gained significant traction in the U.S. More to come in this space for sure, especially as the technology hops to mobile devices vs. physical scanners, but for now, we’ll categorize this in the “emerging” category. 

Palm Reading

Amazon One Capabilities – The palm has a whole new meaning in payments… it’s now a secure way of paying at the Amazon Go stores. By leveraging your palm at the point of sale, you’ll be able to pull up the saved payment method and carry on your way. 

Voice Recognition

Much has changed since the “Big Boy” days of voice recognition software and horrible IVR experiences of yesteryear. Today, voice recognition is an extremely secure way to pay, with integration into Amazon Alexa or Google Home. Being able to authenticate oneself via voice recognition and then execute a transaction or complete an order has never been easier. Having a plan to integrate voice recognition in place is certainly a must-have method of payments.

Behavioral Biometrics

Another area that gets a little less focus but is just as important is the behavioral aspect of authentication. Keystroking, or how a consumer enters information on a keyboard, actually has associated identifying markers. Technology can use machine learning to identify the habits of consumers—when they log in, keystrokes, swipe patterns, scroll speed, etc.—and flag discrepancies as possible fraud. How much money consumers regularly move is also on the behavioral spectrum, though maybe just outside our biometric topic. 

At the end of the day, many of these items may still seem foreign to us. But relying on a password and username is no longer enough. As our lives accelerated in the digital space over the course of the pandemic, it’s going to be hard to put that contactless experience back in the box, and biometrics is a key to keeping those experiences secure and safe for all of us. So whether you wink, nod, wave, or smile, expect biometrics to be part of your payment experience. 

More on security in The Swift Approach to Payments Security.

Today’s legacy and siloed banking technology infrastructure limit financial institutions’ ability to rapidly innovate. It’s time to look at money movement in a new way. Alacriti’s Orbipay Unified Money Movement Services does just that. Whether it’s real-time payments, digital disbursements, or bill pay, our cloud-based platform enables banks and credit unions to quickly and seamlessly deliver modern digital payments and money movement experiences. To speak to an Alacriti payments expert, please call us at (908) 791-2916 or email info@alacriti.com.

Alacriti Blog

Digital Transformation – Your Guidebook Has Arrived

In one way or another, the same question about digital transformation is asked in nearly every panel or presentation I am a part of. Where should I start? It’s a tricky question to answer, as every financial institution finds themselves somewhere different on their digital transformation journey. Looking at the journey in phases may help make a digital transformation more manageable and more focused to help bring customers and members better experiences faster, while minimizing the impact on the day-to-day realities of running a financial institution. So what are those three phases?

Phase 1 – Peripheral Innovations 

When you look at the journey, this is usually the easiest place to start. It’s about working on solutions that would sit next to your existing infrastructure and not require re-working solutions you already have in place. Peripheral innovations involve looking at a single use case or offering, whether that is a P2P product/solution or a new loan payment system. Starting with peripheral innovations at your institution is minimally invasive. As you may guess, they don’t require much more than a simple core API call or light batch-based integration. They may potentially call for an SSO or an embedded experience into your online banking solution, but minimal effort is needed in terms of internal employee training. It will require working with your end-users, but ultimately the new experience and or service will be net positive, and again depending on the use case, minimal in impact. Customer experience is really where this innovation area is focused. Peripheral innovation was once the world of the “garage” or “innovation lab.” Today, cloud-based solutions and platforms are readily accessible for financial institutions of all sizes. These scalable solutions require minimal investment and internal resources as you start your journey. 

Phase 2 – Existing Product Enhancements/Extensions and Co-Existence

In the next phase of the journey, we move into slightly higher impact areas. Switching vendors or solutions live in this realm. The impact levels in this phase are high because you are changing existing experiences and functional items within the FI. Looking at this through the digital transformation journey lens, this step is where you are really tackling your existing product set and trying to enhance/extend your current offerings, moving from an older generation of online banking to a new digital banking offering. This phase is where we really start to build the bridges from older solutions and infrastructure to migrating to volume-based use cases. This phase in the journey is the hardest one to tackle as you are directly impacting experiences. This was also traditionally the domain of “rip and replace”, which gave many in the industry anxiety over the past two to three decades. Similar to the peripheral innovation layer, cloud-based solutions enable financial institutions to maximize their existing investments without sacrificing their digital transformation journey goals. Cloud-solutions designed to scale on demand make running a coexistence strategy to safely and comfortably migrate volume possible.  

Phase 3 – Digitally Transformed 

The promised land…or at least the promised ecosystem. Once you have reached our third phase, you are running an infrastructure that supports open APIs and is driven by microservice-based architecture. The ability for you to quickly add new functionality is now possible due to the easily accessible nature of the microservices within the application layers you have deployed, all tied into a real-time core banking system. Adding new channels of engagement, whether it’s IoT or channels such as voice or augmented reality, your ability to extend services is no longer based on the inability of your infrastructure to support it. It is based on whether the market is ready for your innovative services. You now can be fully proactive, working with your customers to identify areas of need and innovation versus reacting to their needs you haven’t met.  

If you look at the journey holistically, the digitally transformed promised land may seem far-fetched, or at least something that is a decade away. In reality, there are steps your financial institution is likely already taking in phase one to make this reality closer than you think. So break your process down, look at use cases or business models that need help immediately and look for solution providers that have the platforms and tools available to help your institution take the right steps on your journey towards a digital transformation promised land. 

What does digital transformation mean to account holders? Read Payments Modernization: An Account Holder View. 

Today’s legacy and siloed banking technology infrastructure limit financial institutions’ ability to rapidly innovate. It’s time to look at money movement in a new way. Alacriti’s Orbipay Unified Money Movement Services does just that. Whether it’s real-time payments,  digital disbursements, or bill pay, our cloud-based platform enables banks and credit unions to quickly and seamlessly deliver modern digital payments and money movement experiences. To speak to an Alacriti payments expert, please call us at (908) 791-2916 or email info@alacriti.com.

Alacriti Blog

When Compliance Leads to Innovation

It’s that time of year when the compliance officers around the world are looking at their product teams to do their quarterly/annual compliance reviews and reports. An annual necessity that usually involves Alka-Seltzer tabs and some late nights. However, what if we looked through a different prism and thought about this annual compliance review as an opportunity to identify areas for innovation? With network rule changes, such as Nacha’s new compliance rules, many of us are making changes to our systems or processes, but I wonder how many are taking a step back to think about how they could leverage this moment to think bigger? 

Let’s take a specific example and talk about the account validation process for a second. Nacha’s rule change for account validation is specific to the ACH channel and simply states the following (from the Nacha Website).

“Currently, ACH Originators of WEB debit entries are required to use a ‘commercially reasonable fraudulent transaction detection system’ to screen WEB debits for fraud. This existing screening requirement will be supplemented to make it explicit that ‘account validation’ is part of a “commercially reasonable fraudulent transaction detection system.” The supplemental requirement applies to the first use of an account number, or changes to the account number.”

For one, this sounds like a great idea! Why not take the logic to go beyond just ACH as a simple first step and apply it to all of your payment channels? By thinking about compliance as a “check the box” affair, we wouldn’t be thinking about all payments and the value that this rule change will bring to other clearing and settlement networks. We’d just implement and move on. Also, we may not explore options available to us to make that a reality and would only focus on our ACH third-party providers, doubling down on the segmentation of our payments strategy. 

Beyond our shores, we don’t have to look any further than the UK for where this account validation process takes the next step to actually being a user enhancement fraud-fighting tool. The UK has a process for “confirmation of payee” where the account ownership is shared back to the initiator to validate not only that the account is a real account and doesn’t have any fraud flags, but that the name of the owner actually matches what the consumer expects. This helps combat growing categories of fraud such as BEC (Business Email Compromise) attacks where someone poses to be someone else and just asks them for immediate payment to an account. The most interesting example of this was a football club (soccer team if you’re speaking U.S.) nearly sending a $1.25m transfer fee for a player to a fraudster. 

So long and short, we implore you to think about compliance beyond the checkbox. Take a step back and think about what the rule changes are all about in the context of your payments strategy. See if it makes sense to go beyond just complying and leveraging the intent of compliance to innovate your offerings and enhance your customer experience at the same time. 

Read the blog, Rule Changes and the Opportunity for Innovation. 

Stay compliant with Nacha’s Web Debit Rules with a preferred Nacha partner. To find out how your organization can benefit from Bank Account Validation Service, contact us at (908) 791-2916 or info@alacriti.com.

Alacriti Blog

What Faster Payments Can Do for Your Industry

One of the most rewarding aspects of my role at Alacriti is the opportunity to work closely with our market’s thought leaders and the financial institutions that are on the bleeding edge of the payments market. As Alacriti’s representative on the U.S. Faster Payments Council, I have the pleasure of working on the Education and Awareness work group. As a part of that, I have been exposed to discussions on possible faster payments use cases across the market. It’s a big-picture group working on expanding the horizons of payments and trying to push them to the edges. This is all while thinking about each player in the market. Whether that’s a financial institution, a merchant, a government entity, or an individual, there are use cases that touch all of us. So what does this mean for your industry? 

Governments

Let’s start with the hot topic since one, we are coming into the heart of tax season, and two, another round of COVID-19 Stimulus has started to trickle out. Governments stand to gain tremendously for faster payments, primarily because the receivers of those payments are taxpayers and citizens like you and me. Speed is the name of the game for government disbursements, and enabling receipt of those payments via a faster payment system is something I think everyone could agree on. On the other side of this, waiting to pay your tax bill until 11:59:59 pm could be made possible with faster payments. Keeping the money in your account until the last minute could also be a value add.  Although unfortunately, it won’t lessen the tax bill, it could alleviate any cost of a late payment!

Insurance

Speed is the name of the game when it also comes to customer satisfaction in insurance disbursements. Often emotionally charged, insurance payouts, whether it’s property & casualty or health-related, have a critical timeline. Getting dollars in hands is an imperative that faster payments can deliver to this industry. Since checks are still dominant in this space, faster payments offer a clear advantage to current workflows in the market. Simplifying the payout process for the consumer or business can lower anxiety and create a better overall experience. This is a win-win scenario. 

Financial Services

Looking at banks and credit unions, one usually doesn’t think about the outbound payment workflow from their accounts as a driver of value. However, speed is the name of the game today in terms of options such as merchant advances or loan disbursements/funding. Faster payments offer FIs the ability to quickly move money and get it to the destination account faster, an improvement over many of today’s available workflows. This, in turn, could speed up revenue realization or, even better—create net new fee revenue opportunities like pre-funding receivables for merchants. 

E-Commerce

2020 was a dud in some aspects of the economy, but eCommerce was a shining/glowing/on fire spot of the economy as we all turned to our devices to buy things to keep our sanity while in our own safe, confined spaces for the past year. The rise of eCommerce marketplaces where individuals could sell their goods/services/and crafts created a whole new ecosystem requiring payout services. The faster those transactions got to the end merchant, the quicker the next stack of tchotchkes could make it to the marketplace. Also in this category was the growth of Buy Now/Pay Later (BNPL), where you could buy that new Peloton Bike to cycle your days away. Switching out traditional credit card purchases to installment payment plans isn’t necessarily new, but making them simple to apply for as well as part of the in-payment checkout experience exploded over the past 12 months. The value that faster payments could bring will continue to drive use cases for the BNPL space and other FIs looking to enter the game. 

While not an industry, I can close this with the discussion on what faster payments mean to the individual consumer. For me, the biggest value that faster payments will bring is the clarity of where your money is at all times. There are times in financial lives where money is “in-between” where it came from and where it’s going, primarily due to the legacy payment systems much of our financial services market relies on. As faster payments become more broadly available, the day-to-day financial management of one’s personal accounts will simplify, and the concept of a “memo post” or “available balance” will become a thing of the past. The money is there, or it isn’t; your biller got paid, or they haven’t. The distance between everyone will be shorter, making everything more efficient and unlocking new opportunities for innovation all around us!

Read how COVID-19 affected industries in the article: Looking Back: The Impact of COVID-19, Broken Down by Industry

Alacriti’s cloud-based platform, Orbipay, delivers solutions across the payments ecosystem, including The Clearing House’s RTP® network, Electronic Bill Presentment and Payments (EBPP), and Digital Disbursements. To speak with an Alacriti payments expert, please contact us at (908) 791-2916 or info@alacriti.com.

Alacriti Blog

Microservices and API Architecture: Lesson 2

In Lesson 1, we discussed how microservices and APIs are integral to payments digital acceleration. Having an API strategy allows ecosystem participants to easily connect to one another,  as well as build workflows and new solutions that take the best available ‘service.’ This frees the organization from having to get everything from one provider. Here, we will discuss two API prefixes we see regularly, RESTful and Open, and what they mean to your strategy.

“A RESTful API is an architectural style for an application program interface (API) that uses HTTP requests to access and use data.”  In other words, it’s an architectural style for communications often used in web services developments. Simply put, it’s the language of the web.

RESTful APIs are not a new concept per se. However, RESTful APIs are dominating the integration market today—they are the “glue” that brings everything in our space together. It uses less bandwidth, which is ideal for efficient internet usage and hence cloud services.

Taking the API discussion one level higher, we reach “Open APIs.” “An open API, also called public API, is an application programming interface made publicly available to software developers. Open APIs are published on the internet and shared freely, allowing the owner of a network-accessible service to give universal access to consumers.”

Open APIs are designed to be exposed to external developers who can easily integrate them into their applications with minimal interaction with the API owner. They are simple and easy to understand, meaning you don’t need to be a payments expert to leverage a payments API. An example of this would be the STRIPE checkout API. It’s simple, easily understood by the developer, and can be built directly into another application without complicated back-and-forth between the organizations.

The main question for any financial institution should be how ‘open’ their organization wants to be with their API strategy. Whether you only expose your APIs to internal developers, enable permission access to selected partners, or go fully open is really a personal question unique to each business. But having an API strategy in place as you start the journey is the first step!

Alacriti offers an API First and Microservices based architecture on a cloud-based platform, Orbipay, with solutions for real-time payments, EBPP, and digital disbursements. This provides a flexible integration framework to enable easy integration with internal systems (core banking, fraud, risk management, etc.), and your organization can easily add support for new payment schemes as they become available.

To speak with an Alacriti payments expert, please contact us at (908) 791-2916 or info@alacriti.com.

Alacriti Blog

Picking Up Speed: FedNowSM Service to Launch in 2023

Last week the Federal Reserve announced that they’re on track for a 2023 launch of their FedNowSM Service. Since then, I have been getting asked the same questions from both prospects and customers: What should I do? How does this change the faster payments game? What does it mean to me? Luckily enough, I am an opinionated person who’s been around the faster payments market for more than a decade, so I can impart a few nuggets of useful information to inform your next steps. 

First, the update is great news for our market. Competition is good, and options are even better. The more choices we have, the better the services we can create for our customers. For that reason, I am extremely excited by the Fed’s announcement. Full disclosure, we have been talking with the Fed in recent months about the FedNow ecosystem, and we will be participating in their pilot program in the coming months. This is yet another example of our participation in various industry groups involved in payments modernization. Sharing our expertise is important—we also joined the U.S. Faster Payments Council in the summer of 2020.   

So what does this mean if you’re in the process of selecting a faster payments path for your institution? The announcement may seem like a big old yield sign as you approach the intersection, but in reality,  it really shouldn’t have an impact on your decision process. The use cases and client problems we are trying to solve are agnostic to the clearing and settlement networks themselves. There are plenty of good reasons to connect to a specific network for clearing and settlement, whether it’s TCH’s RTP,  Visa Direct, or the upcoming FedNow. However, the biggest priority to consider is what problem you’re trying to solve for your customers or stakeholders. Next is what options are available today in the market, and then whether these options provide you with the flexibility to adapt as the market moves forward.  

That last point is an important one to keep in mind as you look at your plans for faster payments and payments transformation. Because as the announcement last week points out, the only thing we know for sure is that the market will continue to accelerate and change. 

Alacriti Blog

Microservices and API Architecture: Lesson 1

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What is your API strategy? It’s a common question that we talk about regularly in the market, but what sounds like a fairly simple question can quickly turn into a very technical and detailed discussion. With microservices and APIs being at the forefront of payments digital acceleration, it’s important to fully understand what they actually deliver. In order to cut through some of the confusion that can be associated with the subject of API strategy, it would be prudent to break down the topic into some consumable (you may say micro) bytes.

First, let’s discuss microservices. Microservices are really just a set of fine-grain operations—instructions for software to do something. And what is an API? Well, I’m glad you asked. An Application Programming Interface (API) is a technical construct that enables software to talk to one another. If APIs are the glue, the microservices are what the glue is attaching to. And by the way, a recent study by Cornerstone Advisors showed that 53% of financial institutions have already deployed APIs, and 24% planned to invest and/or implement in 2021.

If you want to think of this in a hierarchy, APIs would be at the top of the list, which is a catch-all for both points of integration as well as a product’s list of services. Following that, you would have ‘coarse grain services’, which get you full end-to-end functionality of a product. You can think of this as a form sheet that would have: name, house number, street address, town, state, and zip. With the coarse grain service of a customer mailing address, the API strings together a bunch of microservices delivered in one payload of code. The third level down, you would have microservices that get you a specific feature or item within that product. Using the above example, it would be just “name” or “street”.

The key factor in a modern architected solution is being able to get down to microservices, and leveraging those instructions in larger workflows. An API strategy allows ecosystem participants to easily connect. Even better—a full API strategy that focuses on microservice-based architecture and enables the ability to build workflows and new solutions that take the best available ‘service’ rather than having to get everything from one provider. That’s what we mean when we talk about a holistic API strategy and one that will unlock the true potential of digital acceleration!

Alacriti offers an API First and Microservices based architecture on a cloud-based platform, Orbipay, with solutions for real-time payments, EBPP, and digital disbursements. This provides a flexible integration framework to enable easy integration with internal systems (core banking, fraud, risk management, etc.), and your organization can easily add support for new payment schemes as they become available.

To speak with an Alacriti payments expert, please contact us at (908) 791-2916 or info@alacriti.com.