A world without cash and with real time payments

In June 1967 what is considered to be the world's first ATM was installed at a branch of Barclays Bank in Enfield Street, London. Nearly half a century later, cell phones want to unseat ATMs and put a stop to using cash.

José Luis Sancho, managing director of Accenture Digital, highlights in this interview in Expansión newspaper that "Mobile payments will be the next wave of disruption in world trade" and emphasizes their strength: "In the US, millennials are, right now, the largest population segment in the labor market. In Spain, 40% of millennials constantly purchase online. It is a wave of change that is already here."

The Accenture report Real-time payments for real-time banking reaffirms this idea of the strength of mobile payments. The adoption of mobile peer-to-peer (P2P) payments – system for making payments through cell phones that makes it easy to send money without the need for an ATM or a card – is a key driver. In Accenture’s 2015 North America Consumer Payments Survey, 46% of the 4,000 consumers surveyed had used a real-time mobile P2P service such as Venmo or PayPal, with 15% using them regularly.

Consumers consider being able to make mobile payments vital and they would therefore change bank to get access to immediate payments. Of the over 2,000 people in the UK surveyed by YouGov for ACI Worldwide, almost half (45%) said the promise of a faster and more convenient electronic payment service would encourage them to move their account to a different bank.

Some common characteristics of immediate payments:

- 24x7 availability: consumers should be able to make or receive a payment at any time of day or night, any day of the week.

- Immediacy: the funds being transferred should be available in the recipient’s account in real-time or near real-time.

- Irrevocability: once a payment has been received, it cannot be revoked.

- Certainty: both payer and recipient must be notified in real-time that the payment has been accepted or rejected by the recipient’s bank.

- Richer data standards: most real-time payments schemes across the world standardize data sets to enable greater interoperability, improve payment efficiency and carry richer information with the payment. ISO 20022 is increasingly becoming the standard for financial processing, including for many of the new immediate payment systems.

- Alias/proxy/tokens: In parallel to the demand for immediate payments, there is demand to proliferate ways to connect and transfer funds real-time between parties in the digital economy. This requires the use of addressing databases linking aliases such as mobile phone numbers, email addresses, social media ids, or virtual account numbers to bank account information. Paym in the UK is an example of this.

"Placing real-time payments at the heart of the digital economy" is the title of the post on this report. A text emphasizing that, “Banks have to connect bank accounts, digitally-enable them to make payments, at any point in the ecosystem through any device. If banks are not enabled in the digital economy, others will step in, relegating bank accounts into “dumb” accounts to feed the digitally-enabled accounts of others. Banks will lose direct connection and a daily point of interaction with their customers”.

It concludes, “Banks must shift their mindset and should not aim to own the entire set of innovation. They have to collaborate with new innovative players."