Payers and Payees more than ever connected with Request to Pay
The payment landscape is experiencing a deep revolution with the introduction of real-time banking, the rise of digitalisation and new customer expectations.
Real-time payments are becoming the “new normal” for both domestic and cross-border transactions. In order to leverage the opportunities of such evolution, payment infrastructures need to be fast, available 24/7/365 and flexible while remaining secure. As the European Union invests in the existing SEPA Instant Credit Transfer (SCT Inst) scheme, today Instant Payments represent about 7,5% of SEPA transfers compared to 4,5 % on the same period in 20191.
As digital networks and devices transform the way we communicate, work and transact, the digital revolution is reshaping the payments industry. Cash is increasingly in decline and more value is driven to a variety of payment channels. New payment providers add up to the digital transformation as they use technology to disrupt traditional networks and business models.
As a result, digitalisation is driving expectations from customers. With the boom in e-commerce, customers require their payment providers to ensure the money can follow the goods at the same velocity with no friction. In addition to fast, anytime, anywhere payments, customers expect greater security, flexibility and control.
In view of these emerging needs and transformations, financial institutions are exploring new ways to deepen and enhance the customer experience. Following the expansion of Instant Payment, a new solution is about to become the missing piece of the puzzle to realise its full potential.
Request to Pay is the upcoming message exchanging service that allows a creditor or payee to claim a payment from a debtor or payer. It is a new flexible way to manage and settle payments among individuals as well as businesses and organisations.
Request to Pay is a messaging service and not a payment service itself. It is indeed a complement, rather than a replacement, to existing digital payment methods. As the channel used for the payment is “payment type” agnostic, Request to Pay can be combined with SEPA Credit transfer (SCT) or SEPA Instant payments (SCT INST).
With Request to Pay, payees can benefit from enhanced control over payment processes and improved reconciliation. By requesting outstanding payments, payees can accelerate the reception of their incoming payments and save time chasing their debtors. In addition, a unique reference is generated by the payee during Request to Pay initiation, which is transmitted all along the payment process. This facilitates the match between the payment and the claim of the payment.
For each request, payers are presented with a number of choices, depending on the preferences set by payees. Payers can choose when they want to approve the request and when they want to make the payment. This gives payers greater flexibility of their outgoing payments, allowing them to decide whether to settle a debt immediately or to delay a payment.
Request to Pay can represent a useful solution for a business to deal with late payments. For example, a service provider company willing to collect a due payment can send a Request to Pay to a customer as a reminder of the payment. As the payment amount and remittance information is already filled by the biller, the debtor receives a complete Request in his banking application. This speeds up the settlement of the due invoice. The debtor only needs to approve the request and the payment is automatically made (now or later, depending on the preferences and the timeframe set by the biller).
Coupled with new innovations in payments, Request to Pay will reinvent the customer payment experience in Europe. In addition to the existing SEPA payment schemes, the European Payments Council (EPC) has been developing the pan-European standard SEPA Request to Pay (SRTP). The aim of the SRTP scheme is to provide interoperability and reachability within Europe. The SRTP Scheme Rulebook has just been published on November 30 2020 and will take effect in June 15 2021, covering Request to Pay messages in euros.
Similar initiatives exist in individual European countries, but they are independent of SRTP. As national initiatives have their own functionalities but lack interoperability, SEPA Request to Pay is aimed at providing a harmonised European solution.
In line with this objective, Societe Generale was among the first financial institutions to contribute to the development of Request to Pay2.
“We are convinced this new solution will significantly enhance our corporate customers’ experience in their liquidity management. Today, many businesses have reconciliation issues when they collect bills from other businesses and suffer from late payments. Request to Pay will ease the burden of managing receivables thus reducing processing costs”, comments Nicolas Cailly, Deputy Head of Payments & Cash Management, Transaction Banking at Societe Generale.
Philippe Marquetty, Head of Payment at Societe Generale adds: “Thanks to its flexibility, SEPA Request to Pay introduction in the European market will be bring high value to different use cases. Leveraging on modern infrastructure, Request to Pay will contribute to enrich the payment solutions landscape by offering consumers and businesses a user-friendly service and will act as a catalyst for new payment solutions such as Instant Payment. Therefore, Request to Pay will be the missing link to achieve the potential of several use cases.”
As Request to Pay scheme develops, Societe Generale will capitalise on its knowledge of different European markets. The Group is committed to sharing with regulators, financial institutions and partners its vision of an innovative payment solution that will work at national and European levels.
1According to the European Payments Council (EPC) public website: www.europeanpaymentscouncil.eu/what-we-do/sepa-instant-credit-transfer
2Societe Generale is a member of EPC RTP Task Force, RTP EBA Clearing Working Group and STET RTP workshops.