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Pay.UK is set to launch three new features for the request to pay (RTP) overlay service later this year, which is expected to help give a competitive edge to payment providers, reduce fraud and aid struggling small and medium-sized enterprises (SMEs).
Pay.UK, the UK organisation responsible for developing the RTP framework, has revealed that it is about to expand the framework by enabling interactive advance notices, overpayments and the cancellation of transactions.
RTP is a payment overlay service that provides secure messaging between a payee and a payer, enabling the payee, such as a biller, to request payment rather than simply sending an invoice.
Although the messaging service already offers a wide range of use cases for various participants in the payment process, its widespread adoption by market participants has not yet gained traction.
The new features that Pay.UK is currently working on are intended to increase the value proposition of the service, which practically depends on the players of the payment ecosystem to embrace in order to realise its benefits.
Speaking at a Pay.UK webinar, Kate Frankish, chief business development officer at Pay.UK, stressed that RTP is a network service and as a network service, Pay.UK cannot implement it by itself.
“It’s not one of those cases like Faster Payments, where we built it and asked everyone to come and connect to it,” Simon Brooks, Faster Payments service line manager at Pay.UK, added.
For RTP to work, Pay.UK needs to create “excitement” in the industry, Frankish said, adding that it means banks, billers and end-users must understand how the service works and what the benefits are.
Pay.UK launched the RTP service in 2020 during the pandemic. It currently has two firms, Answer Pay and Mastercard, that have signed up for the framework with a further 11 firms being in the pipeline, according to Brooks.
The messaging service offers a number of use cases for market participants.
RTP is a source of competitive advantage, not just for banks but also non-bank payments firms, Tony Craddock, director general of the Payments Association, stressed.
Due to various features, RTP can help banks and payment firms to reduce fraud, while it could also prevent SMEs from failing, both of which will eventually help financial institutions to reduce their costs, Craddock added.
For instance, RTP can work together with confirmation of payee (CoP), an important tool intended to reduce authorised push payment (APP) fraud.
In addition, only organisations authorised by the Financial Conduct Authority (FCA) can join the service, while businesses can only send a payment request to those customers that have previously authorised them to do so.
For SMEs, Craddock also stressed that better liquidity, resulting from RTP reducing delayed payments, could mean survival.
According to Craddock, there were more than 800,000 new firms registered with Companies House last year.
“The burden of late payments on the already financially stretched SMEs cannot be overstated.”
He estimated that there are currently £23.4bn outstanding in late invoices that could be reduced if businesses could allow their customers to pay in smaller real-time transactions instead of billing in one run at the end of the month.
New features
Pay.UK is pushing ahead with its plans to introduce new use cases and is currently working on three new features.
“Just because we launched the framework, we have not stopped there. We are continuing to develop RTP” Brooks stressed.
One of the new features will be an interactive advanced notice, which will allow messages to be sent over RTP rails, instead of current methods of using text, post or email messages. This will enable customers to interact with the biller, or allow the biller to offer different dates.
Overpayment will enable customers to offer their overpayments to charities, pre-pay their mortgages or loans, or give tips in restaurants, while cancellations will allow requests to be cancelled.
Pay.UK is planning to launch the new features later this year.
Once these are added, the organisation will be looking at further potential areas of development.
These may include new message types that utilise RTP rails at the point of sale, in proxy identification, such as using a mobile phone number or email address, or for cash settlement.
