What is Request to Pay?
Request to Pay is an exciting and innovative development for the payments industry, enabling a more flexible and transparent method for bills to be settled between people, organisations and businesses. It is a messaging service that has been created to complement existing payments infrastructure and gives billers the ability to request payment for a bill rather than simply sending an invoice. For each ‘request’, customers will be able to pay in full, pay in part, ask for more time, communicate with the biller, or decline to pay. A customer’s response does not change their legal obligations.
Why do we need Request to Pay?
- As consumers:
- One in five people in the UK do not feel in control of the outgoings from their accounts[i].
- One in ten people forget to pay their bills resulting in late payments [ii].
- As a bank or institution;
- When sending and receiving instant payments, banks can make more payments because smaller amounts of liquidity are required. If the traffic is only one way, then banks are required to provide a lot more liquidity.
- In contrast with Direct Debits, R2Ps are real-time, suitable for single or ad hoc payments and they do not require an upfront mandate from the payer.
- R2Ps may also be thought of as an upgrade of Electronic Bill Presentment & Payment (EBPP), allowing the payer to approve and execute the requested payment in real time. EBPP is a common process used by companies to collect payments electronically over the internet, direct-dial access or ATMs.
How does Request to Pay work?
Request to Pay is a ‘pull payment’ where a payee initiates a request for a specific payment from the payer. Request to Pay is a digital request that the payer receives on their mobile device, usually on a banking or fintech application. The payer then either approves a real-time credit transfer, rejects the request, pays in part, or asks for more time. It is branded as the next upgrade in real-time digital payments where corporates, merchants, billers, and other people can pull payments from end customers and payers.
What does a bank need to do?
To support end consumers and businesses with the Request to Pay service, banks must upgrade their systems to support the local scheme requirements. Banks will need a solution to enable businesses to initiate a Request to pay, and a solution to enable customers to respond to the request.
Which organisations are responsible for Request to Pay?
In the UK, Request to Pay was launched by Pay.UK in June 2020. In Europe, EBA Clearing launched Request to Pay in November 2020. In the US, The Clearing House launched the US version ‘Request for Payment’ in November 2017. Almost all local payment schemes will have their own similar offering.
We would be happy to discuss your requirements and help tailor Request To Pay solutions to your business needs. ProjectiveGroup provides a full service offering and as such, we can support our clients’ end to end strategy, from implementation to delivery, to deliver business impact for every client.
Don’t hesitate to reach out to one of our payments experts. They always up for a chat!
[i] Mastercard’s 2020 state of Pay report
[ii] Mastercard’s 2020 state of Pay report