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3. Welcome                                                                                            19. The Faster Payment Innovation Index

4. Introduction                                                                                       21. FPII Map and Ranking

5. Openness, Overlays and Immediacy                                                                   22. The Movers and Shakers
     6. Opening Up Banking                                                                                 22. Growth In India
     6. API Access                                                                                         22. China Leading The World
     7. Legislating Openness                                                                               22. New Payments In Australia
     8. Innovate On Open                                                                                   22. US Onboard
     8. Open Up To Fast                                                                                    22. Europe Goes Live
     9. The QR Resurgence

10. Putting the Faster Rails to Good Use                                                              23. Interviews and Insights
      11. The Asian QR Code Explosion                                                                       23. Citi Treasury And Trade Solutions:
      12. Some QR Offers                                                                                        Real-Time, APIs and Corporate Treasury
      12. Dynamic QR                                                                                        26. United States Roundtable:
      12. QR Futures                                                                                            The Federal Reserve, The Clearing House
      13. Social Network Integration                                                                            and BB&T on Faster Payments
      14. Reinventing The Supermarket CX In Europe                                                          29. Payments Canada:
      15. Open Australia                                                                                        Journey to Modernization
      16. A Suite Of Innovation On Open + Fast                                                              32. Blueprint for the United Kingdom:
                                                                                                                Redesigning Real-Time
17. A Definition of “Fast”
      18. Need Not Apply                                                                              36. Country Reports
      18. Beyond Just Retail                                                                               37. Live Countries
      18. Other Factors Of Interest                                                                        76. On The Radar
                                                                                                           83. Under Development

©2018 FIS
FIS and the FIS logo are trademarks or registered trademarks of FIS or its subsidiaries in the U.S. and/or other countries.
Other parties’ marks are the property of their respective owners.

                                             This year, that number jumped to an astounding 40 countries      For example, we’ve seen APIs transform the traditionally batch-
                                             live with faster payment schemes, fueled in part by regions      oriented world of corporate treasury into one that runs on real
                                             like Australia, the United States (US), and the launch of the    time, and overlay services that allow consumers to apply for a
                                             SEPA Instant Credit Transfer (SCT Inst) scheme, created by       loan and receive near immediate approval and funding.
                                             the European Payments Council (EPC). SCT Inst is expected
                                             to progressively bring faster payments to more than 30           We predict this is the start of a continued revolution in faster
                                             countries over the course of the next year.                      payments schemes, and one that will make speed just one
                                                                                                              sliver of a much larger story.
                                             In addition to the surge in new schemes, we’ve seen some
                                             earlier adopters of faster payments explore how to               FIS is a global leader in advanced payments solutions and
                                             modernize their existing systems, both to fuel the new           supports real-time payments production environments in 27
                                             innovations that open APIs and collaboration on real-            countries worldwide. We look forward to continuing our role as a
                                             time rails will make possible, and to shift toward global        fintech leader who is dedicated to helping every one of our clients
                                             messaging standards like ISO 20022. Our 2018 findings            identify how faster payments can fit their unique business now,
                                             also indicate steady growth in terms of usage and adoption       and the one they’re working to build for the future.
                                             in a number of existing schemes.
2018 marks FIS’ fifth year producing our                                                                      We hope you’ll enjoy reading our 2018 Flavors of Fast report,
annual Flavors of Fast report, which was     Perhaps most importantly, 2018 marks the start of what           and invite you to be a part of the faster payments conversation.
                                             we sense will be a pivotal shift in how scheme operators,
originally inspired to capture the early     participants and end users come to perceive the potential,       Sincerely,
but remarkable influences we saw faster      value, functionality and relevance of real-time payment rails.
                                             In various parts of the globe this year, we’ve noted a variety
payment schemes making around the            of value-added services and emerging use cases that
world. When we published our 2014 report,    are raising expectations and possibilities for what faster
                                             payments can accomplish, for end users as well as the
we counted a total of 14 live schemes.       institutions, fintech and authorized third-party providers who
By the time we released 2017 Flavors         can use real-time rails as an underpinning to deliver new        Raja Gopalakrishnan
of Fast, there were 25 countries live with   products and ways of serving customers.                          GFS, Payments

faster payment schemes.

                                        Real-time payments are about more than just speed.              As past Flavors of Fast reports have indicated speed is not
                                        They create frictionless commerce and enable a financial        the only consideration for the retail consumer when making
                                        world in which the entire payment process occurs seamlessly     payment. The value proposition must deliver an ease of
                                        and immediately. An open payments system can also               use that is comparable to cash, without the need for the
Real-time payments are the first step   provide opportunities for financial institutions to help        payer to know the account number of the beneficiary.
toward a new world of payments; the     commercial and retail customers better understand               Costs must be competitive, with no compromise on security.
instant nature of payments is merely    and manage their financial picture with greater ease.           Corporations need to provide customers with options that
                                        By developing innovative overlay services on top of the         are in line with changing expectations, and ensure that
a launchpad for a new payments          faster payment rails, whether through open banking              instant payments are cost-effective and provide an improved
ecosystem.                              initiatives or new ways of initiating payments through          alternative to existing models (from a treasury perspective).
                                        QR code scanning, all parties in the value chain benefit.
                                                                                                        One game-changing factor is the use of the ISO 20022
                                        Initiatives like the sharing of application programming         message standard in many instant payment schemes. This
                                        interface (API) access among financial institutions, as         standard provides an added benefit for corporates from a
                                        an introduction to customers and their customers’ data,         data perspective, as more information can be sent along with
                                        has shifted the conversation about the potential for faster     payments to simplify the end-to-end process. They can better
                                        payments. The discussion is no longer about the business        understand market trends and create new products and value-
                                        case for faster payments, but adding real business value to     added services that meet emerging business or consumer
                                        commerce in all spheres of operation.                           needs, especially those that create efficiencies for end users.
                                                                                                        The use of ISO 20022 is a critical factor in our scoring of the
                                        What is driving increased interest in the deployment and        various instant payment schemes, and the corresponding
                                        uptake of real-time payments, what has changed and what         rank on our Faster Payments Innovation Index (FPII).
                                        does this mean for consumers, merchants, governments
                                        and corporations? Are instant payments primarily a peer-to-      In addition to being instant, the
                                        peer (P2P) instrument, or will they become a mainstream
                                        tool used in the business-to-business (B2B) sphere too?          key word for future payments is
                                        Once the instant payment infrastructure is in place, the real
                                        debate lies in the solutions and use cases that are available
                                                                                                         openness: open to sharing data,
                                        in the market and how to tailor the characteristics of these     open to new channels, open to new
                                        services to each customer segment.
                                                                                                         applications, and open to being open.
Openness, Overlays and Immediacy

Openness, Overlays
and Immediacy
                     The speed of settlement, ease of use, and ways in which the service improves and streamlines
                     people’s lives are certainly paramount to the success of a faster payments scheme — but they are
                     not differentiators.

                     Overlay services can be defined as any payment service offered by a bank or third party that connects
                     to an instant payment clearing and settlement infrastructure or its participants, but adds greater
                     functionality for users. The emerging overlay services that are receiving the most attention have
                     the potential to generate revenues for banks, and provide enhanced value propositions when
                     packaged with coordinated information. It should be noted that the term “overlay” can have specific
                     definitions in some regions. (Under NPP in Australia, for example, an overlay service is essentially
                     a scheme that lives on top of the NPP scheme, and that requires multiple parties to participate.)
Openness, Overlays and Immediacy

Opening up banking                                           API access

Open banking is set to be the most seismic shift in          The use of APIs by banks has become an increasingly
financial services since the emergence of online banking.    common way to drive new banking models that enable
Payments must be an enabler in an increasingly networked     consumers and businesses to manage their money in
world; they need to be an integral part of the context       better ways. Use of such innovative applications will
of everyday life. When walking into a store, browsing a      provide personalized information and services to meet
website or using a smartphone app, customers are not         numerous financial needs in one place. Collectively
there to make a payment, the transaction is just a part of   known as open banking, this technology revolution aims
the bigger experience. Benefits will accrue as the rollout   to liberate customer and business data from the systems
progresses from more convenient and data-rich payments,      and infrastructure of various financial services to facilitate
to easier cross-border commerce, to a wide variety of        these enhanced services, by leveraging connected
value-added real-time payment services.                      networks instead of centralization.

The provision of API services empowers application
developers to create and deliver services that go beyond
                                                               The result of open banking will be
the underlying payment. Immediate payments underpin            new marketplaces, new choices
these value-added services in a way that traditional
credit transfers or card payments cannot. By embedding         and added transparency.
immediate payment mechanisms into otherwise purely             To do that, financial systems must
non-transactional offerings, business value is enhanced.
An instant messaging app can become a means to pay             modernize the way they connect to
the restaurant bill; payday loan applications can provide
instant access to funds; insurance providers can make
                                                               other systems and to customers.
instant payouts on claims.
Openness, Overlays and Immediacy

Legislating openness

A follow-up from Europe’s first Payment Services Directive,
PSD2 has been front-and-center in the banking industry for
more than a year, and not just in Europe. It aims to change
the way retail banking is performed in the EU and provides
the legal framework within which all Payment Service
Providers (PSPs) must operate. The Directive’s purpose is
to increase Pan-European competition and participation in
the payments industry, including nonbanks, and to provide a
level playing field by harmonizing consumer protection and
the rights and obligations for PSPs.

Under PSD2, banks and other financial institutions must
give certain licensed third-parties access to account
information. At the same time, they cannot treat payments
that go through third-party service providers any differently.
There are two types of third parties providers (TPPs),
the Account Information Service Providers (AISP) and
the Payment Initiation Service Provider (PISP). The AISP
provides information about an individual’s accounts and
balances, and the PISP initiates payments without going
through the payment networks.

   Open banking is not simply an
   attractive concept, it is backed
   by legislation in Europe.
Openness, Overlays and Immediacy

Innovate on open                                                Open up to fast

Open APIs and instant payment mechanisms are                    Open access to accounts running on faster payment rails
inextricably linked; the combination of both will release the   goes much deeper than simply smoothing the way for
potential for fundamental change. By opening up financial       additional merchant services. A bank’s customers create
institutions to the outside world, faster payments can be       a massive amount of data that often goes underutilized;
used to drive new innovative use cases on a global scale.       technology can now give customers access to refined and
Third parties will gain access to account information           usable data to improve their personal financial situation.
and payment initiation capability, enabling a host of new       With open access, apps can directly inquire about
propositions to emerge. Open banking and APIs give              consumer behavior and payment history (assuming the
banks the opportunity to reinvent their business models,        owner approves) and add real business value. Third-party
but this must be guided by a sense of purpose.                  lenders could have access to historic transactional data
                                                                to determine a borrower’s risk level, potentially providing
By using an ecosystem of third-party applications and           customers access to more personalized loan terms.
services – enabled by APIs – banks can rapidly advance
their digital transformation agenda in the open banking         Open APIs offer significant opportunities and challenges
world. In practical terms, the entire payment value chain       for the industry, and the payments sector will take a
needs to be disconnected into discrete elements. This           leading role in their development and implementation.
creates new opportunities and challenges, but opens the         Open APIs could have a fundamental impact on the
door for new business models that demand new ways of            customer-bank relationship and significantly alter the
thinking. For example, third-party application developers       landscape of players and providers.
may distribute payment services via their own channels,
changing the traditional financial institution’s direct         Instant goes beyond the payment, as all the processes
footprint of responsibility and interaction.                    around payments– including reconciliation, testing and
                                                                fraud monitoring—also need to accommodate real-time.
                                                                To succeed in an immediate payments world, banks must
  Banks must evaluate their                                     deliver a full digital service and meet client expectations in
                                                                this evolving “always-on” landscape.
  position as either a pure
  infrastructure provider, or
  play an active role within the
  emerging ecosystem and
  maintain a direct relationship
  with customers – it’s a critical
  strategic choice.
Openness, Overlays and Immediacy

The QR resurgence

A few years ago, QR codes were everywhere. From 2011         For brick-and-mortar stores in particular, mobile and
to 2013, brands splashed them across posters, put            online couponing via QR codes offers a way to cement
them in shop windows and integrated them into creative       customers’ loyalty and compete with digital stores.
advertising. Yet, a combination of poor implementation,      This move goes beyond simply creating brand awareness
subpar technology, and a lack of native smartphone support   and now facilitates payments via mobile devices. The
reduced their popularity. However, faster payments may       consequence is a deeper and richer integration of digital-
help QR codes experience a comeback.                         loyalty programs.

In fact, QR codes have become the preferred payment          There is a significant rise in the usage of QR codes on
method in some of the world’s largest mobile payments        mobile devices outside of core Asian markets, enabled by
markets, like Asia, over the last few years. Usage is        handset manufacturers adding QR scanning technology
significantly lower across Europe and North America,         into native camera applications and the rise of app
where mobile payment technology was focused on NFC-          ecosystems which exchange QR codes to initiate fast
based systems including those used by Apple Pay and          payments. This may be an early indication that a “QR code
Google Pay. In China, market leaders Alipay and WeChat       comeback” in Europe, New Zealand, Australia and the US
both use QR code vouchers to add loyalty elements to         is on the horizon.
their mobile wallet offerings, and have integrated instant
payment mechanisms into their fabric.

  QR codes are increasingly used
  in China, India and elsewhere in
  Asia to facilitate payments and
  the exchange of personal details,
  proving that QR codes can add
  value when approached with a
  truly mobile-first mindset.
Putting the Faster Rails to Good Use

Putting the Faster
Rails to Good Use
                     The real question that hints to the potential for continued
                     innovation is: What can you do once the rails are built?
                     The focus is often initially on P2P payments, but this is just the start. Initiatives are underway to
                     deeply embed payments into the social fabric of society, for consumers, SMBs and corporates.
                     Once the underlying real-time payment infrastructure is synchronized across the industry, the
                     services offered on these real-time payment rails help communities take advantage of the benefits
                     of the underlying infrastructure.

                     To achieve this, banks and other payment service providers need to re-evaluate their position and
                     relationship to their customer, and determine how they’ll become open to new ways of doing business.
Putting the Faster Rails to Good Use

The Asian QR code explosion

Asia has much lower levels of credit card usage compared
to other countries, and consequently, many smaller
merchants do not accept them. For these markets, QR
codes are a simple and viable way to initiate transactions
and reduce the high use of cash. Thailand, India, China and
Singapore have established payment services based on
QR codes that use the new faster payment mechanisms.
The use of QR codes has been pioneered with the small
retailers and service providers, such as street food
vendors and motorbike taxis, who do not normally offer
electronic payment options.

Merchants who register for the service are provided with a
static QR code that contains credit card-type information
and the alias the merchant uses. This alias is used to
resolve payments to the bank account of the merchant.
Registered customers also have an alias that links to their
preferred bank account used for payments. The process is
simple: The customer scans the merchants QR code, gets
confirmation of who will be paid, enters the price (unless
the price is also in the QR code), and sends the payment.
The merchant gets a notification that the payment has
been made to their bank account, and the transaction is       Government payments in
complete – all in real time.                                  Thailand and the Philippines
QR codes have also become a government-endorsed               are now being pushed using
solution to reducing cash reliance. The goals are to move
more people away from the black economy, raise tax
                                                              QR codes and the underlying
revenue and guard against fraud and money laundering.         faster payment rails.
Putting the Faster Rails to Good Use

SoMe QR offers                                                      QR futures

An adaptation of the standard QR code purchase on-the-              The resurgence in the use of QR codes as an accelerator for
go, social media (SoMe) networks are making payments                faster payments shows no signs of slowing. The emergence
part of the social fabric. Pioneered in China through the           of QR codes as transaction initiator began in China (WeChat
phenomenally successful WeChat and Alibaba messaging                and Alipay) and India (Bharat), but the phenomenal success
apps, end-users can receive temporary discounted offers             inspired many followers, including Thailand, Malaysia,
from merchants. Using behavioral analytics, the social              Singapore and other Asian countries who are either live or on
media algorithms predict which offers will be of most               the verge of launching QR-based services.
interest to different customers, and then send targeted
offers with a strong likelihood of uptake.                          Governments, banks and merchants are also looking to
                                                                    encourage and publicize QR-based services as they migrate
                                                                    toward cashless economies. For banks, it is a race to capture
                                                                    merchants for their services through a sophisticated and
Dynamic QR                                                          well-designed app.

                                                                    What are the chances that the QR-code revolution will
The static QR code, often printed as a poster for easy
                                                                    spread to the West? We will likely see pilots, but the drivers
scanning at checkout, can also be dynamic if presented
                                                                    of success in Asia do not necessarily match the market
through a screen at checkout. Asian merchants have
                                                                    needs elsewhere. With higher credit card usage in the West,
adopted QR codes to promote offers depending on stock
                                                                    and the imminent emergence of innovative services built on
levels. For example, a retailer may offer a 50 percent
                                                                    open banking standards, QR code initiation may not prove as
discount on the first 100 items sold, but the discount can
                                                                    popular as it has been in Asia.
dynamically drop to 25 percent for the next 100 items sold.
The scanning of the code triggers an inventory check and
adapts the QR code accordingly, in real time.
                                                                      The combination of social networks
The QR code defines the business scenario, and the code               and payments has proven to be a
can change as the scenario evolves. By linking the payment
service to other merchant or retailer systems, such as inventory,     primary driver of growth.
the payment itself becomes embedded in the middle of the
value chain as an enabler.
Putting the Faster Rails to Good Use

Social network integration

Services in China like WeChat and Alibaba (and Alipay) have       These services need a client base to succeed, and the closed-
seen phenomenal success by incorporating P2P payment              user-group nature of these services works to their advantage.
capability. In India, the biggest first movers include services
that continue to merge payments with messaging; money             While Facebook, WhatsApp, Apple Pay and Google Pay have
transfer apps like Tez, Bharat and Paytm payment services now     all offered (or attempted) similar functionality in the past,
feature chatting capability. Established chatting apps such as    the consumer uptake of these services (where available)
WhatsApp and Hike have added instant payment mechanisms.          has been less than meteoric. There are other electronic
                                                                  payment alternatives that are simpler and easier to use,
Other Asian economies are looking to the success of these         and many generate repeat use through generous loyalty
social networks and the huge uptake in mobile payments,           schemes. Social media payments are not even close to
and planning their responses accordingly. Social network          critical mass outside of Asia.
services like WeChat, Alipay, and Bharat have started to make
neighboring countries rethink their strategy. Until recently,       With enormous client reach,
these networks remained within their geographic borders,
while offering their members payment options while abroad.          sometimes approaching one
Alipay, for example, launched services in Malaysia, and others      billion active users per month,
look to export their success to other nations in the region.
                                                                    these services threaten to bypass
                                                                    the traditional financial services
                                                                    players altogether.
Putting the Faster Rails to Good Use

Reinventing the supermarket
experience in Europe

In Europe, the launch of SEPA Instant Payments (SCT Inst),          The supermarket sees enormous advantage in the entire
has inspired a number of players to look at reinventing their       process. By adopting open banking capabilities with SCT
payments capability, for a streamlined customer experience          Inst, the retailer can offer customers good discounts to
(CX). In the world of retail, for example, a European supermarket   encourage uptake and grow loyalty through well targeted
chain is leveraging its financial services wing to simplify the     deals. However, the interchange fees vary; such a solution
checkout process for its client base, using open banking APIs       may not be as attractive where the fees are lower.
based on PSD2.
                                                                    Once operational, the supermarket plans to build out the user
Through its smartphone app, the supermarket’s customers             experience around the payment mechanism to further drive
can directly pay at checkout. Without the need to connect           traffic and generate loyalty. The supermarket can offer unique
to conventional POS devices, customers initiate the payment         deals to customers based on their behavior and past history,
through the app, which connects to the customer’s bank              based on geolocation in the store, directly onto the app itself.
directly to make the SCT Inst payment. Funds are credited           The payment experience is only the first step toward a more
to the supermarket’s bank instantly. The payment confirmation       fully digitized and immersive customer experience.
is sent to the customer’s app while at the checkout – within a
few seconds – and the transaction is complete.
                                                                      In countries where interchange
                                                                      fees are high, customers
                                                                      who continue to pay with
                                                                      conventional credit cards
                                                                      are an expensive option.
Putting the Faster Rails to Good Use

Open Australia

Australia recently launched its New Payments Platform (NPP)
that offers instant payments across the country. However,
the government is planning to go further and encourage open
banking by mandating open data accessibility to improve
customer outcomes and increase competition in the financial
sector. The new open banking implementations will be phased
in from summer 2019, bringing the potential to transform the
competitive landscape in financial services and the way in
which Australians interact with the banking system.

The goal is to give banking customers greater access to
the data their banks hold, and the ability to direct that it
be safely transferred to trusted and accredited service
providers of their choice. Customers may be able to use
their new data rights to find better deals on credit cards,
mortgages and other banking products.

With increased open access to accounts, comparison services
will be able to assess the value and suitability of all available
products, taking into account the individual circumstances
and needs of the customer. The rollout of open banking on
top of NPP will also allow entrepreneurs, in cooperation with
their banks, to develop new services and products tailored
to customers’ needs, disrupting business models within the
banking sector that do not put customers first.

Government payments are prime targets for the improved
services being promised by combining open banking and
the faster payments service. The Australian bill payment
mechanism for SMBs, which could also greatly benefit
from increased speed, convenience and an improved user
experience, should be part of the early transition.
Putting the Faster Rails to Good Use

A suite of innovation on open + fast

Across the world, as faster payment services are combined with the open banking paradigm, a wealth of innovative
services are being proposed, piloted and rolled out. These initiatives confirm that the conversation about faster payments
has shifted from building the business case for a faster payments scheme, into a discussion on how faster payments can
add real value.

Deliveries upgrade                                               Lending streamlined
A recurring use case being rolled out in many regions            In Portugal, a challenger bank is offering instant loan
caters to the delivery vans that service restaurants and         availability with an SCT Inst payment. The bank can use
other stores. By combining faster payments and open              open API banking to credit check the loan applicant
banking into a single app, the driver can send a “request        directly through their bank before making the funds
to pay” directly to the business owner. Alternatively, the       available instantly.
driver could present a QR code to be scanned by the
business owner to initiate payment, without the delay            Commuter delay soothing
and paper trail of traditional models.                           In the UK, an initiative called #YayDelay uses an algorithm
                                                                 to monitor real-time train delays and tweets containing
Ticket sales reimagined                                          #YayDelay unlock discounted gin and tonics for frustrated
A number of ticket purchasing ecosystems are rolling             commuters.
out streamlined payment services that bypass traditional
card transactions in favor of open banking APIs and
underlying faster payment rails. Deutsche Bank, in line
with PSD2 and SCT Inst, has teamed up with a number
of airlines to improve fraud protection with direct money
transfers initiated through the single app.

The fact that direct payments will be processed and received
in near real-time means airlines benefit from the acceleration
of their funds, generating significant working capital and
liquidity benefits. For travelers, this will result in more
choice, a smoother and less complex payments process
and more convenience when paying for airline travel.
A similar process is under evaluation in Australia.
A Definition of “Fast”

A Definition of “Fast”

                         The Flavors of Fast definition of a faster payment:
                         “Inter-bank fully electronic payment systems in which irrevocable
                         funds are transferred from one bank account to another, and where
                         confirmation back to the originator and receiver of the payment is
                         available in one minute or less.”
                         We may consider faster payment schemes to be a modern phenomenon, but the first retail schemes
                         to embody real-time characteristics date back to the early 1970s. Japan had an operational payment
                         system in 1973, and Korea and Switzerland had one in place in the 1980s.

                         On a basic level, fast payments can be defined as payments in which the transmission of the payment
                         message and the availability of final funds to the payee occur in real-time, or near real-time, as close
                         as possible to 24/7. As we move from fast payments, to faster, factors like customer perception of real
                         time, should be considered. Consequently, faster payments do not need to be strictly real-time,
                         immediate nor instant.

                         Operational faster payment services function within nation states in a single national currency. The
                         exception is the release of SCT Inst, where euro payments cross national borders. Looking ahead, it
                         is likely that established domestic faster payment systems will be interlinked to create multiple cross-
                         border faster payment systems.
A Definition of “Fast”

Need not apply

We have explicitly excluded a number of long-established
payment mechanisms that would normally be thought
of as fast, including any card-based transaction, niche
real-time global settlement (RTGS) systems and any
payment system that includes paper origination. The
advent of alternative currencies and mechanisms such
as Bitcoin, Ripple and Litecoin, have significant impact on
the banking market, but we have consciously excluded
cryptocurrencies from this research. Faster payments
may be credit transfers or direct debits, so long as the
confirmation messages and the funds are available
quickly. (While a digital origination is critical, batch
payments are also included.)

Beyond just retail

Originally, faster payment systems were primarily focused
on the retail market (P2P and P2B), but increasingly,
business payments (B2P and B2B) are taking advantage
of them. Additionally, use cases for payments to and from
government services (P2G, G2P, B2G and G2B) continue to
widen, and have become increasingly common.

Other factors of interest

The requirement for a faster payment scheme to operate
24/7 throughout the year is not mandatory. We do accept
schemes that accept payments 24/7 but have a delayed
availability of funds outside normal working hours/days.
Faster Payment Innovation Index

Faster Payments
Innovation Index
The Faster Payment Innovation Index (FPII) was first established in 2014 to create a
comparative rating system where diverse payment schemes around the globe could be
compared and contrasted. While inclusion in the FPII demanded only some basic requirements
(electronic payments between accounts available quickly), a higher FPII score requires more
demanding criteria, and ideally, opens up the road to innovation on top of a faster payment
service. Consequently, the FPII measures not only the speed with which transferred funds
become available, but how the scheme in question is applied in its local market.

Since the first edition, new market initiatives have gained ground, often as a direct result of the
availability of an underlying faster payment service. We have therefore re-evaluated our criteria.
In addition to standard credit transfers (push payments), we have included the ability to pull
payments. A pull payment could take two distinct forms: Real time direct debit or a request
to pay. Both services add value to the overall offering, and the provision of either increases a
country’s FPII rating.

We’ve also added a new element to the FPII that indicates whether the domestic schemes under
review have made use of faster payments to champion overlay services, possibly through QR code
usage or open access through an API layer. It should be noted that the open API element may
be part of the overall instant payment scheme itself, or it could originate from a separate source.
Faster Payment Innovation Index

Faster Payments
Innovation Index (FPII)
         5    Optional features                    Overlay services – API or QR code
                                                   Remittance information
              maximizing                           Alternative identifier (aliases)
                                                   Batch and individual payments
              customer value                       Fast settlement

         4                                         Push and pull payment capability

              Highly desirable                     Universal access

                                                   ISO standard
              features enchancing                  (ISO 20022 or 8583)
                                                   24/7 availability
              customer value

              Requested                             Interbank
                                                    Account to account

         1    features                              < 1 min end-to-end

              The higher the FPII score, the stronger the possibilities for innovation.
FPII Map and Ranking

and Ranking                                                                                   4
                                                                                                    Payments in Real Time

                                                                                                    NETS RealTime 24/7
                                                                                                    Denmark                        4+   Siirto

                                                                                                                                   4     Pan-European Payments
                                                                                                                                         SCT Inst

                                                                                              2     Greidsluveitan
                                                                                                                                   4+    Express ELIXIR
                                                                                                                                                                      3    Zengin

                                                                                                                                                                           Internet Banking
                                                                                          4    UK Faster Payments
                                                                                               United Kingdom
                                                                                                                                           Czech Republic
                                                                                                                                                                      4    Payment System
                                                                                                                                          Hungary                          Interbank Home/
                                                                                                                                                                      2    Firm Banking Network
                                                                                                                                                                           Republic of Korea

                                                                                                                                   4      Swiss Interbank Clearing
                                                                                                                                                                      1    CIFS

                                                                                                                                                                           Faster Payment System
                                                                                                                                                                           Hong Kong

                                                                                                                                                                      4    PromptPay

                                                    The Real-Time Rail
                                                    Canada                                4   Iberpay
                                                                                                                                                                            5        Immediate Payment
                                                                                                                                                                                     Service - India


                                                    4     Real-Time Payments
                                                                                                                                                                            2         LankaPay
                                                                                                                                                                                      Sri Lanka
                                                                                                                                          Retail Payment
                                                            Sistema de pagos                                                        2     System
                                                     2      electronicos interbancarios
                                                                                                                                                                            3       Philippines

                                                                                                                                    3     Fawri+
                                                                                                                                          Bahrain                                      Retail Payments Platform
                                                                                                        2    GhIPSS / GIP
5   Meets most features maximizing customer value
                                                    2       Funds Transfer System                            NIBSS Instant
                                                                                                                                        Saudi Arabia
                                                                                                                                                                                4+      Fast and Secure Transfers
4   Meets some features maximizing customer value           Brazil
                                                                                                        2    Payments
3   Meets most features enhancing customer value
2   Meets some features enhancing customer value    3        Transferencias en Línea
                                                                                                        3     Real-Time Clearing                                                4+      New Payments Platform
                                                                                                              South Africa
1   Meets base required features only
    Under development                                                                                                                                                                             New Zealand
    On the radar                                                                 Peru                   4     PesaLink
The Movers and Shakers

The Movers and Shakers
Fifteen regions went live with faster payments since our Flavors of Fast 2017 was released. Here are some of this year’s highlights.

Growth in India                                                                                   US onboard
Since launching the Immediate Payment Service (IMPS) in 2010, India arguably has the most         The Clearing House launched Real-Time Payments (RTP)® in November 2017, a new real-
evolved and sophisticated public digital payments infrastructure in the world. It is one of the   time payments system open to all US financial institutions. As the first new major payments
fastest-growing immediate payment services in the world, rising from two million transactions     infrastructure since the ACH in the 1970s, RTP is built to support digital commerce and
per day in 2017 to 2.8 million this year.                                                         become a platform for innovation. In addition to being faster than conventional payments –
                                                                                                  settling payments in seconds, not end-of-day or next-day – RTP includes features like payment
The growth is partly attributed to the fact that the second most populous country in              confirmation and requests for payment that enable pull payments to deliver bills and invoices
the world has embraced the smartphone as a payment vehicle, but is primarily driven               through digital channels.
by the additional overlay services offered on top of the faster payments rails. These
overlay services are offered through the Unified Payments Interface (UPI), an overlay on          Since there is no mandate for faster payments in the US, RTP is doing extensive marketing
IMPS which gives an API interface to application developers to enable the initiation and          and outreach to evangelize the new service and demonstrate how RTP could be integrated
collection of payments. UPI-based services have led to the creation of a wealth of new            into current payments processes and bolster business clients’ end-user value propositions.
innovative payment solutions, and the adoption rates of instant payments in India reflect         The aim is to expand the services offered on the new real-time payment rails to include
that evolution. In fact, the numbers of transactions originating through these apps have          simple P2P transfers and business solutions for instant cash-on-delivery payments, supply
adversely impacted traditional debit and credit card numbers.                                     chain payments for just-in-time inventory, and cash concentration for corporate liquidity,
                                                                                                  trade settlement, etc. There are also plans to use ISO 20022 messaging for the delivery of
China leading the world                                                                           standard purchase orders on goods purchased.
Uptake of faster payments in China more than doubled over the last 12 months, from 12
million payments per day to 25 million. Going forward, expectations are that banks and            Read our exclusive interview with executives from the Federal Reserve, The Clearinghouse
third-party organizations will develop new and innovative products and services on top            and BB&T, one of the earliest adopters to go live with RTP, on page 26.
of the instant payment rails, leading to higher market penetration and dominance. China
has made extensive use of QR code-initiated payments where citizens scan QR codes at              Europe goes live
convenience stores, subway stations or street vendors to make instant payments. Such              The European journey toward instant payments has formally begun with the launch of
initiatives have sparked a noticeable spike in use.                                               Instant SEPA Credit Transfer (SCT Inst) in November 2017. By mid-2018, these fifteen
                                                                                                  countries have banks signed up and adhering to the EPC SCT Inst scheme:
New payments in Australia
Australia went live with with its NPP in February 2018. While the initial registration for the    Austria, Estonia, Germany, Italy, Latvia, Lithuania, the Netherlands,
service has been strong, wider availability and the advent of value-adding overlay services       Spain, France, Portugal, Malta, Bulgaria, Sweden, Belgium and the UK.
is expected to accelerate growth.
                                                                                                  Banks in other countries will be coming online throughout 2018 and 2019 to progressively
                                                                                                  span more than 34 European countries. The hope is that SCT Inst will become the primary
                                                                                                  scheme for all euro transactions, with instant becoming the new normal.
Interviews and Insights

FEATURED INTERVIEW: CITI TREASURY AND TRADE SOLUTIONS   In October 2017, Citi Treasury and Trade Solutions and FIS partnered to leverage CitiConnect® APIs to
                                                        connect FIS’ Trax corporate payment factory solutions to Citi’s Treasury and Trade Solutions suite. The
Citi Treasury and Trade                                 collabortion has empowered Citi and FIS’ corporate treasury customers to take advantage of the many
                                                        potential benefits faster payments offer to cash management, including enhanced visibility, real-time
Solutions’ Rene Schuurman                               payment initiation, transaction status inquiry and balance inquiry. In addition to the fact that mutual
                                                        clients of FIS and Citi Treasury and Trade Solutions can now execute, manage, monitor and report on
on Open APIs and the                                    their transaction flows in real time, they’re better prepared to adapt to new initiatives like open banking
                                                        and cross-border payments requirements that will continue to impact corporate treasury functions.
Impact of Faster Payments
on Corporate Treasury                                   FIS spoke to Rene Schuurman, Global Product Manager Channel Services, Citi Treasury and Trade Solutions, to learn
                                                        more about the project, and what he envisions for the future of faster payments in corporate treasury.

                                                        What were the some of the main business challenges or          How much experience did Citi have using APIs or faster
                                                        biggest opportunities that originally inspired this project?   payments prior to this initiative?
                                                        We had the need to switch from batch-oriented processes        Treasury and Trade Solutions went live with API
                                                        to real-time processes to meet the needs of our customers,     capabilities in November of 2016. Since then we have been
                                                        and to become truly 24/7. APIs and technology are a            onboarding and implementing customers onto our API
                                                        building block and a great enabler to help us achieve those    capabilities at a steady pace. As more and more markets
                                                        objectives where instant data capabilities are available.      come online with capabilities and applications, and
                                                        The emergence of instant payment schemes is a great            e-merchants and vendors look to adopt instant payment
                                                        catalyst but, it’s not about the payment itself. There’s an    capabilities as a replacement for credit cards, we expect to
                                                        incremental need to also have access to reconciliation,        see a very quick and aggressive adoption.
                                                        remittance-related information and data. It’s one thing to
                                                        pay fast, but also important to make sure you reconcile          We’re seeing APIs applied to all
                                                        fast and understand cash positions, all in support of right
                                                        controls. Now we’re seeing getting clients energized             different parts of transaction
                                                        and excited to start looking at other means of applying
                                                        the same principles that APIs and true data and instant
                                                                                                                         banking. We see this becoming a
                                                        processing bring along.                                          common technology platform very
                                                                                                                         quickly, very rapidly.
Interviews and Insights

What type of education or messaging did you have to put        What type of reaction did you get from your customers           We’ll probably begin to see a lot of value-added services
into the market as you were onboarding customers to            knowing that while this presents great opportunity, it may      emerge as well. Once you have access to data and
encourage use and adoption?                                    require that they change processes?                             information, and become a provider of services or an
As a financial services industry, we are relatively late       It simply represents the steep learning curve. Consider         aggregator of services, there are additional capabilities
in adopting APIs as a technology. It has required some         the sales tagline of instant payments: it’s considered to       you could develop. These may create new opportunities
recent developments, deeper and more robust security           be a potential replacement for credit cards. I think that’s a
solutions and the embedding of API capabilities into the                                                                       to sell additional financial services, or further digitize or
                                                               profound statement because it can be true in many different     streamline how we as an industry provide our services to
core native treasury applications our customers use to get
to a point where we can start exploring and applying the       ways. Credit card processing is not typically a core treasury   customers. I think we are only seeing the tip of the iceberg.
use of APIs in transaction banking.                            function; treasury simply monitors the deposits into the
                                                               accounts and reconciles charged cards. Adopting instant
We’ve traditionally been a very batch-driven industry. Our     payment schemes will expose the treasury organization             Financial services is undergoing the
clients are accustomed to creating messages or files,
sending them to us before a cut- off time, and logging
                                                               much more directly to the core of the underlying business         type of disruption that we’ve seen
                                                               and processes of any enterprise, than previously has been
back into the system to collect bank statements. With
instant payments, there is no set time by when you should      the norm. The treasury organization needs to adapt, reinvent
                                                                                                                                 across industries like hospitality, but
make your payments, and that means clients may need to         itself and find ways to control and manage these particular       banks are not put in a position to
rethink how they fund their accounts. In the old world, you
could think of all the transactions scheduled to disburse in
                                                               challenges.                                                       have to react or be surprised; they’re
a day and secure funding accordingly. In the new world of      What do you perceive as some of the most interesting,             in the midst of it.
instant payments, that is a fluid, moving target.              relevant or important use cases that we are going to see
                                                               instant or real-time bring for corporates?
Settlement also becomes instant and final. It’s going to
                                                               In the markets where the adoption of instant payments is          Each bank won’t be equally
require greater discipline, stricter controls on the side of
our customers to make sure that they pay the right person,     mandatory, we expect to see an accelerated realization and        successful in navigating this
                                                               transformation of treasury functions and how banks offer
for the right amount, into the right account when they
adopt instant payments.                                        products and services, versus markets where it’s optional.
                                                                                                                                 disruption, but we are probably going
                                                               We’re expecting to see aggregation services start emerging.       to be in a financial services world
                                                               Companies and consumers will likely look for one provider,        that is extremely different from today
                                                               whether it’s a bank or fintech firm or another trusted third-
                                                                                                                                 - in just a few years.
                                                               party provider, for aggregation services on the account
                                                               statement side as well as the payment processing side.
                                                               We’ve seen regulators and governing entities copy and
                                                               replicate policies, procedures, and ideas that have been
                                                               implemented in one market; concepts and ideas like PSD2
                                                               may be replicated across multiple markets.
Interviews and Insights

                                                              A great example is the insurance industry. If two people         Any other impacts you think initiatives like open banking
  The various disciplines and streams                                                                                          and PSD2 are going to have on treasury specifically?
                                                              get into a fender bender, many insurance companies
  of what is needed to keep a company                         have an app where customers can take a picture of the            Once the full reality of instant payments sinks in, we’re going
  functioning from a working capital                          accident, describe what happened, and submit a claim.            to see a cascading effect. For example, if there is no cut-off
                                                              With the assistance of artificial intelligence and automated     time, if payment processing is 24/ 7, what does that mean for
  aspect are all going to be impacted                                                                                          determining your actual cash position? How are you going
                                                              claims processing, many insurance companies can quickly
  by this switch and move to instant                          review, assess and agree to approve these claims. Despite        to baseline accounts? How are you going to determine your
  payments.                                                   that the claim is approved quickly, the payment may be           assets? The concept of time is going to be very critical. There’s
                                                              issued by a check that’s mailed, or an ACH deposit that          going to be a lot more automation and risk assessments. It
                                                              takes up to five days to be applied to the account. If the       may completely change and alter how we, as banks, offer
  That’s going to take a lot of                               insurance company could instantly deposit funds into the         credit to our customers. We may need to start looking into
  iterations, review, fine tuning, careful                    account of the insured, the customer could immediately           the right controls or mechanisms to form instant access to
                                                                                                                               credit facilities for our customers. For example, if an insurance
  interactions and discussions with                           move forward with making repairs. In this type of scenario,
                                                              instant payments could start to replace a traditional            company has to start paying out a lot of claims after a natural
  customers and technology vendors                            instrument, like checks.                                         disaster, we want to make sure such a company is able to make
  in the space to understand how we                                                                                            all of its payments-- but that might have a very profound impact
                                                                                                                               on how the company needs to be liquid.
  can form partnerships and start                             Going back to the traditional use case of instant payments
                                                              as an alternative to credit cards, Citi is part of the UK Open
  transforming the entire working                             Banking Initiative. Credit cards are relatively dominant in    Specific to this project, what best practices or key takeaways
  capital discussion to make it even                          the UK, but only about one-third of consumers in the UK
                                                                                                                             might you want to share with others in the industry who may
                                                                                                                             not currently be leveraging open APIs or faster payments?
  easier and more effective for all of us.                    uses a credit card; there’s a large group who are hindered     Make sure you are ready from a technology, resource and
                                                              in purchasing goods and services online because they           budget perspective. A lot of systems and applications are
                                                              don’t have access to a good payment mechanism.                 already capable of handling APIs - but not all of them are.
                                                                                                                             You need to truly look at it from end to end. For instant
                                                                                                                             payments, every process and platform that touches the
What other impacts are you seeing in banking channels         The UK Open Banking Initiative will empower everyone
                                                                                                                             payment needs to be instant as well. Hire and secure the
outside of treasury because of real-time payments?            with a banking account in the UK to start procuring goods right skills in your organization, and be smart about your
The discussion has become solutions-designed thinking         and services in a fashion that is pretty much identical to     funding and budget. The emerging systems and platforms
about the problems and challenges that our corporations       a credit card transaction. Rather than a credit card or a      are completely new, and that means relatively big
and customers are facing, and how we can provide the right    16-digit account number, the person uses a tokenized form investments. It may require capabilities and technologies
                                                                                                                             that you need to acquire, develop and integrate, but the
solution to help our customers. Only at the tail end is the   of identification, like a self-created handle. The banks will
                                                                                                                             old ones aren’t going away. As an industry we need to be
question: ‘Will an instant payment help or not?’              help facilitate the exchange of funds effectively, efficiently very careful to develop these capabilities in a model that
                                                              and in a secure manner.                                        makes sense for all involved. Not only for banks, but for
                                                                                                                             the corporations and consumers they offer these services.
Interviews and Insights

FEATURED INTERVIEW: UNITED STATES   In July 2017, the Federal Reserve System’s Faster Payments Task Force (of which FIS was a member)
                                    released its official plans and call to action to payments stakeholders to evolve the US payment system
Experts from the Clearing           into one “that is faster, ubiquitous, broadly inclusive, safe, highly secure, and efficient by 2020.”
                                    The Clearing House, a banking association and payments company owned by the largest commercial
House, BB&T and the                 banks, launched its RTP in November 2017 to serve as the real-time rail that financial institutions in the
                                    US will use to clear and settle payments in real time, and to perform additional capabilities that provide
Federal Reserve System              customers with unique and enhanced faster payments services.

Share Insights on the               In July 2018, FIS asked a panel of financial insiders who have been directly involved with these faster
United States’ Move                 payments initiatives – Steve Ledford, SVP Products & Strategy at The Clearing House (TCH), Sue
                                    McBride, senior vice president, BB&T Treasury Services Product Management and Sean Rodriguez,
to Faster Payments                  executive vice president, Faster Payments Strategy Leader, Federal Reserve System - to share their
                                    insights on the move to faster payments in the US.
                                    What has been the overall experience in entering the       The industry has come a long way to making real-time
                                    faster payments rails for the earliest adopters?           payments a reality, but there is still significant work to be
                                    Ledford (The Clearing House): Many moving parts had        done to bring this solution to our clients. Now the focus is
                                    to come together to launch successfully in November;       on facilitating a client readiness program to incent adoption
                                    the RTP core payments system was just one piece. Early     and usage. There is strong commitment in the industry and
                                    adopter banks had to stand up the requisite systems        within BB&T to make this a success from day one.
                                    and operations; meet the legal, regulatory and risk
                                    management requirements; and line up pilot clients.        Rodriguez (Federal Reserve System): Early adopters are
                                    Technology vendors created platforms to process both       challenged with the expense of upgrading their systems,
                                    payments and novel non-payment messages. Bank              to safely and securely process, post, clear and settle
                                    regulators had to adapt policies and procedures for new    transactions more quickly. This is a significant upfront
                                    payment models, and the Federal Reserve implemented        investment with a long-term payback. Financial institutions
                                    processes for opening and overseeing the joint account     that adopt these cutting-edge payment services, however,
                                    RTP uses to prefund settlement. All subsequent             have the advantage of enhanced customer relationships
                                    implementations can benefit from this foundational work.   and the ability to offer innovative new products in the face
                                                                                               of increasing competition. But the value doesn’t really
                                    McBride (BB&T): BB&T is in the early stages of launching   begin to materialize until we have material adoption by
                                    real-time payments. We have fully enabled our clients      large numbers of financial institutions, which makes the
                                    to receive real-time payments with initiation capability   industry focus on ubiquity so important.
                                    following later in 2018.
Interviews and Insights

What are some key learnings from the early adopters that            Rodriguez (Federal Reserve System): The Faster Payments            Though the RTP is not dependent on overlays, I do believe they
could be useful for others who are preparing to enter (or           Task Force envisioned an inclusive governing body that             play an important role in deploying certain use cases, such as
those who are not quite convinced that they need to make it         would work to help support faster payments implementation          P2P payments routed on the basis of a phone number or email
a priority)?
                                                                    and be a forum for lessons learned and best practices.             address. Services like Zelle add important capabilities to underlying
Ledford (TCH): Get started early, and get the whole bank
                                                                    Work is currently underway to establish such a body with           payment systems, by populating and maintaining directories of
or credit union involved. Financial institutions that waited
                                                                    the expectation that it will be active in 2019. By developing,     aliases, establishing a common user-friendly experience, creating
too long to involve important areas such as regulatory
                                                                    coordinating and delivering broad awareness across the             awareness and preventing fraudulent transactions.
compliance, risk management, information security, legal
                                                                    market, those who are not quite convinced that they need to
counsel or customer service operations found themselves
                                                                    make faster payments a priority may reconsider, given the          I’m not sure if open APIs will be a significant factor in faster
having to go to extraordinary lengths to catch up and avoid
                                                                    extensive benefits it could potentially provide. Furthermore,      payments in the US, but APIs (open or not) will be important.
delays. If you wait until you are feeling market pressure,
                                                                    any technical and operational implementation plan also             RTP payments that are initiated via APIs and provided to end
you may be too late to avoid competitive disadvantage. We
                                                                    needs a go-to-market strategy that considers how value             users by their banks are already driving usage. APIs also equip
also found that launching RTP required close coordination
                                                                    can be delivered where reach is limited, during this window        commercial users to integrate faster payments into their own
between the line of business, operations and technology.
                                                                    where we do not have ubiquity.                                     business processes, which may spur creative use cases that
                                                                                                                                       deliver value well beyond simply moving money.
McBride (BB&T): Develop a comprehensive payment strategy            We’re seeing new use cases and value-adds emerge with
— this is not just a new “tool” to facilitate a payment. Dedicate   overlay services that run on the rails and/or use open
                                                                                                                                       McBride (BB&T): We should look at APIs as a natural
resources to design, deploy and support a multi-year RTP            APIs to enhance the functionality and relevance of faster
                                                                    payments around the world. In what ways might these                extension, progression and evolution that makes it easier for
program, to mitigate the risk that conflicting priorities could
                                                                    influence faster payments systems in the US?                       our corporate clients to do business. I consider this business
result in a reallocation of resources. Don’t underestimate
                                                                    Ledford (TCH): The RTP® system was designed to be fully            technology to be applicable across our clients’ financial
the level of effort involved in enabling this new solution; it
                                                                    functional without formal overlay services, but can also serve     business process in terms of how they can pay and transact
may require new infrastructure, UI modifications, numerous
                                                                    as a solid foundation for overlays. For example, capabilities      (not just for faster payments).
commercialization activities and internal collaboration
                                                                    like Request for Payment (RFP) can be used to deliver bills or
with various lines of businesslike risk, legal, compliance,
                                                                    invoices without requiring that the sender or receiver subscribe   Rodriguez (Federal Reserve System): Technological
operations and customer service. Lastly, get actively involved
                                                                    to the same overlay; comprehensive services like P2P or B2B        innovations like APIs are providing new opportunities for
in industry forums and working committees to collaborate
                                                                    networks can use the rich RTP message set to support a             payment providers to implement faster and more user-friendly
and exchange ideas and best practices.
                                                                    distinct end-to-end value proposition.                             payment capabilities, and are being used more frequently
                                                                                                                                       to connect software and web applications from multiple
                                                                                                                                       providers. US providers could look to APIs to integrate a
                                                                                                                                       greater web of systems and services that can help address the
                                                                                                                                       challenges of ‘electronifying’ business invoicing payments and
                                                                                                                                       remittance processes.
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