Dealmaking – and clearing regulatory hurdles – is paving the way for real-time payments to make the leap from concept to reality. Progress continued as Mastercard said on Friday (March 5) that it completed the acquisition of a majority stake in Nets’ Corporate Services business after satisfying conditions set out by the European Commission.
The payments network said the deal supports what it termed a “broader set” of account-to-account capabilities. Within those capabilities tied to instant payment infrastructure: clearing, settlement, bill payment and e-invoicing.
“Today is a significant milestone as we continue to build out our multi-rail payment solutions beyond cards,” Paul Stoddart, president of New Payment Platforms at Mastercard, said in a statement. “This acquisition brings top talent and innovative technology, enhancing our existing multi-rail propositions to enable greater access, choice and flexibility in how people want to pay and get paid.”
The deal comes after the August 2019 announcement that Mastercard would spend about 2.9 billion euros to buy Nets, which is based in Denmark. Stoddart told Karen Webster when the deal was announced that the deeper move into faster payments followed previous deals like the one for Vocalink, where that firm’s infrastructure helped fashion real-time payments platforms across the globe. “We obviously expect that the collective set of technology and the services we’re buying can be further exported more widely across Europe and into other markets,” he told Webster.
Mastercard has been eyeing an interoperable market of payment schemes that can facilitate account-to-account payments, in real time, across countries. The stage may be set for a wide embrace of real-time payments – in part because consumers think they’re already using it. Call it a case of misperception priming the pump for … well, the real thing.
According to PYMNTS research, roughly 36.2 percent of consumers say they have used real-time payments – a notable tally, even though the methods they use either do not support real-time payments or are not made in real time. A panel discussion last month with Webster found unanimous support among the three payments professionals for more education as to how real-time payments (and, for example, account-to-account functionality) can improve the management of everyday financial life.
According to panelist Nubia Valenzuela, vice president of Payment Services at SchoolsFirst Federal Credit Union, one of the problems extends to consumer trust. In fact, she said, many of her members still feel they have no choice but to stand in line to deposit a physical paycheck. “It’s that lack of trust that drives the consumer to utilize older versions of payment methods to get things done,” she explained. “So, I think that’s where we, as financial institutions, as the payments industry, need to really focus. They don’t trust the system. They’re afraid that if they send you $100, something’s going to happen on the way. They’re going to lose their money, and who knows how long it’s going to take to get it back.”
Alacriti Senior Vice President Carl Robinson said that in addition to education and transparency, more work has to be done to make end users and financial institutions (FIs) aware of the mechanics surrounding authentication and the settlement piece (as settlements remain a key component of the Mastercard/Nets deal), given that transactions happen in seven seconds or less.
Beyond Consumer Transactions
To be sure, speeding account-to-account transfers will not be limited to consumer transactions. “Making business-to-business payments today is unnecessarily complex, extremely time-consuming and error-prone,” Transcard CEO Greg Bloh told PYMNTS. “This is especially true when businesses pay suppliers with paper checks.
And the Next-Gen AP and AR Digitization Report, done in collaboration with PYMNTS and Transcard, observes that real-time payments (RTP) rails are getting more B2B use than ever in the aftermath of the pandemic. The use of such transactions increased by double-digit percentage points in each of the second and third quarters.
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