FLAVORS OF FAST FLAVORS OF FAST REPORT 2018 Contents Contents 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 Ofers 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 Defnition 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. Welcome Welcome 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 fntech leader who is dedicated to helping every one of our clients messaging standards like ISO 20022. Our 2018 fndings identify how faster payments can ft 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’ ffth 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 infuences 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, fntech 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. Introduction Introduction 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 fnancial 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 Real-time payments are the frst step and immediately. An open payments system can also use that is comparable to cash, without the need for the provide opportunities for fnancial institutions to help payer to know the account number of the benefciary. 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 fnancial 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 beneft. 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 fnancial institutions, as standard provides an added beneft 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 efciencies 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 openness: open to sharing data, debate lies in the solutions and use cases that are available 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 defned 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 specifc defnitions 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 fnancial 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 fnancial 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. Benefts 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 fnancial 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, fnancial systems must non-transactional offerings, business value is enhanced.