My daughters tease me whenever I make such a proclamation, but it’s clearly an exciting time to be in payments.
This was evident at 2017’s NACHA conference, which drew 2,400 professionals to Austin, Texas. The industry association officially rebranded its event as NACHA Faster Payments, reflecting the current hot-button topics.
The change was more than window dressing, bringing a welcome jolt of energy to the proceedings.
Amid a wealth of solid content, these were three prevailing themes I noted across three days in late April.
1. Ratcheting up the P2P battle
The launch of Zelle as a bank-owned alternative to Venmo is among the payment industry’s most closely watched developments.
Despite the high profile of apps like the PayPal-owned Venmo, Fiserv pointed to research indicating that nonbanks still account for only one-sixth of person-to-person (P2P) traffic as evidence that the market remains in play.
Zelle had prominent booth presence on the exhibit hall floor, but the product team of Early Warning Systems (Zelle’s owner) allowed partners FIS and Fiserv to lead the messaging from the podium.
Both service providers have programs to bring financial institutions running their platforms onto the Zelle solution. (CO-OP Financial Services and Jack Henry have similar Zelle alliances.)
Not to be forgotten, Shazam took the stage touting its own BOLT$ mobile solution, which includes P2P capability as well as other features to round out a community financial institution’s mobile offering.
Zelle promises a $30 million marketing campaign later this year to build brand awareness, and is clearly motivated to achieve ubiquity by recruiting financial institutions to add to the roughly two-thirds market reach of its owner banks.
Unfortunately we’ll have to wait a bit longer to see how Zelle’s proposition plays in the marketplace. Rollout has been delayed again, and is now planned for the fall.
2. Real-time payments charge ahead
If faster payments are the goal, they can’t get more prompt than real-time. While the Federal Reserve’s initiative convening all constituencies to foster a market-driven solution continues apace (another report is due out by mid-year), The ClearingHouse (TCH) is keeping its head down and moving forward with its own solution.
TCH (like Early Warning, an entity jointly owned by the nation’s largest financial institutions) was the conference’s most omnipresent force, preaching its message of inclusion.
FIS announced a new incubator service to this end, providing a low-cost, rapid-fire approach for onboarding financial institutions to TCH’s real-time offering in its nascent stages.
FIS Division Executive for Enterprise Payments Doug Gross explained to me that while the incubator is intended mainly for tier one banks, smaller institutions are likely to opt for his firm’s ASP (application service provider) model, and can access similar capabilities through that channel.
Last year, Jack Henry announced a partnership to help connect its client banks to TCH’s real-time payments platform as well.
3. Application program interfaces (APIs)
Another hot topic I did not expect to receive as much play at NACHA Payments was open banking, the use of APIs to seamlessly connect financial institution systems to nonbanks in pursuit of seamless data sharing and value-added services.
Yet this was also central to the conversation, thanks in part to NACHA’s efforts through the Payment Innovation Alliance, a coalition of 70 companies aiming to create a standardized “playbook” to harness the power of these APIs.
NACHA’s Advanced Payments Managing Director George Throckmorton offered a hypothetical and extremely powerful use case: What if the IRS had the ability (with consumer permission, of course) to connect through APIs to confirm a taxpayer’s identity/account ownership before issuing refunds?
And we haven’t even touched on NACHA’s own in-house priority, the pending September expansion of same-day ACH to debit transactions.
Last September’s same-day credit rollout went remarkably smoothly, already driving more than $5 billion of monthly volume.
The debit phase significantly increases the variety of use cases—especially for consumers—and should therefore drive big volume increases. However it also carries greater risk and opportunities for glitches if processors are not vigilant.
And remember: all financial institutions will be required to receive same-day ACH debits, even if they elect not to originate them for now.
The same-day ACH mandate is more of an operational point, and at its heart NACHA Faster Payments remains an event for practitioners.
Nonetheless, the added focus on strategic topics driving the industry forward breathed new life into an already valuable event.
GLEN SARVADY is managing partner at 154 Advisors and senior payments expert with Best Innovation Group, a CUNA consulting partner. Follow him on Twitter via @154Advisors. His views do not necessarily reflect those of Credit Union National Association.