26 November 2020
Three factors determine the adoption speed of Request to Pay
“Request to Pay (RtP) is the payment method of the future.” This was one of the first statements made by Christof Hofmann, Global Head of Payments and Collection Products at Deutsche Bank, during the session Request to Pay – what's possible? on day 2 of EBAday. RtP is a framework containing digital messages from the payee to the payer, including commercial transaction data and a possibility to initiate a payment.
Through RtP, a payee can send a payment request to a payer who can approve and pay in his own banking environment. Unlike direct debits, RtPs are real-time and also suitable for one-off payments. The payment request can be sent via various channels, for example via SMS, email, via a company's app and ultimately via your own online banking environment. The payer can decide when and if he wants to proceed to a transaction.
Developments in the Netherlands for example – where ABN AMRO achieved great success with the introduction of an electronic peer-to-peer payment solution via an app called Tikkie – demonstrate the great potential of Request to Pay.
The participants in the session believe in Request to Pay, but at the same time they also stated that the speed of adoption depends on a number of factors. One factor is market segmentation. In a poll, presenter Leo Lipis, CEO of Lipis Advisors, asked which market segments are most likely to adopt Request to Pay first. The B2C and C2B market scored relatively high, to my own surprise. The score for P2P was a lot lower.
Chantal Fokke, Product Area Lead at ING Bank, also reacted astonished on the low score of P2P. “Tikkie has been very well received in the Netherlands. The app had a few million users in a short time. Also, in Spain and Italy you see similar P2P-solutions that are growing fast.” She thinks the B2C market is also a candidate for rapid adoption. “Request to Pay is a good payment method, especially for home delivery, when customers can pay for goods on arrival. The corporate space will follow later because integration there is sometimes somewhat more difficult.”
Not only market segmentation but also the developments in a certain country determine whether RtP will be quickly embraced. As Pierre-Antoine Vacheron, CEO at Natixis Payments, pointed out: “The adoption will differ from country to country.”
I agree with that, because in a country like France the credit card is popular, partly because of chargeback possibilities. It might take more time there to get consumers enthusiastic about RtP. In Germany, cash and direct debit are the most important payment methods, which increases the likelihood of a breakthrough for RtP.
The development of use cases will also play a major role in the adoption process. Besides market segments and country developments, a third key factor for request to pay adoption was discussed: the use case, e.g. different adoption pace in e-commerce than bill payments. A combination with Instant Payments is logical, according to Sandra Peute, Business Developer SEPA at ABN AMRO. “Instant Payments is the expectation of customers today. In the Netherlands customers expect nothing but instant, otherwise they complain. Peute mentions a use case as an example: parcel delivery company DHL has integrated payment solution Tikkie in its systems via APIs. This means that a delivery driver can send a Tikkie via a handheld device when he or she is at a customer’s doorstep. “The integration in corporate systems is really important.”
The future will eventually show how quickly Request to Pay will be embraced. When that will be is hard to say. Not within a few years, according to the participants. But they are positive for the future. And so are we at equensWorldline, especially now innovation is taking off more quickly due to regulations like PSD2 and Open Banking. We see how quickly young people embrace new payment methods in the Netherlands like RtP (via Tikkie) and Instant Payments. I am convinced the rest of the world will follow this example.