Real-time payment systems must be interoperable if they are to succeed, Fiserv says. To this end, the vendor wants to enable an open network, but it faces stiff competition.
Fiserv launched the Now Network, which mixes its bill pay, Popmoney and TransferNow services, last month. Currently, only Fiserv customers can use the network, but in the future, "we want this to be an open network and create interoperability with other networks," said Matt Wilcox, senior vice president of marketing strategy and innovation at Fiserv.
But Fiserv isn't the only payments company with the idea.
The Clearing House is developing a real-time payments network that it has said will be a multi-year, multi-partner endeavor. The Federal Reserve is also working on enabling faster payments for a subset of transactions. And plenty of startups have emerged in the market, using the Bitcoin protocol or ACH rails to deliver faster, lower-cost payments. In May, Fiserv's senior vice president, Marc West, said the company was examining Bitcoin's use of encryption to ensure secure transfers.
Speed has "come to the forefront because there's an expectation from consumers," said Wilcox. "Everything around them from Uber to Netflix is real-time and payments haven't kept pace with that, whether it's same-day settlement or instant notification that the money has moved."
Banks and other payments providers might develop a new revenue stream from real-time payments by deploying a FedEx type model for money movement, said Wilcox. Just as consumers will pay for faster delivery of their mail or packages, he predicts consumers will pay a premium for instant payment capabilities.
"It's not just the person sending the money that has a willingness to pay [for real-time] but also on the receiver end," Wilcox said. Fiserv's Now Network also has a consumer intelligence component for real-time offers.
While banks are becoming more open to collaboration, they've typically held their customers close. Wilcox said Fiserv is making progress in changing that mindset and gives its Popmoney person-to-person technology as an example.
More than 2,300 financial institutions use Popmoney, including TD Bank, U.S. Bank, PNC and Citibank, and because the network is open, a customer from one of these banks can send money to a customer of another institution.
BBVA has also made moves to modernize its payments, partnering with Dwolla in October to enable real-time payments throughout the bank's offerings.
"This type of partnership shows how important real-time capabilities are to financial institutions," said Wilcox. "They are exploring options to bring those capabilities to their customers, which reinforces the need for openness as many different solutions are being explored."
Fiserv plans for its financial institution clients to enroll their customers into the network, said Wilcox.
Millennials will likely be the first to adopt real-time payments since they've grown up using connected devices that provide instant information and gratification, and because their perception of money is increasingly digital. PayPal's Venmo, for example, is finding success with millennials by mixing payments with a Twitter-esque social media stream.