The term real-time payments is a slight misnomer. It focuses the industry and the market on the outcome instead of the input.
From an infrastructure standpoint, it's about leveraging technology to help financial institutions better assess and manage the risk involved with payments. Admittedly, this is a bit too far removed from the daily concern of end-users (i.e. businesses and consumers) to appreciate, so “real-time” tends to fall out of our mouths a lot more.
The fact is that security and safety is what allows fast to be Fast. Without new security and fraud sharing advancements and capabilities, Fast wouldn’t be achievable—banks simply wouldn’t adopt it. Luckily, they’re coming around.
But, as high-profile security breaches at Target, TJ Maxx and others have shown, the same is true for the consumer. And while I'd argue that comparing risk profiles of legacy payment systems to a fundamentally improved and modern infrastructure is apple and oranges, we can't marginalize the existential threats facing and informing consumer behavior.
Still, our behavior as consumers is perplexing, isn’t it? We live in fear of cyberthreats, and yet our actions don’t always align with the healthy skepticism and behavior we’re told to practice (i.e. we're lazy). But have we—as stakeholders and providers—really made it easy for our customers to practice good security? For example, we’ve asked them to memorize hundreds of unique and complex passwords at hundreds of individual sites and platforms for decades. Can we really blame a consumer (i.e. “us”) for repeating or over simplifying a password?
Therefore any consumer-facing innovation in payments must be designed for the laziest. I'll be damned if Apple didn't do just that with their extension of Apple Pay to online merchants. The new feature allows them to click “Pay with Apple Pay” at checkout on their computer. Consumers are then prompted to provide their fingerprint to their iPhone or tap to their iWatch to authenticate and complete purchase. Now, I'll be generous and call the benefits I receive from a card swipe vs. a mobile phone tap at physical checkout as a “push.” But online? Where I have to enter 16-digits, a CVS, and other payment info? Give me that iTouch any day of the week (why Apple didn't start here, I have no idea).
Securing the consumer is every bit the responsibility of your design team as it is your security team. At Dwolla, and many other tech platforms, we call this “Security by Design”. It isn't technically revolutionary (reduces friction of integration and end use by incorporating new security technologies and ideas, like tokenization, encryption, or offering two-factor authentication), but it is a deviation from the way legacy players have approached, designed, and grown their interactions with their customers.
Apple, with its massive reach, partnership power, and ubiquity, will play a critical role in socializing new consumer behaviors, like this, that are equal parts security and ease. In doing so, they'll pave the way for the use of real-time bank transfers by businesses and consumers.
Jordan Lampe is director of communication and policy affairs for Dwolla.