Implementing an instant payments infrastructure – A guide to success

Instant payments are becoming the norm globally, with real-time payments schemes appearing in new countries every year. In this series of articles on instant payments, we’re discussing the keys to implementing a new payment infrastructure – so you can unlock the capacity to handle increasing volumes of transactions without compromising speed, accuracy or security.

Implementation of an instant payments system cannot be a solitary endeavor. As with any type of network, the value is directly correlated with its level of reach – in this case, the number of banks involved and reachability of their accounts. To launch a successful instant payment infrastructure, you need to view the implementation as a community project that involves various stakeholders, each with their unique interests, concerns and contributions.

The project can be initiated in several ways: some are pushed by banks, others driven by the national bank or clearing house, and some are forced through legislation. Regardless of how the project is initiated, community collaboration is significant to its success. Effective stakeholder management is critical.

Who are your stakeholders?

1. Banks

Banks serve as the participants in the system, as well as the channels through which the end-user will utilize the infrastructure. Their collaboration and active involvement are crucial to designing a system that’s efficient, secure and fits the specified market.

2. Regulatory entities

Regulatory entities, such as governments and central banks, play a critical role in licensing the system, and they often provide a range of necessary requirements to operate a payment infrastructure within their jurisdiction. They also provide oversight to ensure compliance and protection of the interests of all parties.

3. End-users

End-users of the system include individual consumers, organizations and businesses. These are customers of the banks and the primary users of instant payments as they send transactions to friends, pay supplier invoices or pay recurring utility bills. There is rarely a direct relationship between the operator of the system and the end-users, so it’s important that participating banks include customer feedback at the heart of their planning and use case design so that operators have clear insight into the wants and needs of customers.

It’s also worth considering other stakeholders, such as technology providers, payment service providers and industry associations, from the beginning of the project.

Implementation as a community project

The implementation of an instant payment system impacts a broad community of actors. One of the most common pain points of implementation is the readiness of participating banks. Banks are subject to pressure from regulatory entities, market competition and customers. These are common reasons why implementing instant payments unfortunately becomes deprioritized. Because of this, it's critical to include banks in the early phases of planning so they understand the benefits and what will be expected of them. This will help set a realistic timeline for everyone and avoid delayed go-lives. After all, the banks are the ones facing the end-users and must be part of the launch to market.

Approaching implementation as a community project fosters collaboration, encourages shared ownership and ensures that the system meets the needs and expectations of all stakeholders. It also helps to build trust and support for the project, which can be instrumental in overcoming challenges and achieving project objectives.

Treating the project as a community project is a mindset and a commitment to the idea that the operator and participating banks must work collaboratively for the joint success of the network. It means each taking ownership, carrying responsibilities and working together despite the otherwise competitive nature of the industry. It means establishing informal dialogue in addition to the formal project governance and working together to overcome project obstacles.

Banks must see themselves not only as paying customers with the infrastructure served on a platter, but rather as partners who actively partake in discussions, review documentation, complete early testing and help set the future direction of the platform. Participating banks must be involved as contributors to the project, as much of the success of the system relies on their readiness and offerings to their customers.

Engaging banks in the early stages increases the likelihood of them being properly prepared and ensures greater reachability from the beginning. This is a pivotal factor in fostering widespread adoption and utilization of a new instant payment system.

Discover how to unlock the smooth and accurate flow of funds by synchronizing and integrating all transaction activities, payment systems and financial networks.

Learn more about developing an instant payments infrastructure by downloading our white paper, From Vision to Reality: Planning Your New Instant Payment Infrastructure.

Read more from this three-part series:

Part 1 - How to build a secure and efficient instant payments infrastructure

Part 3 - How to successfully launch an instant payments infrastructure