Open Banking Report 2022: Combining A2A Payments with Request-to-Pay
European regulation and technological innovation, as well as the pandemic, have shaken payment habits and have therefore disrupted the payment industry. In fact, consumers are more than ever looking for easy-to-use, instant, and secure means of paying online: the demand for flexible and transparent solutions has never been higher. Request-to-Pay (RTP or R2P), combined with instant Open Banking-powered payments is to play a central part in the future of payments, giving notably more control and freedom to both payees and payers.
What is RTP and what are its benefits?
First and foremost, RTP is not to be confused with a payment means or a payment instrument. It is rather a way to communicate a request to be paid. RTP can therefore be described as a messaging functionality, where the payee takes the initiative to request a specific payment from the payer, while providing the latter with all required information (amount, recipient, etc.).
This functionality has been used for several years to fulfil its immense potential by leveraging Open Banking-powered payments as a new settlement method. Over the past months, it evolved from being used within closed payment method networks to theoretically every bank and payment account in Europe.
RTP offers many benefits to all stakeholders, from merchants (‘invoicers’ or payees) to consumers (or payers), mainly revolving around the ease of implementation first, and then, of use.
On the one hand, merchants and their IT teams benefit from a simple technical integration by leveraging REST APIs, enabling them to offer this new payment solution in no time.
RTP also means lower fees than credit cards or e-wallets, as well as fewer payment rejections/failures (and therefore fewer reconciliation efforts). In fact, as no manual input of payment or recipient details is needed, the number of possible mistakes decreases drastically.
Moreover, it can support several additional use cases where the acts of purchase and payment are dissociated, either to give more flexibility to the consumer (Buy Now, Pay Later) or because the business model requires it (pay-per-use, for utilities and energy, notably). RTP also brings additional security in certain use cases such as telesales (for instance, when buying airplane tickets, the consumer receives a link by SMS to make the payment while on the phone, instead of providing his/her credit card details).