The concept of Request to Pay is simple. By enabling a secure messaging channel between biller and payer, it allows the biller to initiate a transaction and the payer to choose when – and how much – they pay. This is unlocking new flexible ways for money to move between people, organisations and businesses.
But despite this undoubted potential, the path to widespread adoption remains unclear and the full range of product and service offerings have yet to emerge and take hold. To better understand current and future perspectives on Request to Pay, Icon surveyed over 50 industry stakeholders, including global retail and corporate banks, to analyse customer benefits and demand, key emerging use-cases, and the main challenges to overcome.
What are the benefits of Request to Pay?
Across all customer segments, it is apparent that the ability to deliver more flexibility, choice and control – while reducing costs – are hallmarks of Request to Pay that are providing a viable alternative to established payment methods.
For corporate customers, 73% of respondents saw the reduced cost of reconciliation as the main benefit, followed by better visibility of real-time cashflow (63%) and the general ability to reduce costs (56%).
Given merchants’ long-running attempts to circumvent card rails, 71% of survey respondents see Request to Pay as an opportunity reduce dependency on payment cards and drive customers to alternative payment methods running on cheaper account-to-account (A2A) rails.
And amid an escalating cost-of-living crisis and rising inflation, the ability of Request to Pay services to offer retail customers better control of cash flow, greater visibility of money leaving their account and more flexibility for the date the payment is taken, as well as the ability to pay a bill in part, are significant advantages. In fact, 87% of respondents see Request to Pay as a good alternative to direct debits to help consumers better manage their finances.
Request to Pay – where next?
This potential is feeding increasing customer demand for Request to Pay services. As one senior bank executive explains, “there are a number of different sources [of demand] and that’s helpful.” So far, the most momentum for Request to Pay has come from retail customers for services such as peer-to-peer (P2P) payments, one-off bill payments and recurring bill payments.
For corporate and merchants, there are fewer offerings currently available. Yet this is set to change as survey respondents agree that demand for Request to Pay is predominantly coming from large corporate customers (73%) and merchants (59%).
Respondents are therefore planning to offer a wider set of Request to Pay services in the future to reflect increasing demand from these customer segments, with invoicing (65%), the digitalisation and integration of processes and systems (51%) and payments reconciliation (49%) identified as leading emerging use-cases.
Hurdles to overcome
Yet despite wide recognition of Request to Pay’s potential and increasing customer demand, only 18% of bank and PSPs surveyed offer Request to Pay services today. What’s more, only 27% plan to within the next 12 months.
The main challenge facing banks is familiar and predictable, with 54% of bank and PSP respondents citing the limitations of existing technology and systems as their biggest obstacle. This reflects the fact that existing infrastructure simply does not have the flexibility to bring differentiated services to market quickly and safely.
Successfully launching Request to Pay services will require a transformation of the underlying technology, as well as a broader cultural shift to embrace agility. These technological limitations are compounded by the absence of direction. A pragmatic path to upgrading existing technology, that is aligned with business objectives, is critical to accelerating adoption and remaining competitive. But less than half of respondents reported having a clear strategy in place.
Realising the benefits of Request to Pay
These challenges are not easily overcome. With competing priorities from mission-critical projects, the reality is that demand-led propositions like Request to Pay are a ‘nice-to-have’ and there will inevitably be trade-offs between opportunity and urgency. As one senior bank executive explains: “There is a level of change congestion.”
To deliver a Request to Pay capability, banks will face the usual consideration of whether to buy, build or partner. But with banks already at the limits of their technological and strategic capacity, trusted third-parties promise to play an important role in filling the resource gap to help banks realise the huge opportunities presented by Request to Pay.