Real-time payments become the new norm in Australia, with Europe set to follow suit

The rapid speeds of modern technology have created the expectation amongst consumers and businesses that payments need to be transferred instantaneously at the push of a button. Global infrastructure provider SWIFT made this a reality this week, with the launch of a real-time payments platform in Australia.

The New Payments Platform’s (NPP) financial architecture has been designed and constructed to transform how consumers, businesses, and governments transact with one another.

SWIFT has supported the evolution of payments systems around the world for more than 40 years. It played a key role in the design, build and delivery of the NPP and will continue to operate its infrastructure. This is the first step in SWIFT’s global instant payments strategy and illustrates a blueprint for what we can expect to arrive in Europe.

Instant payments are set to launch across Europe in 2018, alongside the launch of TARGET Instant Payment Settlement (TIPS), the euro real-time payments service commissioned by the Eurosystem. SWIFT’s new messaging service will harmonize the infrastructure throughout the continent and allow instant payments to be made in euros through both TIPS and EBA CLEARING’s RT-1 instant payments system.

Consumers, businesses and the broader economy are only beginning to see the possibilities with new services such as same-day delivery, just-in-time manufacturing, and instant payment apps. SWIFT currently connects 85 of the 149 High-Value Payments systems in the world, including CHAPS in the UK, TARGET2 in Europe and the SWIFT India Domestic Services. It also offers gateways to instant payments platforms in Hong Kong and in the US. All of this suggests the payments industry has only taken small steps towards reaching its full potential.

It is likely that real-time line-by-line settlement, open access infrastructure that empowers innovation via competition, and overlay services that provide value-added services are likely to become the norm.

This is a once in a generation opportunity to reinvent the payment process. While Europe awaits the arrival of instant payments in November 2018, it will be interesting to observe the changes in Australia that occur due to this new payment landscape.

Previse secures backing to end late B2B payments with the help of AI

Small businesses are the backbone of the UK economy, generating some 50% of private sector turnover and employing three out of five private sector workers.

However, these businesses are held back by late payments from their large corporate clients. With 60% of SMEs paid late by corporates, businesses are left strapped for cash to meet their own payment obligations, such as wages, stock and rent. This cash flow crisis forces 50,000 UK companies a year to go to the wall. 

Banks play a role in easing the problem, offering larger suppliers short-term financing or buying the invoices directly from suppliers for a substantial discount, a practice known as factoring. Both these solutions are expensive for the supplier, however, which pushes up prices for the whole payments chain. In addition, given the fragmented and high-risk nature of the SME credit market, only the largest suppliers are able to secure credit.

This means that, according to the world bank, there is $2.4 trillion in unmet demand for financing from SMEs globally.

Enter Previse. The company, which this week announced the successful completion of a £2 million seed round, is harnessing the power of artificial intelligence (AI) technology to allow banks to meet the financing needs of SME suppliers in a scalable and low-risk way.

Previse uses advanced AI and hundreds of millions of data points to score the likelihood that a corporate buyer will be able to pay a supplier’s invoice. This score is then provided to banks and other funders who use that information to instantly pay the SME on behalf of the large corporate. The supplier receives their money the day they issue their invoice, giving them complete cash flow confidence.

The effect is that “instant, frictionless and efficient payments become the new standard for B2B payments,” according to Paul Christensen, co-founder and CEO of Previse.

The rest of the payments chain benefits as well. By offering such a service, buyers can negotiate a discount on their purchasing costs and banks can reach much deeper into the SME credit market without blowing their risk exposure. The net effect could be a several billion-pound boost to the UK economy every year.

To find out more about Previse seed funding please click here