With COVID continuing to impact economies and incomes across the world, there is a need for flexible and transparent payments solutions that put both payer and payee in control of their payments.

The significant decline in regular payments arrangements across multiple industries during the pandemic emphasises this need even further. Businesses in the UK are offering a number of short-term measures to support those of their customers who are struggling to pay essential bills. The time is right for the industries to explore the benefits Request to Pay (RtP) can offer to them and their customers.

What is Request to Pay and what benefits can it offer?

RtP is an innovative way of requesting and settling payments between individuals, businesses and organisations.

It offers a secure messaging framework through which billers can request payments in the form of a simple message. Payers have the flexibility to make full or partial payment or ask for an extension of the payment date with the following response options:

  1. Pay in full
  2. Pay part
  3. Ask for extension
  4. Decline
  5. Ask for information

These options allow payers and payees to communicate in the context of a payment. Payers enjoy greater control and flexibility in making payments and can avoid fees or charges by requesting additional time. Similarly, billers will have better visibility into the payer’s ability to meet a payment obligation by a due date. RtP enhances communication, flexibility and control at the heart of payments. It enables billers to efficiently manage cash flow and debt and reduce the cost of collection and recovery. The framework can complement the biller’s existing payments infrastructure without requiring them to introduce any new payments infrastructure.

Request to Pay with Open Banking

The benefits of RtP are amplified when combined with the principles of Open Banking. This means billers can empower their payment service providers to instantly and irrevocably make and receive payments directly between their accounts and those of their customers. It also allows payers to easily make payments for goods and services directly from their bank account without creating a regular payments arrangement.

What sectors can benefit?

Request to Pay was launched in May 2020 by Pay.UK. During the consultation phase, multiple industries identified the potential benefits:

  • In the utilities sector, the demand for a flexible payment mechanism is evident from the short-term measures such as cancellation, extension and missed payments. RtP enables open dialogue between large providers and payers / consumers.
  • For small and medium-sized enterprises, irregular cash flow is a significant problem. RtP allows quicker collection of funds and flexible financial management when dealing with suppliers.
  • In real estate, debt collection has always been a challenge. RtP can create a positive dialogue between tenants and owners / advisors to offer more flexibility for payment.
  • RtP can also support the public sector when it comes to enabling the payment of fees for things like parking permits and fines.

The potential role of FS providers

While Request to Pay promises huge potential across multiple industries, payments services providers have the opportunity to enable this service for both businesses and consumers.

Financial services (FS) providers have already established trust among their clients and are in a unique position to operate the central message repository which is required to facilitate the exchange of RtP messages between businesses and customers. Those with an Open Banking infrastructure in place will be able to provide the key components of the RtP services to other industries.

In the post-COVID world, Request to Pay will become a central part of the future of payments. FS firms that become early adopters will be the ones with the position of advantage.

In my next post, we’ll take a look at the global RtP trends and the leading players.

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