Electronic invoicing has been a huge step in improving the efficiency and sustainability of bill payments: consumers are now used to receiving paperless bills via banking apps or e-mail, and to paying those bills online after logging into their providers or bank account. The next leap forward for consumer payments convenience – and improved cashflow for companies – is to enable one-click or automatic payment of invoices via RTP services. However, there are a couple of steps that need to be taken before this next level becomes reality.
Real-time data required
The core service in RTP is not the transfer of funds, but the exchange of data between the payer and billing organisation. At present, most e-invoicing systems do not allow billing companies visibility of the entire payments process: while they can see that an invoice has been opened or has been paid, there is at present no link between that status and the movement of funds. It’s possible to change this, and deliver real-time status data through the existing SEPA RTP framework.
If we are able to do so – but there’s a catch we’ll come to later – then we will deliver not just more consumer convenience, but also help billing companies to improve their liquidity forecasting and, by extension, their working capital management. What’s more, if we can aggregate payment status data, it can help us to draw out payment patterns to which we can apply AI and Machine Learning to help prevent fraud as well as identifying new product opportunities.
Getting the whole ecosystem involved
The catch mentioned earlier is that we need to engage the entire payments ecosystem to make this model work. If today a billing company gets confirmation of payment from their bank one day after the invoice is due, our aim should be to make the entire invoicing flow transparent to the company. This would make the entire process transparent and backed by real-time information, just like a peer-to-peer transaction between two wallet systems is today.
Achieving this ambition means getting banks, retailers, insurance companies and intermediaries such as fintechs involved. To help make RTP billing a reality, Tieto was selected as the Leading Company for NextGenerationEU funded program to run a pilot scheme in Finland called Veturi (the word means “locomotive” in English) under its 5 year Trusted Digital Societies program – building the mission critical building blocks for our society. In a future blog, we’ll go into more detail about this scheme and what it means for everyone involved in payments, from making paying easier to reducing errors and helping to fight fraud.
