MasterCard's New Way To Get Paid...
The card network officially acquired Vocalink in 2017 and Transfast in 2019, both of which helped Mastercard develop its ability to move beyond its traditional card rails and into real-time payments (RTP). Now, Mastercard is taking two new steps that will expand its reach and rely on RTP to succeed:
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It's launched a business-to-business (B2B) RTP solution called Payment on Delivery. The offering enables a supplier's bank to request a payment and for a business to pay immediately upon delivery, potentially removing inefficiencies from the process like time delays and paperwork. Payment on Delivery uses The Clearing House's (TCH) RTP network and is being piloted with PNC Bank. It's first being deployed for alcohol distribution where payments can be complicated due to various regulations.
Mastercard has expanded its Bill Pay Exchange product to new clients, which could boost access to RTP transactions. The solution, which was announced in October 2018, aims to let consumers pay many or all of their bills from a banking app or website, making for a less fragmented experience. Bill Pay Exchange is being rolled out with firms like ConEd that bill consumers, and bill pay players including recent Mastercard acquisition Transactis. It enables consumers to pay their bills with bank account payments, cards, and RTP transactions if both the consumer and billing bank are set up to do so, Ronald Shultz, Mastercard EVP, new payment flows, North America, explained.
These two use cases could boost adoption of RTP because they might remove pain points surrounding efficiency. Both the B2B payments and bill pay industries still involve a significant amount of checks, cash, and nondigital processes, potentially making them prime targets for new digital offerings.
Because B2B payments can follow "a clunky and inefficient process," Shultz said in a release, and some consumers would benefit from the financial flexibility of being able to pay bills at the last minute, RTP may have particularly strong appeal in these areas. And once businesses and consumers grow accustomed to the speed of RTP and its convenience, they could start to expect it elsewhere, leading to demand for RTP across all types of payments.
Pushing these solutions and getting involved in RTP in its relatively early days is key to Mastercard's ability to succeed as payments move beyond cards. Mastercard has made several acquisitions and partnerships to bolster its noncard capabilities, and launching Payment on Delivery and expanding Bill Pay Exchange is a continuation of its efforts.
Its involvement in these areas gives it visibility into payment types beyond cards — even when it isn't directly powering those payments — and new ways to capture payments volume. Targeting RTP in particular may be wise given that it's not widely adopted yet and there's interest in it from businesses, which may be driven by its unmatched speed.