Payment Rail Competition Heats Up
ACH volume hit new records in the year’s first quarter, driven in part by a surge in B2B payments adoption.
But as this week’s Payment Rails Innovation Tracker demonstrates, competition between networks is on the rise as innovators embrace multi-rail strategies to streamline the movement of funds — and data — for corporates.
Q1 ACH Volume Sets Records
New ACH Network data has revealed that adoption of the payment rail is breaking records for the first quarter of 2021. NACHA revealed an 11.2 percent first-quarter increase in network volume compared to Q1 2020, with transaction totals hitting $17.3 trillion, a 19 percent year-over-year increase. Both February and March saw record-breaking days of ACH network traffic. B2B payments saw some of the biggest gains, with volume growing 17.3 percent — a clear sign that firms are ditching the check, NACHA noted.
Orum Boosts Value Prop Of ACH
While ACH payment volume is on the rise, the rail has its drawbacks. Some of the largest include often sluggish speeds, and the inability to move rich transaction data along with funds. FinTech Orum aims to tackle this pain point by collaborating with financial institutions (FIs) to accelerate bank transfers and enhance transaction data availability. The company has also introduced a new solution to optimize payment routing across multiple payment rails, including ACH, card rails or otherwise. Investors placed $21 million in venture capital to support the companies technology, with the Series A funding led by Bain Capital. Inspired Capital, Homebrew, Acrew, Primary, Clocktower, Box Group, Amex Ventures and SVB Capital also participated.
Saudi Arabia Ushers In Instant Payments
Saudi Arabia is welcoming real-time payments capabilities as a result of a partnership between Saudi Payments, IBM and Mastercard. Under supervision of the Saudi Central Bank (SAMA), the partners have launched sarie, an instant payment system that uses Mastercard’s multi-rail strategy to accelerate payments, including card and account-to-account (A2A) rails. The new system supports ISO 20022 messaging standards, and all local banks have now been successfully looped into the network, an announcement stated.
Mastercard Brings Track To UAE
In a partnership with HSBC, Mastercard is expanding its multi-rail strategy and is rolling out its Mastercard Track service in the United Arab Emirates, a technology that automates B2B payments across multiple rails to boost efficiency. The expansion follows the recent addition of A2A capabilities on the Mastercard Track Business Platform Service to expand payment choice and support the movement of enriched transaction data along with funds.
TCH Backs Global Collaboration
As more jurisdictions roll out their real-time payment infrastructures, opportunity for the global payments ecosystem to evolve continues to grow. In a conversation with PYMNTS, The Clearing House (TCH) Senior Vice President of Products and Strategy Steve Ledford discussed the importance of cross-border collaboration to drive payment rail innovation. Eventually, he said, this collaborative effort will give rise to new use cases and functionality, where only the most efficient payment rails will survive.
Tassat Touts Blockchain Over Legacy Rails
There are three key ingredients to better B2B payments, according to Tassat CEO Ron Totaro. In a conversation with PYMNTS, he pointed to the need for real-time transaction speeds, movement of data and funds, and an overall better end-user experience. Unfortunately, legacy payment rules cannot achieve all of these goals, he said. Blockchain demonstrates the opportunity for new payment infrastructure to enhance B2B payments. “These next-generation rails are going to create a more elegant experience around customer experience, something that’s [application programming interface (API)] driven, something that creates payments as a growth engine for banks to grow deposits, and attract and retain customers better,” Totaro said. At the same time, however, he emphasized the importance of support for multiple rails that can integrate with the Tassat platform to provide choice and drive adoption.