The payments world is continuously expanding with solutions that put speed and convenience at the forefront of their goals. New innovative solutions enter the market to enable better payment experiences for both the payer and payee. One of these is Request-to-Pay: a simplified way to request payments. This article explores what is Request-to-Pay, what are its benefits, and the impacts it has on both the payments and insurance industries.
The Request-To-Pay (RTP) is a messaging service that involves the payee requesting a specific payment from the payer. It is a simple and safe payment that is processed in real-time, making it an ideal option for collecting premiums. The RTP process also allows customers to make payments without having to enter any sensitive information, such as their account number and password.
When your customers use an RTP service, you will receive an authorisation code from their bank that you can then use to charge their account. This process takes place in real-time, so there’s no need to wait until the next business day to see if your payment was successful.
Request-to-Pay is available across the globe in various markets. You may find that the designation of “Request-to-Pay” may change slightly from market to market. For example, in the UK and Europe, this messaging service is called “Request-to-Pay”. In the US, it is called “Request for Payment”, in India, it is called “Collect”, and in some parts of Asia, it is called “E-mandates”.
In the UK, the final Request-to-Pay framework was launched on the 29th of May 2020 by Pay.UK, after four and a half years of research and user tests. This service is regulated by the Financial Conduct Authority, also known as FCA, to ensure that it follows KYC practices.
In Europe, Request-to-Pay was launched on the 15th of June 2020 by the European Payments Council. It was launched at a time when there was increasing pressure to increase SEPA’s instant volume of payments.
While the process is similar to the UK version, in Europe, Request-to-Pay is exclusively available in Euro (though there are plans to expand for non-Euro markets), there are no additional payment options for the payer (either they approve or decline the request), and the service isn’t limited to financial service providers. Both in Europe and in the UK, Request-to-Pay works as an overlay scheme and is payments-rail agnostic.
When you use an RTP service, requesting payment from your customers, your customers will receive a digital notification of this request on their mobile devices. The notification could be sent via a mobile banking app or a third party. They then have the option to accept or decline this request for payment.
If they accept the request, they will be asked to provide their billing address, email address, and telephone number. They also have the option of providing additional information about themselves, including their name, date of birth, and Social Security Number. The amount of information they need to provide depends on the region or country they are based in. Once they submit this information, a real-time payment is initiated to the payee.
In summary, Request-to-Pay enables you to:
– Send requests, which may include the amount that needs to be paid, the due date, and other attachments
– Receive requests, and manage them in one place
– Respond to a request, whether by asking for more time, accepting the request in due time, or starting a conversation
-Pay for a request – Payers can pay whenever they want and split the total amount requested into various transactions, as long as the full amount is paid by the due date.
Request-to-Pay can be used by consumers, corporates, billers, and merchants. It is applicable to both B2B and B2C, as enterprises can request payment for vendors and suppliers, as well as from their customers. The use cases of Request-to-Pay are varied, as any industry can benefit from it. However, industries that collect money from their customers on a regular basis, such as the case of insurance, may find Request-to-Pay even more beneficial.
Ensuring that premiums are paid on time to facilitate reconciliation and improve cash flow management is an important part of insurance. With Request-to-Pay, insurers can make payments easier for their customers, which in turn enables them to have more predictability around incoming funds.
There are various benefits of using Request-to-Pay, and these affect both customers and businesses. Let’s have a look into some:
Billers are provided with all of the information to reconcile a payment when it arrives. Each request and payment comes with a customer reference, making it easier to match the internal records with bank statements.
Request-to-Pay is a simple and convenient service that provides a lot of flexibility to customers. Customers are allowed to pay whenever they want and split the total transaction into various smaller payments. This can be done as long as the bill is fully paid off by the deadline set by the payee.
No customer likes to be left in the dark, wondering if the payment arrived or how to make the payment. Request-to-Pay enables easy communication between the payer and payee, as each request opens up a dialogue. Your customers can speak with your customer service team whenever they need and get their questions answered. This makes for a much more satisfactory customer payment experience.
Customers can accept or decline a Request-to-Pay, or speak directly with your team should they have any queries. They are given more control over how and when to pay. This doesn’t affect you in any way, as the Request-to-Pay has a deadline by which customers need to have the full amount paid off.
Yes, Request-to-Pay is a secure messaging channel. The payer has full control over whether to accept this request or not. If they approve the request, they will use their verified bank account details to make the payment.
Request to Pay (R2P) is widely anticipated to have a lasting effect on the way we pay for goods and services, as it enables companies to offer their customers greater flexibility, choices, and control at lower costs than traditional payment options.
According to an analysis conducted by Icon Solutions, 73% of enterprises that have adopted Request-to-Pay saw the reduced cost of reconciliation as the main benefit, followed by better visibility of real-time cash flow (63%) and the general ability to reduce costs (56%).
The cost-of-living crisis makes Request-to-Pay even more relevant. As customers struggle with paying for bills and necessities, there is a higher likelihood that they will miss payments. Much like our Pay-By-Link solution, which enables customers to pay via a digital payment link, Request-to-Pay offers a convenient and easy way to pay for premiums.
It also facilitates communication, which helps to ensure more positive engagements between insurers and their policyholders, even if policyholders are facing financial difficulties. By making it easier and more convenient to pay, insurers are also enabling better cash flow management and preventing the high costs of chasing up clients that have missed their payments.
According to a recent report, customers would be 52% more loyal to a company that offered R2P than to one that didn’t, even if the other company had more competitive prices. Pay.UK has estimated that Request-to-Pay will save up to £1.3 billion per year for UK-based companies. Based on statistics alone, Request-to-Pay has a significant amount of potential, and the capacity to great benefit both consumers and enterprises.
According to the Icon Solutions survey, out of all the banking institutions and payment providers surveyed, 54% mentioned limitations in existing technologies as their biggest concern in adopting Request-to-Pay. Traditional enterprises have traditional IT systems – the same ones that powered all of the company’s operations for decades. Their current infrastructure does not offer enough flexibility to integrate with newer solutions quickly and safely. This is a significant challenge for enterprises that, while looking to innovate and bring new solutions to the table, still need to ensure speed-to-market.
To accelerate the adoption of Request-to-Pay, identifying a pragmatic path to upgrade current technologies, along with a clear strategic direction that aligns with broader business objectives, is key. This friction between new and old technologies presents huge opportunities for third-party providers. Third-party solutions like Imburse can serve as the glue between technologies, filling the gaps that traditional enterprises face.
Imburse is a cloud-based middleware connecting large enterprises to the payments ecosystem, regardless of their existing IT infrastructure. Through a single connection to Imburse, enterprises can collect or pay out using various payment technologies and providers around the globe.
In a world where consumers’ payment preferences and technologies are ever-evolving, Imburse works with insurers to future-proof their payment requirements. Regardless of the business area, market, or requirements, Imburse will connect you to your choice of technology and provider.
Reach out to our team should you want to discuss the options Imburse offers on Request-to-Pay. Our team is happy to show you what our platform can do for your business and offer you a free demo.