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Request for payment: Building block for payments transformation
Journal of Payments Strategy & Systems,
10
(3),
238-244
(2016)
Abstract
This paper examines the benefits and drawbacks of debit-based payment systems and credit-based payment systems, and introduces the Request for Payment (RFP), an enhancement to the traditional credit-based system. An RFP allows a biller, supplier or creditor to request a payment be initiated by its customer that will apply to a specific account on the payee’s receivable system, and solves many of the reconciliation issues that exist in traditional credit-based payment systems. Although similar in terms of basic functionality, the RFP has broad applicability, beyond the traditional electronic bill presentment and payment use case. The result is a payment system that combines the simplicity and certainty of credit transfers with the control over payment application associated with interbank debits.
Keywords: request for payment; credit transfer; payment systems; immediate payment; real-time payment; business-to-business payments
The full article is available to subscribers to the journal.
Author's Biography
Steve Ledford is Senior Vice President of Product Development at The Clearing House, LLC, and is leading development of a Real-Time Payment System, which will be implemented in 2017. The Clearing House (www.theclearinghouse.org) is a banking association and payments company that is owned by the largest commercial banks and dates back to 1853. The Clearing House Payments Company, LLC, owns and operates the core payments system infrastructure in the USA and is currently working to modernise that infrastructure by building a new, ubiquitous, realtime payment system. The Payments Company is the only private-sector Automated Clearing House operator (ACH) and wire operator in the USA, clearing and settling nearly US$2 trillion in US dollar payments each day, representing half of all commercial ACH and wire volume. Its affiliate, The Clearing House Association, LLC, is a nonpartisan organisation that engages in research, analysis, advocacy and litigation focused on financial regulation that supports a safe, sound and competitive banking system.
Michael J. Thomas is Director of Product Development at The Clearing House, LLC, supporting the Real-Time Payments initiative.
