A new concept dubbed the ‘Instant Payment Card’ could hold the answer to successfully introducing a pan-European instant payments system, Alain Martin, president of the Smart Payment Association, explains in a new presentation for NFCW’s Contactless World Congress online events series.
The core idea involves using a bank card’s Primary Account Number (PAN) as a proxy for the customer’s International Bank Account Number (IBAN) so that, when making a payment to a merchant either in a store or online, a consumer would be able to use a standard physical EMV bank card — or a digital version stored on their NFC mobile phone — to send funds directly from their bank account to the merchant.
Those funds would then arrive instantly in the merchant’s bank account, with no delays involved.
The idea, which has been proposed to standards organisation The Berlin Group for adoption, has multiple advantages over other instant payments options that have been proposed, Martin says.
One key advantage is that it enables the existing smartcard, merchant terminal and banking infrastructure to be leveraged, he says. And, unlike with QR codes, it will be possible for payments to be made without the need for an internet connection.
Instant payments delivered in this way would also be fully accessible to any consumer with a bank account, with no requirement to have or use a smartphone. Consumers would also not need to make any changes in the way they pay as they would make a payment in exactly the same way that they do today.
Making the concept a reality will require payment terminals to be upgraded with a new software application — but no new hardware would be required, Martin explains.
There would also be a new role for payment initiation service providers (PISPs), converting the PAN stored on the customer’s bank card to the IBAN of their bank account, Martin adds, in a similar way that mobile payments tokens are handled today.
PISPs would then use the customer’s IBAN, rather than the PAN, to request payment authorization from the consumer’s bank.
Importantly, the SPA proposes that Instant Payment Card authorizations should be performed using a non-PSD2 defined API. This would mean that, rather than having to be made available free of charge, they could be provided as a chargeable, Premium API.
This would then make it possible for a new revenue stream to be introduced which would, in turn, provide banks and payment service providers with the incentive needed to invest in making an instant payments ecosystem a reality.
NFCW members can find out exactly how the SPA’s proposal works by viewing a recording of Martin’s presentation, along with a copy of his slide deck, that is now available in the NFCW Knowledge Centre.
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