You may have seen a lot of information recently about Request to Pay. SWIFT are focusing in on cross border Request to Pay as part of their SWIFT gpi initiative (more to come on that later). The following pretty cool infographic by the European Payments Council nicely explains Request to Pay…
Request to Pay (RTP) Explained:
Imagine, Bob (Payer) is going to buy some goods online from Bill (the merchant / Payee). The Request to Pay (RTP) transaction would flow as follows:
Request to Pay: Initiation
Bill creates the Request to Pay using the following details and sends it to Bob through the inter-Payment Service Provider network:
- Transaction data
- The identity and the payment service provider (PSP) of the consumer
- Merchants data
Request to Pay: Presentment
Bob receives the Request to Pay and checks it on his mobile phone
Request to Pay: Acceptance/Refusal
Bob either accepts/rejects the Request to Pay, and the corresponding message (accepted/rejected) is sent to Bill
Payment Initiation
If Bob accepts the Request to Pay, the payment is electronically initiated without needing to re-enter any of the above data
What is the Point of Request to Pay (RTP)?
- Often Request To Pay will give the Payer (Bob) some flexibility, allowing Bob some choices around when he pays for his goods
- Its cheaper for Bill (the merchant/payee)
- Bill doesn’t need to worry about sending a paper invoice to Bob, RTP enables Bill to use electronic billing
- Bill should receive his money faster/more efficiently since the process is electronic, so less time is spent chasing payments, and in a large organisation the reconciliation effort is also reduced
- Customers are more likely to engage and be loyal to the merchant
- If Bob has problems paying the invoice, he is more likely to speak with Bill (I’m not sure about this, but let’s go with it!) where RTP is used rather than the alternative – ignoring the paper invoice
- Compared with Direct Debit schemes, Payers are able to:
- Review the Request to Pay and assess the payment details and be comfortable they’re not being overcharged
- Ensure there are sufficient funds in their account, compared with direct debit – which can get rejected due to insufficient funds
- Ref: Benefits of Request to Pay – Answer-digital
