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Wednesday, July 6, 2022

Real-time payments making POS debut

Sionic, an Atlanta-based payments company, introduced the first-ever real-time payments service for the point of sale. Pay-by-Bank, as the service is called, uses RTP, the real-time payments network built by TCH, a payments company owned by the nation's largest banks, to support instant bank-to-bank transfers.

Ron Herman, founder and CEO of Sionic, described the service as part of "the great reallocation" of digital payments—a reallocation of card payments to real-time transactions. He also described it as an inflation-fighting move for merchants.

"This is a good step forward in helping merchants combat inflation," Herman said in a press release. "From local businesses to global enterprises, merchants continue to be plagued by credit card fees," he said, adding that it's not just merchants, consumers, too, are paying a lot in credit card interest and late fees. "Bringing instant digital payments to commerce provides a new way to more equitably reallocate value back to both merchants and the consumers," he said.

Sionic's real-time payments service also allows merchants to incent customers to pay using their bank accounts rather than credit cards, with instant cash back (or cash discounts) and other rewards schemes. An initial pilot is expected to get underway this summer in Atlanta.

Sionic, which bills itself as a provider of omnicommerce, consumer-to-business payment solutions, also is releasing online and mobile widgets that charities can use to enable low-cost, instant donations. Sionic already has experience in the nonprofit sector, facilitating digital card-based donations via its Shopt2Give mobile app and platform.

Partnering with ISOs, acquirers

A spokesman for TCH said Sionic is the first company to use RTP for POS payments. In addition to RTP, Sionic has partnerships with leading acquirer Shift 4, Jack Henry & Associates, a technology services company supporting banks and credit unions, Visa's CyberSource, Google (which is providing cloud support) and Google Pay. Sionic also is working with General Motors to support in-car payments, and expects to launch an in-car payment service this fall.

Herman said in an interview with The Green Sheet that Sionic expects to work with other acquirers as well as ISOs to get merchants on board with Pay-by-Bank. "There's money to be made by ISOs and agents," he said.

Direct deposits through POS

Bank-to-bank digital cash payments is an instant version of Direct Deposit, an ACH transaction commonly used for payroll. It also has many similarities to person-to-person payments, although most P2P payments get routed to recipient accounts with the P2P service provider. Think PayPal, Venmo, Zelle.

Consumer adoption of P2P mobile apps has been growing wildly in recent years, primarily as a replacement for cash and checks.

The Federal Reserve reported that the share of monthly P2P payments made using mobile apps nearly doubled, from 15 percent to 29 percent, between 2020 and 2021. During that same period, cash usage fell from 57 percent of monthly P2P payments to 49 percent; checks fell from 13 percent to 9 percent.

Meanwhile, Lending Tree found 84 percent of consumers it recently surveyed had used a mobile P2P app. Among consumers between the ages of 18 and 41, it was 91 percent.

The Strawhecker Group and the Electronic Transactions Association recently surveyed merchants and found 82 percent accept at least one digital P2P payment option. Ninety-three percent of those merchants plan to continue accepting P2P options.

"More and more – especially among newer establishments and gig workers – merchants are responding to consumer demand by allowing them to pay through P2P digital options," said Jared Drieling, senior director of merchant intelligence and insights at TSG. end of article

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