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Wednesday, May 8, 2024

Recurring payments in an instant-payments world

While recurring payments are not the most popular way to for consumers to pay merchants, it is rare to find an individual or family that does not have at least one type of recurring subscription payment—utilities, gym memberships, mobile phone service. You get the picture.

In fact, the volume of subscription payments in the United States doubled between 2019 and 2022, according to eMarketer.

Now, a new report from the U.S. Faster Payments Council (FPC) and sponsored by BNY Mellon addresses the topic. Navigating instant recurring payments: consumer, business and financial institution perspectives, offers strategic insights into the implementation of instant recurring payments.

"Instant recurring payments represent a significant evolution in the payments landscape, offering unprecedented speed, convenience, and security," said Josh Karoly, director of payments at Netflix and chair of the FPC work group that produced the report. He described the report as "laying the groundwork for widespread adoption and innovation" of recurring payments using instant payment rails.

Considerations and recommendations

Key considerations highlighted by the report include:

    Ease of signup and use,
  • Support for notifications,
  • Flexibility in managing scheduled payments, and
  • Robust security.

"In a world of instant payments there is an added responsibility to ensure that the transactions occurring are well understood and validated by the consumer," the report states. "Emphasis on strong yet frictionless authentication at the time a standing approval is setup helps to ensure future recurring payments can happen seamlessly without the fear of fraud and risk to the consumer."

A standing approval can be likened to a card on file, only instead of consenting to a specific payment, the consumer agrees to an authorized range of payments to accommodate fluctuating bills, like utility payments.

The report also highlights emerging trends and best practices for implementing instant recurring payments. For example, financial institutions are encouraged, when receiving a request for payment, to put the requests to the test of strong customer authentication techniques, real-time monitoring and alerts.

"Simplifying and streamlining digital payment standards will help drive increased adoption across the industry," said Carl Slabicki of BNY Mellon Treasury Services.

"By leveraging the recommendations outlined in this report, businesses and financial institutions can position themselves as leaders in the rapidly changing payments landscape, driving innovation and enhancing customer experiences," said FPC Executive Director Reed Luhtanen. end of article

The Green Sheet Inc. is now a proud affiliate of Bankcard Life, a premier community that provides industry-leading training and resources for payment professionals. Click here for more information.

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