R2P: Leading the Way into a New Era of Banking
In today’s rapidly accelerating digital landscape, both consumers and businesses demand complete control over the ways they complete transactions. Payers want to control when and how they pay. Payees and billers want payment certainty — to control how they are paid and to what account.
According to Strategic Link partner FIS Global, Request to Pay (R2P) is the missing link in the chain for opening up real-time payments. Along with initiatives like ISO 20022 — an emerging standard for electronic data interchange between financial institutions — R2P can reduce processing-related and follow-up costs, and seamlessly link payment requests to current and future payment flows.
What is R2P?
Several iterations of R2P have been developed over the past decade. But because they used a closed loop infrastructure, the reach of this technology was limited. Today’s R2P options have evolved.
While not a payment scheme, R2P is a dedicated processing scheme for various service models, different markets, and use cases. The R2P process enables an automated reconciliation between an invoice and the actual payment(s). Each R2P transaction has the capability to include details from the payee to a payer, which may include payment amount, purpose, destination account, timing, a unique reference field, and a link to an invoice.
The flow of a typical R2P transaction might look like this:
- Step 1: An R2P is initiated from payee to payer related to a business interaction and sent over the internal R2P service provider’s network.
- Step 2: R2P is presented to the payer showing amount/ currency, purpose/description and payee info. Rich payment information is shared.
- Step 3: The payer will approve or decline the request; the payee is automatically notified.
- Step 4: If the R2P is approved, the payer’s bank is instructed to initiate/execute the payment.
How is R2P used?
Typical use for R2P cases includes bill payment, invoice payment, ecommerce, payment at point of sale and installments. Real-time payments are driving the new wave of R2P services, but it can also be applied to payment types including direct debits, ACH and card payments.
As a leading provider of payments and technology solutions for credit unions, FIS Global can help your cooperative evolve its enterprise payments. Contact the Strategic Link team to get connected with the experts at FIS, and watch this video to learn more about R2P.