Revolutionizing Bill Payments With Request for Pay (RFP)
Enhancing Security, Simplifying Transactions, and Empowering Consumers
Both the RTP® network and the FedNow® Service offer Request for Pay (RFP). RFP transforms the way bills are paid. Unlike traditional systems, RFP is based on a credit push model, ensuring that payments are initiated by the payer. This design significantly reduces fraud risks and eliminates the need for direct account debits. RFP turns the payment rail into a powerful messaging system, enabling requests for payment for goods or services directly through the recipient’s financial institution.
What Is Request for Pay (RFP)?
Request for Pay (RFP) is a financial messaging scheme built on the rails of real-time payments that enables billers to initiate real-time payments from bill payees with the click of a button. The request includes all relevant invoicing information, and the payee can pay immediately or at a scheduled time, giving them more control over when the funds are taken from their account. It’s a win-win—the biller benefits from irrevocable, good funds, and the payee gets more visibility and control over when the bill is paid.
The Benefits of Request for Pay
The impact of RFP is vast. With 65% of the 15 billion annual consumer bill payments being non-recurring, RFP offers a centralized and streamlined experience, reducing the hassle of managing multiple usernames and passwords. RFP opens up a world of possibilities for businesses and financial institutions, from enhanced consumer bill payment experiences to improved invoicing and treasury operations.
How Does Request for Pay Work?
Imagine the simplicity of sending a payment request to any bank account in the U.S., just like you would request money from a friend in a P2P app. RFP, leveraging the ISO 20022 messaging standard, makes this a reality. This global standard for financial messaging enhances the efficiency and clarity of payment communications, allowing for richer data exchange and interoperability between different payment systems. RFP uses ISO 20022 to offer a seamless way for businesses to request payments and for consumers to respond promptly, resulting in a smoother and more informed transaction process. The process goes as follows:
- Your retail and business customers will receive a non-financial RFP message from their biller/counterparty requesting a payment.
- Your financial institution will deliver RFP messages via your mobile app for your members/customers to respond or not take action
- Your financial institution will provide a method to originate a payment in response to the RFP request
Request for Pay Use Cases
RFP is a practical solution for various scenarios:
Risky Payments
Ensure payment with good funds, reducing the risk of NSF fees.
Just-in-Time Bill Payers
Offer flexibility for those who prefer to pay at the last minute.
One-Off Bills/Invoices
Accelerate accounts receivable with secure, direct requests.
Non-auto/Recurring ACH Payers
Give control to customers who prefer to validate each payment.
Adapting to Market Changes
Stay ahead in the evolving payments landscape by offering RFP services.
Implementing Request for Pay
Alacriti is among the first fintechs certified to connect to the FedNow Service and is certified for Customer Credit Transfer (Send and Receive with RFP).
The Future of Request for Pay
The Federal Reserve’s release of market practices for RFP in September 2023 was a pivotal moment in the evolution of instant payments. These practices, developed by an industry work group of over 90 organizations, including fintechs, banks, and merchants—aim to foster effective and consistent RFP implementation across the financial sector. The focus is on consumer-to-business (C2B) bill payments, potentially extending to other use cases. The detailed recommendations cover enrollment, message clarity, and data exchange, all designed to reduce friction in the bill payment process and enhance the customer experience.
In parallel with the FedNow Service moving forward, The Clearing House’s RTP network announced in August 2023 expanded availability of its RFP capability, following surpassing the 500 million instant payment milestone. This expansion means more RTP financial institutions now support RFP, broadening its use to consumer bill pay, business-to-business payments, and account-to-account transfers. High-profile collaborations, like that of BNY Mellon, Citi, and Verizon, and major banks and technology providers’ participation have progressed RFP in the market.
Request for Pay stands out as a key player in modernizing bill payments. Financial institutions and businesses are quickly recognizing the potential of RFP to create new revenue streams and enhance customer engagement. Contact us today to learn more about implementing RFP in your operations.
