20 April 2018
Shaju Nair


Shaju Nair - Temenos

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Ease of making payments vs speed of making payments

24 September 2017  |  5023 views  |  2

I was 30 miles away from Bangalore City, in a quite village, ordering for red-bricks from a nearby brick factory over phone. I was extremely pleased to hear the manger say that he will accept account transfer, and passed on his bank code and account number.

An hour later the truck arrived and as the unloading of bricks commenced, I got on to my phone to make the promised payment. While I registered the beneficiary successfully, the application threw error when I made a test payment of 100 INR. The error wasn't absolutely clear so I waited, called up the manager to check if the payment was received. The answer was 'no'.

I made the test payment again, waited, called up to know if the payment was received. Again the answer was no. I tried a third time with no success, when I realised that the error was something to do with the bank code. I called up the manager again to confirm if the bank code was correct to which he said yes. On checking up the internet I found that his bank merged with another bigger bank recently so the bank codes are probably changed. I called up my bank to find out if they can help with the right bank code of that bank, to which my bank said they cannot. I called back the factory manager again persuading him to call his bank for the new bank code but realised that he wasn't literate enough to ask that question. Pressure was mounting on me as the truck with 5 men were waiting for an hour by now. They wouldn't leave until the payment is confirmed as received by their manager.

I realised that the pleasant feeling of making a payment quite easily via phone an hour back has now somewhat overturned. While how I managed to make the payment eventually is irrelevant, the one hour of distress raises the question of 'how easy is to make a payment' in a serious real-life transaction such as above with a person/business that I have not transacted before, with whom one cannot communicate easily. How many things should one know to make the payment (bank code, account number, their real time validity, my phone's network, bank network, bank system availability...).

On encountering situations like this, one tends to think how much more easier was it to pay by cash, or card or even a cheque in those days. The payer or the beneficiary is not dragged down through the minute details of the technicality of the payment, such as it details, movement of the payment through the networks, and finality.

I'm aware that its not fair to take one difficult scenario and generalise it. That said however, the strength of an infrastructure/model/scheme is valid only when it can handle difficult scenarios, isnt it?

In the distress situation that I had, I only yearned for my bank to give me a confirmation that the payment instruction was received and it "will be" made (and not that it was actually made). And that was exactly what my beneficiary wanted too (so the truck could leave). But instead the system made the situation a whole lot complex.

This brings me to the crux of this post - how much has been invested to make payments faster? And how much has been done to make payments easier?

I have noted that all new real-time systems around the world have their primary objective to make the payments fast - like the best being a blink of eye. Probably it is matter of great pride to have the 'fastest' system in the world. Making the payment initiation easier for user does not win so much brownie points - atleast so apparently or so instantly.

So I looked around how various RT aspiring nations have sequenced the two requirements. India has an instant payment system since 3 years now, and has recently started to provide mobile number based payment initiation, however it rarely works because of lack of awareness to general public (like the brick factory) and the process involved. One country who got it right is THAILAND, which now has 'Promptpay' launched that allows users to make payments using beneficiary mobile number or TAX ID. It's nothing about speed (the payment goes via regular clearing) but just about convenience. Thailand has also invested heavily on advertising Promptpay to the general public.

Public sure will embrace convenience over speed. So, in the longer run, the countries that looked at customer convenience will have larger user base than the ones who invested on speed.

One probable reason why everyone ran behind the 'speed wagon' is because of UK Faster Payments. The name of the system misled the aspiring nations to build systems that are faster and faster, whereas in reality, UK FPS is much more sensible that it only tries to give the user a confirmation about acceptance of the payment in real time (which is exactly what payer/payee needs) while the payment itself comes about at a later time.


TagsMobile & onlinePayments

Comments: (4)

Susan Hall
Susan Hall - ING NV - amsterdam | 03 October, 2017, 21:48

The real question is what are you trying to achieve? Easy really - you want your goods, the brick factory manager wants to know he will be paid. None of that means that a payment is per se necessary - what is necessary is a  guarantee that the funds will be there and irrevocable access to those funds. A payment should just be a means to an end not the centre of the process. Attention should be what the problem is that needs solving, rather than on a technical driven solution 

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Shaju Nair
Shaju Nair - Temenos - Bangalore | 12 October, 2017, 05:01

Thanks Susan for concurring view. I think you put that right by saying "Attention should be what the problem is that needs solving".

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Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 12 October, 2017, 19:06

As I highlighted in How To Really Kill Cash, cash is still the only truly realtime, irrevocable retail payment method in the world (Source: DB Research). Cash is also the only form of payment that accomplishes transfer of value between payor and payee without any dependency on bank, hardware, software, network, battery, and other third parties.

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Shaju Nair
Shaju Nair - Temenos - Bangalore | 24 October, 2017, 05:35

Thanks Ketharaman.

btw, I mentioned this in my post. "So, in the longer run, the countries that looked at customer convenience will have larger user base than the ones who invested on speed."

This recent post in finextra some what proves my point. Thailand now has 24 million users signed up to PROMPTPAY, which is almost a third of its population, according to figures from the Bank of Thailand. Whereas Singapore has just just half a million users registered to use the PayNow service, despite the country's ambitions to be a world-leading tech-based economy and its status as a leading fintech hub.


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job title Payments Consultant (VP)
location Bangalore
member since 2008
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