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Excellent post. When a buyer onboards a new supplier, it seeks extraneous data on the non financial performance of the supplier, the quality of the goods and services, the timeliness of the supplies, propensity of the supplier to notify in advance on potential delays. Similarly when a supplier on-boards a buyer, it tries to understand the ability of the buyer to pay and pay on time, tendency of the buyer to fault with the goods and services or with the invoice and therefore to delay payments. There is a significant amount of white space from an IT enablement standpoint that can contribute immensely to the risk discovery process. Providers of finance too look to acquire these insights when deciding on buyer sponsored supplier finance and supplier credit rating driven programs. Industry wide sharing of data is lagging in pace and continues to be an important factor in the variations in the cost of finance. The FI that facilitates buyer / seller relationship is probably the only player that is well suited to price the finance. An effective competitive bidding mechansim is sorely missed !!!

Great post Ralf !!! One of the crucial deficiencies of instant payments is the ability to push remittance data along with the payment. While the consumer payment use case is well served with instant payments, when we hit B2B payments, remittance information flow tends to pose a hindrance. In the B2B world, straight through reconciliation is as important as immediacy of the payment. If the payee gets the payment but is unable to apply it to outstanding invoice the pitch gets diluted. Similarly user stories such as child support payments, tax payments which hinge on justification data get impacted. Government to business payments and reverse are other manifestations that get affected.

Another dimension is interdiction check which along with fraud protection measures such as 'out of pattern' checks get minimalized.

All the juicy validations that the originating bank is typically expected to perform (as early as it can in the payment flow), do not get the required execution time, causing them to be compromised, in order to further the real time payment cause.

These are some points that would need to be considered when objectively analyzing the wider outcome of embracing ‘cashless cash’ mode of value transfer

Greater security, non repudiation are terms that people here in the US may not want to associate with card transactions some time soon. A Master Card survey of its customers revealed that 77% of its customers fear loss of their financial data to unscrupulous elements http://fortune.com/2015/07/22/mastercard-security-chip-pin-emv/. A 2013 study of payment transactions in the US brought out the attractiveness of credit cards for transactions above USD 50                    https://www.frbservices.org/.../2013_payments_study_summary.pdf ‎

Deferred payment feature available in credit cards is seen to be a draw in economies where the savings bank interest rate is not insignificant. My point is it is not unimaginable to see disruption in the area of mobile payments being spoilt for choice of the rail to be used in fulfilling a purchase and a service hub stepping it to decide the trajectory aside of handling other intelligent functions. How soon could that happen is anybody's guess..

As a payor the need to know the rails  only surfaces if there is a fee involved and if there is a value date to be protected. Most of the retail customers are not in the know of the rails used. Corporates too are mostly agnostic unless they find one rail to be significantly more expensive / slower than the other. Often entities do not know if a check (cheque) they have deposited is going to hit the payor as a check clearing debit or as a ARC (converted check) based ACH. With speed and cost reduction becoming high focus areas for the industry at large, whatever little interest exists in knowing what method the payment service provider would use to parcel the payment, is likely to fade away. Fees is the key driver for banks to be protective of card rails. Take that element away, add spontaniety and you will see payments emerging as a true commodity play, making all forms comparably attractive, allowing the dehumanizing of the related decision point, making way for hubs to take up the task. 

Not having a cap on credit card inter change fees is a US ruling. Europe does carry ceiling for credit card fees. With faster payment rails being conceived across geographies, we may find electronic payments becoming as instantaneous as card settlement, creating an interesting scenario where the service bus app would need to decide if it should navigate the purchase over the card network or originate a faster payment. All this postulating is hypothetical and imaginary as it stands today. But good brain bending discussion I must say. Thank you once again.

Very insightful comment Ketharaman. Thank you for staying with this.

Probably not enough of a business driver today but with cheques fast being substituted by card and electronic payments as forms of cashless payments and faster electronic payments becoming a reality, we are likely to see cards competing with electronic payments. If this happens, it would not be surprising to see interchange fees vaporising (in order for cards to effectively battle electronic payments in a commodity service environment), cashback programs would struggle for survival. In such a scenario drawing customers on the basis of maximizing cashback may not be a sustainable strategy.

App mutuality is an area of active research and close to a viable breakthrough addressing most of the technical constrains.

Thanks Charmaine, Ketharaman. Valid obervations..

I was struggling with a name apt for the wizard but found characteristics common with the chores of a payment hub.  

Ketharaman, This sandwitch app is also envisioned to take on wallet sequestering by becoming a gateway to all cards and e wallets and additionally harmonize app interplays. Not all apps need to convert into mobile wallets. This would require support of card federation function such that a regular merchant app ill equipped for payment origination can send a pay request to a wallet through the gateway, a role not necessarily  provisioned by a TSM. Besides being rewards aware, it could be architected to be cognizant of APRs, annual fees and other levies, thereby owning a larger responsibility from the standpoint of upholding customer's financial interest.

Few considerations: Propagation of collateral revaluation to linked limits needs to be taken care of, keeping in view the proportion in which the collateral was attached to the different limits. Depreciation in a category of collaterals beyond a set threshhold is an important risk control feature. Individual collaterals belonging to such a collateral category should be sensitive to such global devaluation at the category level and trigger limit freeze or suspension as a configuration. Creation of a pool of collaterals with the ability to link the collateral pool to various credit limits is a feature extension of the many to many relationship between limits and single collateral.