Steve Percy
President, Diolkos Commerce Solutions
Aug 2024
RTR continues to be a non-starter in Canada. Delay after delay and re-start after re-start. What about the U.S. ? RTP for the big banks, FedNow for the smaller. Still no significant advantages or impactful rollout. More costs, more complexity, no agreement. Deposit Only Participation ? Why ?
They all know the answer. A non-capable approach to exchanging real-time payments.
Oddly, some experts believe that they are not really interested in success. Why ? Well there is a list. Professionals have debated which payment stream benefits from real-time vs. the costs and risks to port them over. There is no consistent agreement. Each market has it’s issues. And who decides when you have massive stakeholders at the table, including government.
Lately, the principal issues appear to fall on the Value Proposition vs Risks to their P&L along with other operational and reputational risks. The current and proposed solutions do not have a viable method for migration of existing revenues, nor do they keep regulators happy on exchange risk, ergo reputational risk. They continue to use century old clearing and settlement processes because they don’t want to impact their P&L. I get it. I used to own and grow the P&L in this area at two significant banks. I would be protective as well.
The wakeup solution is to realize that they are doing it wrong and that there is a different way to process real-time payments through Diolkos. I know all the issues and have designed a system to retain their existing revenues, protecting their P&L while ushering additional new-to-bank revenues, plus an ability to change banking for their customers and themselves. And the risk model is modified to suit and in fact reduce financial risk significantly.
Let’s see,
1. True real-time, multi-party participant payments,
2. All current payment Use-Cases solutioned,
3. No PII for users to handle,
4. Simple frictionless execution,
5. 20+ Fraud Improvements,
6. Existing Revenue retention,
7. PLUS added future revenues for reward/pre-paid/token programs that are fully integrated into the same exchange,
8. All real-time regulatory and exchange risk issues resolved
…a better mousetrap by far.
Isn't every CEO of every Financial Institution looking for a breakthrough in the saga of payments exchange ? Are they tired of hearing that ISO20022 is the panacea of payments and then experiencing time and again that it is not ?
Every year produces a series of papers, conference presentations, and podcasts with titles that promote the greatness of the newest real-time solutions yet upon full review the author/participants reveal that nothing of substance has truly been resolved, let alone built and implemented. Who is paying for all of this ?
In Canada, the Mastercard-Vocalink solution was recently discontinued for reasons not disclosed to the public. I am aware that hundreds of millions were spent to build out and integrate this solution yet another new direction is now in progress.
In Europe, the solutions have been clearly exposed as non-effective for the long-term, particularly in completing the real-time cross-border requirements which in turn have reached critical importance. The EU needs more effective cross-border payment exchange that includes the exchange of domestic fiat currencies. Doesn’t everyone ?
Lastly, global anonymous “Crypto platforms” are not a preferred solution for mass exchange in the low-value payment market because there is a loss of sovereignty and loss in oversight and control. We need some level of oversight to protect us all. While these solutions will attract niche communities, they are not feasible for the wider everyday population.
There is a better way. And it’s a different way that costs a lot less and provides a lot more. It’s the Diolkos way.
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