Banking

FIS launches its own real-time payments network, RealNet, as demand for faster money movement rises

  • FIS is launching its own real-time payments network, RealNet.
  • Real-time payments adoption is on the rise as commerce shifts digital.
  • FIS will first focus on B2B use cases, before rolling out products catered toward consumer and governments.
  • See more stories on Insider’s business page.

Real-time payments, like credit cards or ACH, are just another way to move money. And while countries like the UK and India have mature real-time payments networks, the US has historically lagged. 

Largely, that’s because real-time payments are relatively new, and require substantial tech builds. But in 2020, real-time payments adoption in the US took off, as cash usage fell and businesses faced a renewed focus on getting paid quicker.

Real-time payments differ from methods like cards and ACH in that they settle and clear in real time. They’re always on, and they’re irrevocable.

But to facilitate real-time payments, new rails have to be built, which is no easy lift.

However, FIS, the financial-services infrastructure giant, announced Wednesday plans to launch its own real-time payments network, RealNet.

“When you look at how commerce is going to grow, real-time payments are going to be the payments of choice in the future,” Raja Gopalakrishnan, EVP of global real-time payments at FIS, told Insider.

While use cases for consumers in the US are relatively nascent, business-focused opportunities are emerging. And that’s where FIS will start, offering its RealNet software to businesses like insurers, small banks, and merchants. 

A US-based merchant with international suppliers and customers, for example, could use RealNet to pay back vendors and receive payments in multiple currencies around the world. And an insurer could review claims and process payments through RealNet, as opposed to sending checks in the mail.

Sending money internationally or paying back suppliers has historically been a headache for businesses. Many B2B payments are still made via checks, and the ones that are digital typically run on networks that are only open during market hours, meaning money usually arrives at a delay.

FIS has long been a leader in financial-services software, including everything from banking to payments. When it acquired WorldPay in 2019, it entered the business of actually moving money itself in the card ecosystem. Gopalakrishnan sees real-time payments as the next logical step.

“We do cards. We do cash. We do checks. Now it’s time for us to start really leaning in on real-time payments and ACH,” Gopalakrishnan said.

FIS wants to build a network-of-networks to drive real-time payments adoption

FIS, like many of its payments infrastructure competitors, is in the business of building networks. And that’s the case with real-time payments too. 

“As we build this, we have a network-of-networks strategy,” Gopalakrishnan said.

FIS’ existing network of clients includes more than 1 million merchants and more than 20,000 banking and capital markets institutions. And it’s betting on a network effect driving adoption of RealNet. 

While real-time payments may be more costly now, the price would go down as more FIS clients migrate onto RealNet and funds move within the FIS ecosystem.

“It’s going to be a combination of investment dollars to bring older networks up to scratch, and volumes,” Gopalakrishnan said. “As more and more volume goes to real-time payments, the cost of real time payments will come down.”

In the meantime, RealNet operates with a routing engine that determines which payments should run in real-time and which can stay on traditional rails like ACH based on cost and priority.

To be sure, other payment methods still account for the vast majority of money movement, globally. 

Of the $240 trillion in global payments volume, 12% is cards, 29% is cash and checks, and 59% is electronic payments like ACH, according to a January report from Credit Suisse. Real-time payments will fall into the electronic payments category.

“We see real-time payments as a catalyst,” Gopalakrishnan said. “We don’t see it as a be-all and end-all.”

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