Real-Time Request For Payment

Real-Time Request for Payment (RfP) using digital invoices from payees/billers to payers for both B2B (Business-to-Business) and C2B (Consumer-to-Business) transactions is a significant innovation in the payments landscape, particularly leveraging the ISO 20022 standard. Here’s an overview of how this works and its benefits:

Real-Time Request for Payment (RfP)

1. Definition:
   • Request for Payment (RfP): A digital request sent by the payee/biller to the payer, asking for payment. This can be used in various scenarios, including B2B and C2B transactions.
2. ISO 20022 Standard:
   • ISO 20022: A global standard for financial messaging that enables rich data content and consistency across payment systems. It supports extensive data fields that can carry detailed remittance information, making it ideal for digital invoicing and payments.

How RfP Works in B2B & C2B

1. Payee/Biller Initiates RfP:
   • The payee/biller creates a digital invoice and sends an RfP to the payer using the RTP or FedNow network.
   • The RfP message includes details such as the invoice amount, due date, and remittance information in the ISO 20022 format.
2. Payer Receives RfP:
   • The payer receives the RfP through their banking or payment app.
   • The payer can review the details of the request and choose to approve and initiate the payment.
3. Instant Payment:
   • Upon approval, the payment is processed instantly through the RTP or FedNow network.
   • The payee receives the funds in real-time, and the transaction is settled immediately.
4. Reconciliation and Confirmation:
   • Both the payer and payee receive confirmation of the payment.
   • The rich data provided by ISO 20022 ensures easy reconciliation and reduces errors.

Benefits of RfP for B2B & C2B

1. Efficiency:
   • Reduces the time between invoicing and payment.
   • Streamlines the payment process, eliminating the need for paper checks or manual intervention.
2. Cash Flow Management:
   • Improves cash flow by enabling quicker payment receipt.
   • Enhances predictability and planning for both payers and payees.
3. Security:
   • Enhances security by using standardized, encrypted messaging.
   • Reduces the risk of fraud compared to traditional payment methods.
4. Data-Rich Transactions:
   • ISO 20022 provides comprehensive remittance information, making it easier to match payments with invoices.
   • Supports detailed reporting and analytics.
5. Customer Experience:
   • Provides convenience for payers by offering a simple, efficient way to make payments.
   • Enhances the overall payment experience with instant confirmation and transparency.
6. Integration with Accounting Systems:
   • Can be integrated with systems like QuickBooks Online (QBO) to automate invoicing, payment tracking, and reconciliation.
   • Ensures that financial records are updated in real-time, providing accurate and up-to-date information.

Example Workflow in QuickBooks Online (QBO)

1. Invoice Generation:
   • A business generates a digital invoice in QBO and sends it as an RfP via RTP or FedNow.
2. RfP Sent:
   • The RfP, formatted in ISO 20022, is sent to the payer’s bank or payment application.
3. Payment Approval:
   • The payer receives the RfP, reviews the details, and approves the payment.
4. Instant Payment and Confirmation:
   • The payment is processed instantly, and both parties receive confirmation.
   • QBO automatically updates the invoice status and reconciles the payment.
5. Record Keeping:
   • All payment details and remittance information are stored in QBO, ensuring comprehensive record-keeping.

By adopting Real-Time Request for Payment with ISO 20022, businesses can significantly enhance their payment processes, improve cash flow, and provide a better experience for their customers and partners.