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How real-time cross-border payments are changing the world (now more than ever)

At one point in May 2021, India was responsible for more than half of the world’s COVID-19 cases. Bodies piled up, quite literally. Crematoriums reported overwhelming traffic, and the world watched, unsure how to best help. 

For many Indians, the financial burden of sickness and death was especially paralyzing: After months of paying for bottlenecked medical care, many were suddenly faced with urgent after-life expenses. Paying for cremation services was a real-time concern — something that traditional Hinduism requires within a mere day after death.

Across the globe family members were forced to reconcile with the distance. While the pandemic was easing in the US, it was becoming more harrowing for their loved ones at home. It led many to ask a simple yet seemingly insurmountable question — how can we help from afar?

Philanthropy Meets Fintech | The FIS Cares Story

One company poised to help was FIS — one of the largest and most tenured players in fintech. FIS houses one-third of its global workforce in India. The company saw a dire need to be able to immediately route financial support to its employees, many of whom were not only grieving, but also caught in the financial pinch of a sudden crisis. 

What happened was part prescient, part kismet. FIS had recently finished developing its newest, fastest cross-border payment platform called RealNet™. The company chose to deploy RealNet™ to help Indians in need by way of FIS Cares, an internal program aimed to help employees in times of crisis. 

Through this rapid, real-time payment system, and by partnering with TransferMate, FIS was able to deliver funds from FIS Cares and get over $500,000 of support delivered to India within 24 hours. The feat was not only a profound relief for those in need, but it was a game-changing proof of concept for real-time money movement between countries.

A New standard of cross-border payment

The humanitarian aid provided through FIS Cares underlines a transformation taking place in global payments. The pandemic has made clear that speed of relief and money transfer is of critical importance to a globalized economy. 

RealNet™ shortens traditional payment times between entities from five days down to one. (While consumer markets tout cross-border payment within minutes, the world of B2B takes much longer). It does this by systematically unifying over 54 real-time domestic networks across the globe, creating a whole new standard of global payment. 

“RealNet™ is simplifying and unifying a global landscape,” says Raja Gopalakrishnan, Executive Vice President of Global Real Time Payments at FIS. “It’s like a new, faster train track running parallel to an old track. The old track could only handle so much speed.”

Behind the scenes, real-time payment is not a simple construct. “Real-time” means that from inception to completion of funds cleared and settled a payment is irrevocably fulfilled within seconds — and that it can all happen 24/7 all year long. When you apply real-time payment across borders and between entities, the time to completion becomes appallingly longer. Most of this lag is bureaucratic. RealNet™, however, comprehensively synthesizes the complex, government-laden processes.

What makes this next stage in real-time payments different from those of previous decades is the infrastructural improvement. By creating an entirely new network of payment, RealNet™ allows for more volume and throughput than systems before. “It’s an absolutely modern platform,” says Gopalakrishnan. “RealNet™ brings together complex elements like technology, rules, and regulations that underpin money movement.”

Through its recent partnership with TransferMate, RealNet™ is now able to deliver cross-border payments to over 162 countries in many cases within minutes. What’s more, the technology can decrease the cost of these payments by 90 percent compared to a T1 bank. Much of this saving is due to prevention of “leakage”, or instances in which money transfer requires so many players that the original value gradually depreciates from fees, interest, and mismanagement. RealNet™ circumvents such administration costs by providing a streamlined, comprehensive platform.

How real-time payments can change your world

Image Credits: Getty Images

Sending money across the globe is an ancestral challenge. And while getting cash to a loved one abroad is easier now than it was centuries or even decades ago, the infrastructure around payments has become bloated. Many players, many systems, and many governments can cause unique hindrances to modern life. 

Generally speaking, we all move faster, and we need our finances to catch up.

Here are a few instances in which real-time payment can greatly change lives for individuals and entities alike:

Government Aid

Getting money to and from the government is critical. Take, for example, relief during the pandemic. At unprecedented speed, the US government approved trillions of dollars of stimulus to support struggling small businesses and individuals. However, making those funds immediately usable has not been as turnkey. 

Every day that it takes the government to route cash is a day of doubt and decreased confidence amongst the public. Imagine a world in which the social good of government aid is able to be appreciated in its immediacy. 

Vendor Payments

The globalized economy has ramped up the standards for small businesses. Manufacturers have become more specialized, meaning there are more vendors across the globe that need to be paid. Say you run a bicycle shop in the US (this is Gopalakrishnan’s preferred metaphor). It’s possible that you procure some parts from Europe (let’s say the wheel), and others from China (let’s say the handlebars). Being able to pay both of your vendors on time while fully understanding the respective regulations of their countries is a lot for a small-town bike shop owner.

With RealNet™, you set up your beneficiaries once and the system does the rest. You’re able to offboard the coordination of cross-border payments to vendors.

Insurance Claims

Insurers tend to enter our field of vision at the worst moments: car accidents, fires, deaths, etc. They are there to help, but very often insurance is not able to pay what you need paid quickly enough. 

Say you’re at the auto repair shop with a $2K bill for a recent accident. The mechanic could be willing to fix your car immediately, enabling you to drive home that afternoon if you’re able to pay now. Although you have confidence your insurer will eventually pay, the lack of immediate funds puts you in a precarious position.

What’s significant is the compounding of speed expectations: If one insurer offers real-time payments the auto body shop might soon start to expect such speed. This means everyone’s everyday gets accelerated a bit more. That’s what RealNet™ is aimed at doing. “Essentially you want to support transactions at the speed of life,” says Gopalakrishnan. 

The future of financial immediacy

The change in global payments is happening now, boosted by the pandemic. A recent FIS research study of executives across the US and Europe explores the impact of the COVID-19 crisis on global digital payments. Respondents said they are ramping up innovation initiatives to meet growing demand with development in new products and services. In fact, 66% of those surveyed agreed that companies who adapt quickly to real-time payments will be seen as more attractive to work with by both customers and suppliers.

This attractiveness is driven by speed, which is the focus of RealNet™ and the work at FIS. In the coming years, the company wants to continue its mandate of democratizing payments in order to make them more socially inclusive. In business this means providing small businesses the same type of access to financial tools that large corporations have. This means improving access to global supply chains and vendors as well as providing a system that makes it easy for those small businesses to simply pay their vendors. 

For governments, democratized payment systems mean they can provide aid and stimulus to people more quickly. Especially for developing nations, tightening the lag behind inception of funds and execution of them can be game-changing. Real-time payment can make legislation a reality in terms of natural disaster relief, education reform, and housing development.  

For individuals, real-time payment means supporting your family more easily. As FIS witnessed with the COVID-19 disaster in India, financial burdens can shift and reshape across the globe very quickly. Crisis can strike at any moment, in any country, and the ability to get payment cross-borders is a more vital concern than it has ever been.

There are billions of people who live paycheck-to-paycheck. In dire times, being able to access funds can be life-saving. Financial immediacy can greatly enable the expectations we have for our lives. Now more than ever, real-time financial support is about sustaining self-sufficiency and dignity.

To learn more about RealNet™ and FIS Cares, visit fisglobal.com/realnet.