Request for Payment Real-Time Payments

To create a Request for Payment (RfP) for Real-Time Payments (RTP) that is compliant with all financial institutions, the format needs to adhere to certain universal standards such as ISO 20022 PAIN.013 messaging format. Below is a breakdown of the necessary attributes, features, and benefits of creating an RfP format for B2B payments:

Attributes of Request for Payment (RfP) Real-Time Payments Format:

1. Message Structure:
   • ISO 20022 Standard (PAIN.013): This is the global standard for financial messaging, ensuring that the RfP format is universally accepted by financial institutions.
   • XML Format: The message is typically transmitted as an XML file to facilitate data exchange between different systems.
2. Header Information:
   • Message ID: A unique identifier for tracking the specific payment request.
   • Creation Date: Timestamp indicating when the RfP was generated.
   • Version: Specifies the version of the ISO 20022 schema being used.
3. Creditor (Payee) Information:
   • Payee Name: Legal name of the creditor (the company requesting payment).
   • Payee Bank Account: Payee’s bank details, including IBAN, Routing Number, or other relevant banking information.
   • Payment Reference: An identifier tied to the invoice or transaction for internal reference, such as an Invoice Number.
4. Debtor (Payer) Information:
   • Payer Name: Legal name of the payer (the business making the payment).
   • Payer Account Information: Bank account details from which the payment will be made (e.g., IBAN or account number).
   • Debtor Reference: Additional information about the payer for further identification, such as a Customer ID.
5. Payment Information:
   • Payment Amount: Specifies the requested payment amount, usually with a currency code (e.g., USD, EUR).
   • Due Date: The date by which the requested payment is expected.
   • Payment Type: Defines whether the payment is a one-time request or part of a recurring billing cycle.
   • Execution Date: Date when the payment is expected to be executed in the RTP system.
6. Remittance Information:
   • Structured Remittance Information: This includes details about the payment, such as the Invoice Number, customer reference, or other related data for reconciliation.
   • Unstructured Remittance Information: Additional notes or comments that help the payer identify what the payment is for (optional but useful for tracking).
7. Payment Method:
   • Supports multiple RTP networks like FedNow, The Clearing House (TCH RTP), or international RTP networks.
   • Allows the flexibility of using ACH, wire transfers, or other real-time payment methods.
8. Settlement Information:
   • Settlement Amount: Amount to be settled between the payer and the payee's banks.
   • Transaction ID: Unique identifier for the transaction as processed by the RTP network.
9. Security and Authentication:
   • Digital Signatures: Ensures the integrity of the payment request, confirming that the message hasn’t been altered during transmission.
   • Encryption: The file must be encrypted using SFTP, HTTPS, or other secure methods to protect sensitive financial data.
10. Bank-Specific Extensions:
    • Some financial institutions may require additional fields for internal processing or routing information, allowing customization for specific banking needs.

Features of Real-Time Payments (RTP) RfP Format:

1. Automated Invoicing and Reconciliation:
   • The system generates and sends the RfP automatically, and upon payment, the transaction is automatically reconciled in the payee’s accounting system.
2. Real-Time Processing:
   • Payments are processed instantly through real-time networks like FedNow or The Clearing House RTP, ensuring faster transactions compared to traditional payment methods like ACH or wire transfers.
3. Recurring Payment Support:
   • For businesses with subscription models or recurring bills, the RfP format can automate recurring requests, ensuring consistent cash flow without manual intervention.
4. Multiple Payment Channels:
   • The RfP file supports multiple payment channels, allowing the payer to pay via the RTP system, bank transfer, or other approved methods.
5. Immediate Confirmation:
   • Both the payer and the payee receive immediate confirmation once the payment is processed, reducing uncertainty and payment disputes.
6. 24/7 Payment Availability:
   • RTP systems are available 24/7, meaning payments can be made outside traditional banking hours, which is particularly useful for global businesses operating across different time zones.
7. Rich Data Exchange:
   • The ISO 20022 format allows for the exchange of rich remittance data alongside the payment, enabling better reconciliation and reduced errors.

Benefits of Real-Time Payments (RTP) for B2B Transactions:

1. Faster Payment Settlement:
   • Immediate Funds Transfer: The payment settles instantly, improving liquidity and ensuring that businesses get paid faster.
   • Reduced Payment Cycles: Traditional payment methods like checks or ACH can take days to process. With RTP, payments are settled instantly, reducing accounts receivable cycles.
2. Improved Cash Flow:
   • Since payments are received in real-time, businesses have more immediate access to funds, improving cash flow management and operational efficiency.
3. Better Payment Tracking and Reconciliation:
   • With the rich remittance data provided by ISO 20022, businesses can easily track payments and reconcile them with outstanding invoices.
4. Reduced Fraud Risk:
   • The secure transmission of files through encrypted channels and the use of digital signatures reduce the risk of payment fraud.
5. Global Compatibility:
   • The use of ISO 20022 as a global standard means that this format is compatible with financial institutions worldwide, enabling international B2B transactions through RTP systems.
6. Cost Efficiency:
   • While traditional wire transfers often incur high fees, RTP systems typically have lower transaction costs, providing savings for businesses with high payment volumes.

How to Implement RfP for B2B Payments:

1. Setup the Integration:
   • Integrate your ERP or accounting system (e.g., QuickBooks, SAP, or Oracle) with an RTP-compliant solution like SecureQBPlugin for automated generation of RfP files.
2. Generate the RfP:
   • Create the digital invoice in your accounting software, then automatically generate the RfP file in the required ISO 20022 format.
3. Transmit the RfP to Financial Institutions:
   • Send the RfP file to your financial institution using SFTP, API, or embedded payment links via email, allowing the payer to approve and process the payment instantly.
4. Automatic Reconciliation:
   • Once the payment is made, the system automatically reconciles the payment with your accounting records, updating the invoice status as "paid" in real-time.

By adhering to this RfP specification for real-time payments, B2B companies can significantly streamline their payment processes, reducing delays and improving their cash flow and operational efficiency.