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As Real-time payments edge closer to becoming the global norm, many acquirers and payment service providers (PSPs) remain mired in antiquated settlement models.
Real-time payments need real-time fee intelligence
While consumers enjoy seamless, real-time transaction experiences, the underlying fee structures continue to operate on the outdated rails of end-of-day reporting.
This lag has introduced an often-overlooked vulnerability: compressed margins and lost revenue due to fluctuating interchange fees.
Real-Time Payments
According to projections, by 2030 one in every three global payments will occur in real time.
Yet behind the scenes, acquirers and PSPs typically apply fixed mark-ups to merchants – without the ability to adapt to the dynamic changes in scheme or interchange fees that happen intraday.
A seemingly minor 10 basis point shift in fees can erode margins by a third, translating to annual losses in the millions for providers processing high volumes.
Dynamic Transaction Routing
Enter RS2, a German-based global banking infrastructure firm, with a timely solution.
The company has developed a real-time fee calculation and dynamic transaction routing system powered by AI.
At its core is an intelligent decision engine capable of calculating the exact scheme and interchange costs of a transaction before it is authorised – then automatically selecting the most cost-effective route for settlement.
In a landscape where acquiring is increasingly commoditised, RS2’s system introduces a compelling differentiator.
For cross-border payments, where the cost implications of routing decisions are pronounced, RS2’s solution can generate significant savings.
A transaction worth €1,000, for example, might typically incur €19 in fees. But when split intelligently between a scheme card rail and SEPA Instant, the same transaction could cost just €1 – a saving of up to €18.
Beyond Routing
Moreover, the system’s capabilities extend beyond routing.
Dynamic pricing tools allow PSPs to adjust merchant pricing based on real-time interchange costs, protecting margins and offering more competitive rates.
RS2’s platform also flags anomalous fee patterns, which can serve as an early warning system for potential fraud.
If a domestic merchant suddenly incurs high fees indicative of a cross-border corporate card transaction, the engine can feed that signal into a real-time fraud detection model.
The implications are profound.
PSPs using RS2’s infrastructure stand to not only protect revenue but grow it.
A firm processing $10 million in daily volume could avoid $3.65 million in annual losses and generate up to $1 million in additional revenue through smarter pricing – a delta of over $4.5 million.
Regulatory readiness is another area where RS2’s platform shines.
With full transparency into fee structures and real-time reporting capabilities, PSPs can meet the demands of regimes such as PSD2 and the incoming PSD3 with confidence and precision.
As the industry prepares for the next wave of innovations – from instant Buy Now Pay Later products to real-time lending via Open Banking – fee transparency and dynamic pricing will be vital.
RS2’s real-time intelligence layer offers a blueprint for the future: one where every transaction is not only fast, but financially optimised.
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