Payment rail

Cash management - liquidity - financial markets - infrastructure - remittances.

A payment rail is an infrastructure that supports and enables remittances and settlement.

Rails coexistence and interaction will optimise solutions

"Currently, payment rails are predicated upon a centralized model.

Furthermore, new, transformative rails - such as the Real-Time Payments (RTP®) network in the US, Australia’s New Payments Platform (NPP) and the Faster Payments network in the UK - are restricted in terms of the value that can be transferred.

This is an issue for wholesale payments in particular, where values significantly exceed such ceilings...

... we believe that no one initiative or technology is a silver bullet for delivering optimized payments—nor is there one path that will take us there.

It is a combination of capabilities that will enable payments and settlements to be truly optimized.

Going forward, the industry will see coexistence and interaction between traditional rails, the more established emerging technologies and the new landscape of digital currencies.

Digital tokens and fiat money will coexist, with different rails and channels remaining relevant, supporting different payment needs and delivering value."

Innovation in Payments - A spotlight on digital currencies - BNY Mellon, 2021 - p4 & 11.

A treasurer's perspective

Payments are fundamentally important for treasury, liquidity, cash management and reporting. Among other considerations, treasurers need to balance payment speed, security, settlement and total cost. A payment rail is any system for sending and receiving remittances, also known as a platform or network.

Traditional rails - such as CHAPS - generally rely on banks or other established financial institutions to process payment instructions, and a centralised payment system to execute and settle them securely. Any time lags when using a rail can result in float, reducing liquidity and adding to total cost. Newer and disintermediated payment rails are already delivering faster and cheaper solutions, initially for lower value and retail remittances. Higher value payments need correspondingly greater security, currently favouring traditional payment rails.

Innovative and improved rails promise substantial security, speed, cost and reporting benefits for treasurers and our organisations.

• read the disclaimer on a treasurer's perspective

See also

• Cash management
• Clearing House Automated Payment System (CHAPS)
• Committee on Payments and Market Infrastructures (CPMI)
• Continuous linked settlement (CLS)
• Digital currency
• Digital token
• Faster Payments Service (FPS)
• Fiat money
• Financial markets
• Financial Market Infrastructure (FMI)
• Infrastructure
• Liquidity
• New Payments Platform (NPP)
• Payment
• Payment infrastructure
• Platform
• Real-time Payments (RTP)
• Regulation
• Remittance
• Supervision
• Systemic risk
• Systemically Important Payment System (SIPS)

Further resource

• Innovation in Payments - A spotlight on digital currencies - BNY Mellon, 2021