Digital overlay services are value-added solutions that leverage the core infrastructure of real-time payment systems to deliver enhanced functionality and user experiences. These services can enrich the payment process, enable seamless interactions between different payment systems, and provide innovative features that cater to specific customer needs. This article explores the concept of digital overlay services, how they work, and how they can unlock the value and volume of real-time payments.

What are Digital Overlay Services?

Digital overlay services are complementary applications or features that build upon the foundation of a real-time payment system. They facilitate seamless interactions between customers, merchants, and financial institutions while providing additional value to the payment ecosystem. These services can offer various benefits, such as improved security, reduced friction in payment processes, and the development of innovative payment solutions tailored to specific use cases.

How Digital Overlay Services Work

Digital overlay services leverage real-time payment systems’ core infrastructure and connectivity, such as the ISO 20022 messaging standard or other application programming interfaces (APIs). They can interface with multiple payment platforms, aggregating data and providing additional features that enhance the user experience. Some examples of digital overlay services include:

1. Request to Pay (R2P): R2P is a communication layer that enables a payer to receive a payment request from a payee and authorize the payment through their preferred payment method. This service can streamline invoicing and payment processes, enhance payment transparency, and provide better cash flow management for both payers and payees.
2. Payment Initiation Services: These services allow third-party providers to initiate payments on behalf of customers by accessing their bank accounts through secure APIs. This can simplify payment processes and provide customers with greater choice and convenience.
3. Fraud Detection and Risk Management: Digital overlay services can enhance security by integrating advanced fraud detection and risk management capabilities into real-time payment systems. These services can help identify and prevent unauthorized transactions and safeguard sensitive financial information.

Unlocking the Value and Volume of Real-Time Payments

Digital overlay services can significantly impact the value and volume of real-time payments in several ways:

1. Enhanced User Experience: By offering improved functionality and tailored solutions, digital overlay services can create a more seamless and user-friendly payment experience. This can lead to increased customer satisfaction and encourage the adoption of real-time payment systems.
2. Innovation: Digital overlay services can foster innovation within the payments industry by providing a platform for developing new, value-added solutions. This can create opportunities for financial institutions and fintech companies to collaborate and bring unique offerings.
3. Interoperability: As digital overlay services can interface with multiple payment systems, they can enable greater interoperability between different platforms. This can facilitate cross-border transactions and improve the overall efficiency of the global payments ecosystem.
4. Financial Inclusion: By offering tailored solutions and accessible user interfaces, digital overlay services can help promote financial inclusion, enabling underserved or unbanked populations to access and benefit from real-time payment systems.
5. Increased Transaction Volumes: As digital overlay services enhance the value proposition of real-time payments, they can increase transaction volumes by encouraging more consumers and businesses to adopt these systems for various use cases.

Digital overlay services are essential to the real-time payments ecosystem, offering enhanced functionality, improved user experiences, and innovative solutions. These services can unlock significant value and drive transaction volumes by leveraging the core infrastructure of real-time payment systems. Financial institutions, payment service providers, and fintech companies can collaborate to develop and implement digital overlay services, capitalizing on the opportunities presented by the growing adoption of real-time payments.