DT Payments News > Tereon moves money in real-time

The Faster Payments Task Force issued a final report in July with an eye-popping goal: National, real-time payments by 2020. Kalypton and TEREON top the list!



In July, the Federal Reserve-sponsored Faster Payments Task Force capped off two years of hard work with a final report that set an ambitious deadline: real-time, or near-real-time, payments in the United States by 2020.

To help make that happen, the Task Force presented a compilation of final evaluations—managed by its outside consultancy, McKinsey & Co.—of some 16 surviving faster-payments proposals. The examiners thoroughly reviewed each proposal, detailing how they would work and zeroing in on strengths and weaknesses. The evaluations included dialog with each proposer conducted between initial and final assessments.

The assessments included some 36 so-called effectiveness criteria against which the proposals were measured, ranging from “Very Effective” to “Not Effective.” The criteria are grouped under six major headings: Safety and Security, Speed, Governance, Ubiquity, Efficiency, and Legal.

Below, we present summaries of these 16 final evaluations. How faster payments will take shape over the next three years is not yet known, but it seems clear some combination of these 16 proposals will play a major role—and will have to do so quickly.

To help readers assess the quality of the proposals, Digital Transactions quantified the assessments for each one, and then tallied the results to create the rankings in a chart (see print or Digital Edition). To do this, we first assigned a value of one to each checkmark that the McKinsey & Co. assessors—the Qualified Independent Assessment Team, or QIAT—gave every proposal based on 36 effectiveness criteria. Each criterion could get just one of four assessments: “very effective,” “effective,” “somewhat effective,” and “not effective.”

Then, we converted the total number of checkmarks for a proposer into a percentage of the total possible score (36 for each of the four effectiveness ratings), and finally ranked them by the sum of their “very effective” and “effective” percentages. Thus, the two highest-ranked proposers, The Clearing House/FIS, and WingCash, both achieved 100% scores based on their identical scores of 83.3% very effective and 16.7% effective.

Readers should keep in mind that these scores were conceived and calculated by Digital Transactions, not McKinsey or the Faster Payments Task Force. Assessing proposals to improve U.S. payments is an often qualitative and subjective task.

For example, as at least one Task Force member noted, each criterion is given equal weight. That means, for example, that an “effective” for inclusive governance in the Governance category counts the same as an “effective” for risk management in the Safety and Security category. Making an apples-to-apples comparison of two such differing categories is difficult, if not impossible.

Kalypton Group Ltd.
United Kingdom

The evaluators note that full details of Kalypton’s solution were not available for consideration as the company was undertaking patent applications. In brief, the company proposes to use its Tereon engine to provide a so-called central core that would integrate with the banking system. Tereon would move money in real time using Internet sessions or mobile-data networks, and is available to both bank and non-bank providers. Kalypton is in the process of deploying the first Tereon installation in Central America, the evaluation indicates. Notable strengths include: Ability to support multiple currencies as well as banked and unbanked customers; and security, with device and user authentication. Areas that need improvement or clarification include: definition of transaction information shared between Tereon servers and banks; details about the flow of information within and between providers; details about the needed infrastructure or the accounts providers must create. Kalypton’s proposal scores quite high, finishing second for effectiveness at 97.2%.

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