By James Karat– Inventor of STP
What is Straight Through Processing (STP)?
Straight Through Processing (STP) is a process that you, your family and everyone on the planet uses every day of the week. It is used as much as the Internet. STP is part of our lives, but very few people actually know what it is or how they use it on a daily basis without even thinking about it. There are many examples of how we use STP in our daily lives, but let me start with the most common. When you go into a shop, let’s say Walmart, and you go to the tills to pay, you put your card into the machine or use Contactless; this uses the following process:
- 1. “Confirmation,” and it is you, the person in the shop, confirming that you wish to spend $50 in Walmart. The bank instantly checks that you have the $50 in your bank account and sends a message back to the machine saying “Approved” (if the funds are available) or “Declined” (if you have run out of money). This is called: “Affirmation (Accepted) if you have the funds available or “Rejection (Declined)” If you have no money in your account.
- 2. “Allocation.” If you have the funds available, they are instantly transferred from your bank account to Walmart’s bank account.
So, we have Confirmation/Affirmation and Allocation, and this process is Straight Through Processing (STP). Every payment in the world uses STP to process.
Billions of transactions an hour use STP globally. The process is one-of-a-kind, and every payment can only use STP. There are no other options as it is the globally accepted language of the movement of funds. So, as you can see, STP is huge and doesn’t stop there. STP is used in many other ways, and here are some examples.
- Restaurants: When a customer orders their food, the server selects your menu items on an Ipad and confirms that the order is correct with you. The order is then instantly sent into the kitchen, where the chef Affirms acceptance of the order, once cooked the order is sent /allocated to the customer. The whole process is STP.
- Amazon (or any Web-based delivery service): When a customer selects Buy on Amazon, the customer has Confirmed that they wish to buy that item(s). The order is sent instantly to the Amazon depot, where it is accepted (Affirmed) by the Amazon colleague. The colleague gets the items and Allocates it to the customer for delivery. The whole process is STP.
- Just Eat (or any food delivery company): The customer orders their meal and Confirms that they wish for it to be delivered. The restaurant receives the order and Affirms that they are in the process of cooking it. Once cooked, the order is Allocated to the customer to be sent out. Again STP.
In my next blog, I will go into how the invention came about and how it works.
To learn more about how Royal uses Straight Through Processing in healthcare to enable every part of the customer journey with real-time, self-service automation, click here to download our white paper.
