Mass adoption of real-time payments is changing the face of the payment industry. With the growth of real-time payment options, there is a new standard among financial institutions, merchants and consumers.
By Philipp Postrehovsky // @philpostro // June 23, 2021
We now live in an environment where people expect to pay customers, employees, pay bills and transfer money instantly. And this new standard is changing traditional payment types like credit, debit, and cheques as consumers expect faster settlement periods, convenience and availability around the clock.
We know that sending and receiving payments is the life-blood of any fast-growing business. But because payment processing is full of friction and pain points that can impede the growth of a business, moving to real-time payments is the best way to keep everyone happy and bring value to your business. What are real-time payments? Real-time payments at its simplest is a payment system that enables money transfers between banks and banking systems that are settled instantly. In an ideal world, real-time payments can be processed online (initiated and settled) 24 hours a day, 7 days a week and 365 days a year. Unlike older forms of payments processes that are stalled by weekends and holidays.
In the past decade, there has been exponential growth and disruption in the Fintech world. Specifically to do with new payment platforms, payment solutions, and higher expectations from consumers and businesses. This increased demand for real-time payments has been the result of a few factors; technological innovation, higher expectations from merchants and consumers, and the onset of COVID-19.
Technology innovation has pushed real-time payments forward tremendously and disrupted the traditional finance sector completely. No longer is it controlled by the same few financial institutions but rather new startups, new business models and partnerships have brought in new payment options.
Merchant and consumer expectations have also created a demand for real-time payments. From lower transaction fees and improved cash flow management, by switching to real-time payments merchants provide increased value to their customers.
On the consumer side of things, they expect payments and access to funds instantly. People no longer want to wait for their money, and in a world that relies on ‘instant’ everything, slow payouts like in the image below, feel like they should be left in a bygone era. Consumers will also look for faster alternatives.
COVID-19 and Real-Time Payments
The urgency created by the pandemic also contributed to a surge in real-time payments and the need for instant access to funds. From social security payments, unemployment benefits, government assistance and other COVID-19 related financial aid, real-time payments became critical for those in need. From a business standpoint, access to immediate financial support helped businesses stay afloat and keep their doors open.
The benefits of real-time payments are across the board. From financial institutions, to merchants and consumers, real-time payments enhance every sector they are a part of.
90% of executives asked, believe that the most important reason to offer real-time payments is to improve customer experience. From an uptick in customer satisfaction to increased customer engagement, real-time payments offer efficiency that today’s consumers expect.
With real-time payments, and real-time processing, businesses will be able to better manage their cash flow, day-to-day operations and liquidity. With a positive impact on cashflow and liquidity, this will in turn improve a businesses ability to manage overall cash flow projections and budgeting.
Zūm delivers payment management solutions that eliminate friction, optimize efficiency, and give you a competitive advantage in the marketplace. Because Zūm is designed from the ground up, we’re able to manage payments more efficiently with less fees. Currently there are two real-time payment options at Zūm:
Visa Direct: Send and receive money from almost any Visa card in real-time. Also, Zūm has layered additional security features to provide the most advanced Visa Direct payment solution in the market.
Interac: Push and pull funds at scale, to and from a bank account, in real-time with higher funding limits.
We also make switching to Zūm seamless. Our technology gives you the freedom to implement a payments solution that fits your existing workflows and provides customers with the payment options they expect.
As North America and the world lay groundwork for real-time payments networks, we will start to see a change in the ways we transact and do business. If we were to look to India, who is poised to become the world’s largest real-time payments market, the number of real-time payments processed in India by 2024 is expected to reach 52.8 billion.
As you can see, there is a growing trend and burgeoning need for real-time payments. Economies worldwide will see a more fluid way of transferring money, and businesses and financial institutions will be expected to offer real-time payment options.