Instant payments: why countries are switching to real-time payments

[Carding Forum]

In which countries are instant payments already a reality?

Instant payments are a trend in the financial market.
The size of the global real-time payments market in 2021 was estimated at $ 6.9 billion. And, according to forecasts, it will grow by an average of 29.3% per year from 2019 to 2025. The editors of PaySpace Magazine figured out what instant payments are, why they benefit companies and their customers, and which countries are already using new technologies.

Instant payments are a new way to transfer funds that happens in a matter of seconds. Compared to bank transfers, which can take up to three days, the new technology allows money to be transferred from the payer's bank account to the recipient's bank account almost immediately. These payment systems have been developed (and are currently being developed) all over the world as there is a need for faster and more reliable transactions in the global economy.

What should be instant payments?​

Transfer speed is not the only criterion for choosing a money transfer service. The capabilities of the system must be adapted to the needs of each client segment.

What is important for users:​

• ease of use
• versions for PC, smartphone and tablet
• solution safety
• wide payment acceptance network
• commissions that tend to 0%
• ecosystem of value-added services

What is important for merchants?​

• no option to revoke money transfer
• instant payments at the checkout
• protection against fraud
• more favorable bank commissions compared to accepting cards
• multichannel

What is important for corporations?​

• control over the movement of funds (instant payment systems imply notification of the status of the payment in real time)
• automated information processing
• instant access to funds
• marketing tools to improve sales strategies

Instant payment systems in the world​

Today there are about 20 instant money transfer systems in the world. Even more are in development. Their principle of operation is similar: it is access for clients in a 24/7/365 format and payment processing in real time.

Most instant money transfer systems are local. However, there are still players who want to cover several states at once. Such plans are pursued by SCTInst1. After the launch, the creators of the project plan to cover the entire SEPA zone, which is 34 European countries.

These systems are being introduced at different rates. Much depends on government support. For example, in Mexico, the adaptation of new technology has proceeded quickly with the support of regulators. On the contrary, in Brazil, even 10 years after launch, instant payments are rarely used.

In the future, the growth of e-commerce and the increased demand for fast translations will drive the industry forward.

TOP-3 payment systems in real time​

At the end of 2018, financial services provider FIS published an annual report on the development of instant payments. Having separately noted the three most progressive systems. One of them is already working fully, and two more are in the process of implementation.

Immediate Payment Service, IMPS (India)​

IMPS was launched in 2010. She offers to make electronic money transfers between accounts in different banks via mobile phones. The service is available 24/7 throughout the year, including holidays. It is the fastest growing real-time payment system today. The volume of daily transactions in the system has grown from 2 million per day in 2017 to about 2.8 million per day in 2018.

In July 2021, 189 million transactions were made through the system for $ 25.7 million.

New Payments Platform, TPP (Australia)​

New Payment Platform (NPP) was launched in February 2021. As a result, individuals, businesses and government agencies are able to make payments and receive funds 24/7. In addition, the new system has simplified the addresses for sending money transfers. Now you don't have to use a standard bank account number for a transfer. And limit yourself to the recipient's phone number or email address.

In January 2021, the number of payments through the system reached 13 million, and the amount was $ 11 billion.

Fast and Secure Transfers, FAST (Singapore)​

The system was launched in 2014. Like the previous two services, it allows you to instantly transfer money between accounts in different banks (up to S $ 200,000 per transaction). To do this, the sender needs to have a savings or checking account with one of the local banks, as well as the recipient's account number.

In July 2021, 218 million payments for $ 216 billion were processed through the system.

Prospects for instant payments​

The popularity of instant payments is due to the growing use of smartphones around the world and the demand for prompt transfer of funds.

The technology also finds support from government agencies. For example, in India, the UK and the US, governments are partnering with ministries and banks to create an ecosystem that facilitates digital transactions.

Cybersecurity issues, coupled with interoperability issues between the various systems that transfer funds in real time, can hinder the development of instant payments.