Real-Time Payments: Everything a Merchant Should Know

Wednesday, August 14th, 2019

Payments are evolving, pretty much like any other tech in ecommerce as well as other sectors.
Trending on the sector now is real-time payments. The new-age payment method has been the talk of the town since last fall when tweaks in regulations added more capabilities to same-day Automated Clearing House (ACH).

Same-day ACH enables e-payments to be deducted directly from a shopper’s account. This segment of the payments sector is expanding remarkably. Upgrades in real-time payments will encourage businesses to use this new avenue to their advantage.

What are Real-time Payments?

The US Faster Payments Council controls real-time payments— also known as faster payments. The watchdog defines it as a type of payment where transmission of a transaction’s notification and the accessibility of the finances to the recipient happen in real-time or at least near real-time.

An excellent example in the US is same-day ACH. This service avails all funds to the various recipients by 5 p.m. local time (but this only applies to funds disbursed by the daily closing times).

Real-time payments are another example. It allows merchants to process all funds transacted in near real-time or real-time to their business accounts. Furthermore, real-time payments also give recipients unlimited access to their money— they can get their funds any time, any day.

Customer and business needs have evolved with the advancements in payment tech and the advent of channels like mobile that are connected round-the-clock. And the entire payment industry— both startups and sector giants— is responding with different solutions.

How have Real-time Payments Impacted the Payments Environment

Before real-time payments, merchants suffered long processing periods. This innovation has sped up the processing of payments.
But adopting faster payment systems will come with extra costs to businesses. They must invest time and funds to shift from older to newer platforms. Merchants and acquirers who rely on outdated point-of-sale terminals and software will experience the same problems.

But organizations that succeed in upgrading their systems will be able to support trending innovations like API integration and faster solutions like Agile Systems to serve their customers.

Penetration in the US and Beyond

The need for faster and more flexible solutions has pushed global markets to launch solutions to serve their local markets over the past decade. Here are some regions that have paced the move toward real-time payments.

2008: Pay. UK of the UK launched a faster payment solution that allows users to initiate single payments and schedule recurring as well as forward-dated transactions. It also speeds up the completion of payments and makes funds readily available to merchants.

2014: Singapore launched a round-the-clock bank-to-bank payment transfer through its Fast and Secure Transfer (FAST) platform in partnership and Vocalink. The platform now serves a large part of the European Union.

2018: Australia’s New Payment Platform (NPP) got underway. The service enables bank users to electronically access their funds with their phone numbers or e-mail addresses—just like Zelle in the US rolled out in 2017

The US must pull up its socks in the adoption of faster payments. After Zelle, only NACHA has been trying to lead the evolution. The National Automatic Clearing House Association even completed a three-stage launch backing credit, debit and regulation updates to same-day payments for recipients. Its separate network, known as real-time payments (RTP) system, can facilitate the bank-to-bank transaction and looks to onboard all US corporations by 2020.

Final Words

Hopefully, the US will see the need for speed in payments and implement these solutions in their day to day activities.