25 November 2020
Instant Payments are becoming more and more mature
Instant Payments have entered a new phase on its way to adulthood. This is the conclusion after the session Instant, open, everywhere – have real-time payments delivered on their promise? on the first day of EBAday. The focus points around Instant Payments seem to have shifted; in the past, people mainly talked about the underlying infrastructure and Instant Payments as a premium service, but now you see a change in the way people think about Instant Payments. This payment method is now seen as a magnet that can attract new customers and forms the foundation of a new customer-friendly era for banks.
Paul Thomalla, Global Head of Payments at Finastra, expressed this as follows: “It's not just about moving to real-time; it's about digitizing and being able to interact with your customers and give them the valuable opportunities they need. Instant Payments is not just a new norm, it is the norm.” The other speakers agreed. David Chance, VP Product Strategy and Innovation at Fiserv, stated that Instant Payments is more than just a service. “Instant is the beginning of a journey and part of the digitization of customer satisfaction.”
Andrea Bacioccola, Global Service Line Payments Director at SIA, doesn’t understand how it’s possible that there are still parties who offer Instant Payments as a premium product that requires an additional fee. “This way, you create a barrier instead of using Instant Payments to attract customers. The real-time creation of services will improve the customer experience and thus the relationship with the customer.”
At equensWorldline, we agree with this message. Instant Payments is not a service in itself, but a basis on which new services and functionalities can be built. It’s the foundation on which new ways can be developed to engage and attract customers. It’s a tool with which Open Banking and PSD2 can grow to its full potential, as our CEO Michael Steinbach pointed out earlier in a blog.
Steinbach phrased it as follows: “Banks need to add Instant Payments as an extra layer to their infrastructure. The new functionalities and services built on this layer generate an abundance of real-time customer data. Data that can be used directly for better and personalized domestic and cross-border services created by banks and third parties in the era of Open Banking and PSD2.”
500 millionth Instant Payments transaction
In the Netherlands you can see how quickly the adoption of Instant Payments can grow, especially when banks forge a plan together. This month the 500 millionth Instant Payments transaction was processed in the Netherlands, more than in any other EU country. Over 90 percent of all single transfers between different Dutch banks is an Instant Payment. In the Netherlands, Instant Payments already is the new normal.
More and more financial institutions are starting to realize the importance of Instant Payments, but there is still a lot of work to be done. In Europe, we are still too often stuck in good intentions, as was demonstrated during this session at EBAday. Cross border payments and scheme interoperability still need to improve, but meeting the regulations is proving difficult. The fragmentation of payment solutions and apps also makes it hard to offer the same payment experience on a pan-European level.
So, there is still plenty of work to be done, but the way in which Instant Payments are approached by the financial world shows that steps are being taken in the right direction. A promising message.