Instant payments: why countries switch to real-time payments

Which countries are using instant payments today?

Instant payments

Instant payments: why countries switch to real-time payments. Source: shutterstock.com

The global real-time payment market in 2018 was estimated at $6.9B. And, according to forecasts, it will increase by an average of 29.3% per year starting from 2019 to 2025. PaySpace Magazine has figured out what instant payments are, why they are beneficial to companies and their customers, and which countries are already using new technologies.

Instant payments are a new way to transfer funds in seconds, in the fastest and most convenient way. Compared to bank transfers, which can take up to three days, the new technology allows you to transfer money from the payer’s bank account to the recipient’s bank account almost immediately, instead of requiring a few business days. These payment systems have been developed (and are being developed) around the globe, as there is a need for faster and more reliable transactions in the global economy. It is also a good way to exchange money or buy goods/services right away.

The major criteria for instant payments

The speed of transactions 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.

Instant payments

Already existing instant payments systems

Today, there are about 20 instant money transfer systems worldwide. We can even say there are more systems, but they are under development. They have a similar working principle, and the major one is 24/7/365 access for customers and payment processing in real-time.

However, the problem is, most instant money transfer systems are local. Nonetheless, there are still players who want to cover several countries. These are the plans that, for example, SCTInst1 pursues. After the launch, the creators of the project plan to cover the entire SEPA zone, which covers no more and no less than 34 European countries.

The introduction of such systems is happening at different rates and at different speeds. Most of the factors depend on state support situation. In Mexico, for instance, the adoption of new technology was quick, with appreciable regulatory support. Conversely, in Brazil, even 10 years after launch, instant payments are rarely used.

In the very near future, an increase in e-commerce and an increase in the need for fast (if not to say instant) transactions will facilitate the development of the industry.

Top 3 real-time payment systems

In late 2018, the financial services provider FIS released an annual report on the development of instant payments. Moreover, it noted the three most progressive systems at that time. What’s interesting, one of them has already become fully operational, while others are in the process of implementation.

Immediate Payment Service, IMPS (India)

Instant payments

IMPS was launched in 2010. Source: shutterstock.com

IMPS was launched in 2010. This system offers electronic money transfers between accounts from different banks via mobile phones. The service is available 24/7 throughout the year, including holidays. Today it is the fastest-growing real-time payment system. The volume of daily transactions in the system increased from 2M per day in 2017 to around 2.8M per day in 2018.

In July 2019, 189M transactions were made through the system.

New Payments Platform, ТPP (Australia)

Instant payments

NPP was launched in February 2018. Source: unsplash.com

The New Payments Platform (NPP) was launched in February 2018. Thus, private individuals, enterprises, and government agencies have been able to make payments and receive funds 24/7. In addition, the new system has simplified the addresses for sending money transfers. Now, clients are free not to use standard bank account numbers in order to implement transfers. It is possible now to carry out a transfer using just the phone number or email address of the recipient.

In January 2019, the number of payments through the system reached 13M, and the amount of these transactions totalled $11B.

Fast and Secure Transfers, FAST (Singapore)

Instant payments

The system was launched in 2014. Source: shutterstock.com

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

In July 2019, no less than 218M payments worth $216B were made through the system.

The future of instant payments

The promotion of instant payments is attributable to the growing use of smartphones all over the world and the demand for prompt money transfers.

Technology is also supported by public authorities. For example, in India, the United Kingdom, and the United States, governments are working together with ministries and banks in order to create an ecosystem that facilitates digital transactions.

The most probable obstacles in the way of implementation of instant payments are cybersecurity issues, coupled with compatibility problems between different systems, which carry out real-time funds transfers.

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