Embracing the Real-Time Payments Transformation
Ross McFerrin, VP Enterprise Growth, Trustly
Consumers were first introduced to real-time payments (RTP) a few years ago with the likes of Venmo and Apple Pay, with very positive results. Why wait hours or days to send money when you can do it instantly with one of these services?
Still for many banks and businesses, RTPs continued to be seen as an infrastructure luxury applicable only for peer-to-peer transactions. However in reality, it has become a very common method of payment for all sorts of use cases around the world.
Applications of Real-Time Payments
Contrary to what industry leaders once believed, RTP can and is being applied to every major payment category, including:
Here are just a few examples of the major applications of RTPs beyond helping people split the bill on a dinner out with friends:
- Peer-to-peer (P2P)
- Business-to-business (B2B)
- Business-to-consumer (B2C)
- Consumer-to-business (C2B)
- Government-to-citizen (G2C)
- Account-to-account (A2A)
The number of people working as freelancers has grown steadily over the years and exponentially during the COVID-19 pandemic. The global gig economy is expected to grow to $455 billion in value by 2023. People are not only switching to freelance and the gig economy out of necessity, but also preference. They appreciate the flexibility this system of working allows — including the ability to access and move money quickly. RTPs can be used to help freelancers and their clients complete transactions in a timely manner.
Supporting those in need
Another important application of RTPs is the ability to send and deliver money to people in need when they need it the most. RTPs can be critical to support people during emergencies, like during natural disasters. They can also help provide financial assistance to those in need during the COVID-19 Pandemic, such as G2C transactions.
For businesses transactions in various industries
The ability to provide instant financial transactions can help improve all sorts of business processes across industries. RTPs can be applicable to providing instant payment services, same day ACH payments, push-to-card payments and digital wallet-based services in numerous industries.
The Benefits of Real-Time Payments for Businesses
Real-time payments have a lot of potential use cases for the gig economy, supporting people during emergencies, and facilitating business transactions. However organizations will only feel the drive to adopt this payment strategy if it offers clear benefits for their bottom line.
The capabilities of RTPs actually make it possible to drive a number of business-related goals, including:
Higher user satisfaction
Consumers today want and expect fast deposits and withdrawals. Consumers prefer to work with businesses that can provide these transactions instantly as it's a driving force for their decision to use one service over another.
Great user experience
When businesses utilize the right RTP tool, user experience can be identical or even better for users. The flow of withdrawals and deposits are fast and simple with good user experience.
Instant funds, 365 days a year
With RTPs, there’s no wait times, cut off times, settlement cycles, or other aspects that delay payments. Both businesses and customers can receive money in their accounts in seconds, 24 hours a day, 7 days a week.
Improved customer loyalty
All these benefits together make a business that offers RTPs more appealing for customers, improving customer loyalty in the process. A seamless payment process attracts repeat users, and can drive more engagement and deposits in comparison to standard withdrawals.
Embracing the Real-Time Payments Transformation
The real-time payments transformation is something that’s happening right now, whether banks or businesses are prepared for it or not. It’s getting to the point where those industries that embrace RTP and make it actionable for their customers will have more transactions, higher customer loyalty, and ultimately more sales than those that don’t.
The COVID-19 pandemic was the driving force behind numerous changes in economics and business. Its influence on RTPs is no exception. According to the Faster Payments Council, RTP transaction volumes surpassed forecasted projections of 1.2 billion. As people go back to work and as close as we can get to normal life, this trend isn’t slowing. The fact that RTP’s share of all transactions has doubled suggests the push is quite powerful, especially considering how many adults have adopted the use of mobile wallets since 2020.
This behavior change marks a breakthrough for RTPs that is unlikely to go away. As we have seen happen in other parts of the world, mobile wallet adoption is a driving force behind an increase in real-time payments. COVID-19 was just the catalyst.
Real-time payments are now a necessity for businesses, but they’re also good news for banks. Instead of being more labor-intensive or costly, RTPs have a lower cost of operation than processing other types of transactions. They also make the most of the available resources to optimize transaction processes for banks.
So not only are RTPs necessary to meet consumer needs, they’re also convenient for all parties involved. This makes any real arguments against major RTP adoption pretty weak.
Trustly is an instant payments solution that leverages the Clearing House’s trusted network to offer real-time payments for users. The Clearing House launched the first RTP network for the US back in 2017 and continues to work in the FinTech industry to provide this service.
Trustly’s Instant Payouts solution helps consumers access their funds immediately, expediting marketplace payments, enabling speedy trades & gains, and accelerating insurance payouts, among other benefits. The speed and ease-of-use of this service leads to higher purchase frequencies and customer satisfaction. Trustly’s intuitive Open Banking Payments interface makes it easy for users to log in with their bank credentials and start real-time payments in seconds, with no settlement or cut-off times.
Consumers, citizens and businesses all want the path of least resistance when it comes to making transactions. Real-time payments are no longer a luxury service reserved for specific use-cases. We already have the infrastructure in place to offer RTPs at scale in industries and other use-cases across the US and the globe. Organizations interested in leveraging the benefits of RTPs need to trust in a solution that maximizes the benefits of improving customer satisfaction, user experience and customer loyalty. Trustly is uniquely positioned to do just this.