Real-time payments, an innovative and revolutionary way of transferring funds, are changing the financial landscape as we know it. In fact, the Real-Time Payment Market Industry is expected to grow from 23.24 (USD Billion) in 2024 to 50 (USD Billion) by 2035.
At Finteq, we understand the importance of staying ahead of the evolution of Real-Time Payments and providing our clients with the most efficient and innovative payment solutions.
Here, we take a deep dive into the world of these types of payments to give you an understanding of exactly what they are, how they work, and the benefits they can bring to your business.
What are Real-Time Payments?
Real-Time Payments are electronic fund transfers that are cleared and either settled almost instantly, usually within a matter of seconds, or have deferred settlement depending on what the specific requirement is They differ from traditional payment methods which often take hours or even days to process by being an immediate transfer with an immediate confirmation that the transaction has been successful. This form of digital cash payment essentially arrives at its destination almost as quickly as you can hit ‘send’ – a level of speed and efficiency that traditional payment systems simply cannot match.
How do Real-Time Payments work?
With a sophisticated infrastructure and processes as their foundation, Real-Time Payments are made possible because of the following process:
- Initiation – The payer (the person or business sending the money) initiates a payment through a participating bank or payment service provider. This is often done via a mobile app, online banking platform, or a dedicated application.
- Network routing: The payment request is securely routed through a dedicated network developed with robust technology with the capabilities to handle high volumes of transactions with speed and reliability.
- Verification and authorisation: The network verifies the payer’s account details and ensures sufficient funds are available. Security protocols are in place to prevent fraud and unauthorised transactions. The payer’s bank then authorises the payment.
- Instant clearing: Once authorised, the payment is cleared instantaneously meaning that the funds are moved from the payer’s account to the recipient’s account in real-time with settlement being executed as required.
- Confirmation: Both the payer and the recipient receive immediate confirmation that the transaction has been completed successfully.
While the specific infrastructure and processes can vary slightly depending on the Real-Time Payment scheme process in a particular country or region, the core principle of near-instantaneous transfer is the defining factor with these types of payments.
The benefits of Real-Time Payments for your business
- Faster access to your funds can significantly improve your cash flow management.
- A seamless and convenient experience for customers.
- Immediate verification of funds reduces the risk of fraud.
- Better business operations – think of instant refunds, on-demand payments, and seamless microtransactions.
Three important considerations before implementing Real-Time Payments
While the benefits of Real-Time Payments are compelling, businesses must take the time and do due diligence before simply integrating them into their operations:
- Ensure that your existing accounting software, point-of-sale (POS) systems, and other relevant infrastructure can seamlessly integrate with the chosen platform. Working with an experienced provider will help you ensure that integration is done properly and securely.
- While Real-Time Payment networks are inherently secure, it is critical to make sure your business has already got robust security protocols in place to protect against potential fraud and cyber threats. Pre- and post-implementation this includes employee training, secure authentication processes, and ongoing monitoring of transactions.
- Although the adoption of this type of payment process is becoming more common place, it’s important to remember that adoption in your customer base may take time and you must still offer their preferred payment methods so that you can cater to their needs across the board.
Real-Time Payments are more than just a faster way to send and receive money; they are a fundamental shift in transacting in the digital age.
At Finteq, we are committed to providing our clients with access to the latest and most
innovative payment solutions.
Contact us today to explore how we can help you integrate innovative digital payment methods seamlessly and securely into your business.
