How to transform customer experiences by embracing instant payment technology

Consumers’ need for instant gratification isn't just a desire; it's an expectation. Instant payments, also known as real-time payments, are meeting these expectations head on by enabling funds to be transferred and accessed immediately in one single transaction. This is a significant leap from traditional payment methods made via legacy POS systems, which can take hours or even days to process, and with over 266.2 billion instant transactions made in 2023 alone, it’s clear a shift in access to instant payments is more important than ever.

In February 2024, the European Parliament announced new regulations for instant, cost-effective credit transfers across the EU. These new rules overhaul SEPA standards, compelling banks and PSPs to process payments within ten seconds, any time, any day. Even non-euro member states must adapt, though they get a bit more time and leeway for off-hours transactions due to liquidity issues. This bold move aims to revolutionize payment speed and accessibility for retail clients and SMEs, setting a new standard for the industry.

However, irrespective of this mandate, there was already a favorable shift occurring towards instant payments, involving multiple factors:

1. Speed and convenience: According to a 2023 study by ACI Worldwide and GlobalData, the number of real-time payment transactions worldwide surged by 42.2% in 2023. This growth is driven by consumers’ demand for immediate access to their funds, whether they are paying for goods and services or receiving payments themselves. This trend reflects a broader shift towards faster, more efficient transaction methods in today’s digital economy.
2. Improved financial control: Instant payments provide consumers with better financial control and transparency. A 2023 survey by the Federal Reserve showed that 75% of consumers expect instant payments to improve their cash flow management, as well as 92% of businesses. This is particularly relevant in an era where financial health is a top priority for many.
3. Debit cards and BNPL schemes: The reliance on debit cards and Buy Now, Pay Later (BNPL) schemes is growing. As of today in 2024, 50% of UK adults have used BNPL services, up from 36% in 2023. These payment methods align perfectly with the capabilities of instant payments, further driving their adoption.
4. Rise of digital currencies: The rise of digital currencies, such as Bitcoin, is intricately linked to the concept of instant payments as these cryptocurrencies facilitate direct and immediate transfers. As of today in 2024, the market capitalization of cryptocurrencies is around $2.66 trillion, demonstrating their growing influence on the financial ecosystem. This significant milestone highlights the increasing acceptance and integration of digital currencies in mainstream finance, which, in turn, propels the adoption of instant payment technologies that offer similar benefits of speed and efficiency.

With 60% of customers preferring retailers to offer real-time payments, the integration of instant payment technology is not just an option for merchants; it's a necessity, as the benefits suddenly become more like rallying cries.

Let’s explore some of the benefits of offering instant payments in more detail:

Competitive edge

By offering instant payment options, businesses can stay ahead in a competitive market and differentiate themselves from competitors who rely on slower, traditional payment methods. Real-time payments significantly enhance the customer experience by providing faster, more convenient transactions, which can be a decisive factor for consumers choosing between retailers. This competitive edge is crucial in an age where speed and efficiency are increasingly demanded by consumers.

Enhanced security features

In addition to this, real-time payment systems are often equipped with advanced security features, which contribute to reducing fraud, which has led to a 10% decrease in payment fraud in markets where these systems are widely used. The advanced security protocols in real-time payment systems help detect and prevent fraudulent activities more effectively than traditional payment methods. This enhanced security not only protects merchants and consumers, but also builds greater trust and confidence in the use of digital payment solutions.

High transaction volume handling

Additionally, instant payment systems offer scalability, efficiently handling high transaction volumes as businesses grow. This capability is particularly important for businesses experiencing rapid expansion or fluctuating transaction volumes, such as during peak shopping seasons or promotional events. Scalability ensures that the payment system remains reliable and efficient, regardless of the transaction load, thereby maintaining a smooth customer experience and operational stability. By integrating instant payment technology, businesses can optimize their payment processes and enhance security, while also supporting their own growth, positioning themselves for long-term success.

Optimized cash flow management

For merchants, instant payments facilitate immediate settlements, allowing for better cash flow management. Timely payments to suppliers for inventory, rent, goods, and services ensure smoother operations and enhance relationships with suppliers. This immediate financial transparency and control are invaluable for business planning and growth.

Flexible payroll options

Instant payments enable businesses to offer flexible payroll solutions, such as daily or on-demand pay. This feature is particularly attractive to part-time, temporary, or seasonal employees, making it easier for businesses to attract and retain staff. It aligns with the growing trend of gig economy workers who prioritize immediate access to their earnings.

The adoption of instant payment technology can revolutionize the customer experience in several key ways:

1. Enhanced convenience and security: Instant payments, powered by QR codes and digital wallets, offer a secure and user-friendly method for both online and in-store transactions. Customers can complete purchases with a simple scan, avoiding the need for cash or physical cards. This not only speeds up the checkout process but also enhances security by reducing the risk of card skimming and fraud.
2. On-the-spot refunds: One of the most frustrating aspects of traditional payment systems is the delay in processing refunds. With instant payments, merchants can offer on-the-spot refunds, significantly enhancing customer satisfaction. This immediate resolution reduces the burden on customer support and minimizes the operational costs associated with tracking and managing refund processes.
3. Efficient loading of prepaid cards: Instant payments provide a secure and convenient way for customers to load funds onto gift, reward, or prepaid debit cards without needing to disclose sensitive financial information. This method not only protects customer data but also streamlines the process, making it faster and more efficient.

Choosing the right payment platform for your instant payment offering is crucial for businesses aiming to enhance customer experience and operational efficiency. An ideal platform should ensure seamless integration into existing payment ecosystems, allowing businesses to quickly adopt and benefit from the technology without extensive system overhauls. Security is paramount, and the platform must protect both merchants and customers from potential fraud and data breaches.

Additionally, customization and flexibility are key; the platform should allow businesses to tailor instant payment features to their specific needs, whether it’s implementing QR code payments, digital wallets, or instant payroll systems. Aevi excels in providing these capabilities through its innovative and customizable orchestration layer, making it an excellent choice for businesses seeking to optimize their instant payment solutions and enhance the overall customer experience and operational efficiency.

As we move towards a future where instant payments become the norm, businesses that adopt and integrate these technologies will be better positioned to meet the evolving demands of their customers. The benefits of instant payments - enhanced convenience, improved security, better cash flow management, and flexible payroll options - are too significant to ignore, and the time to act is now.