Instant payment

Instant payment is a method of exchanging money and processing payments, allowing for almost immediate transfer of money between bank accounts, instead of the more typical one to three business days.[1]

Many countries have implemented instant payment systems, and many instant payment systems and platforms are currently under development worldwide, due to increased need for faster and reliable transactions.[1]

The Euro Retail Payments Board (ERPB) define instant payments as:

Electronic retail payment solutions available 24/7/365 and resulting in the immediate or close-to-immediate interbank clearing of the transaction and crediting of the payee’s account with confirmation to the payer (within seconds of payment initiation).[2]

Background

The growth of e-commerce has caused changes in people's spending patterns. Shopping is no longer confined to regular business hours, creating new challenges for funds transfers.[3] Similarly, merchants require faster and more reliable money transfer systems to keep up with consumers' demands.[4]

Traditional electronic payments like simple bank transfers, that perform the electronic funds transfer within few business days, are not in line with user expectations. It is predicted[5] that, in the next year, instant payments will become the standard for electronic fund transfers, where customers will be able to digitally access their insurers and manage their funds.[6]

Adoption

In 2017, Walmart, America's largest retailer, announced that it will start offering instant payments to its employees via a digital application, enabling them to access a portion of wages for the hours they have already worked.[7]

In 2018, the on-demand delivery network Postmates partnered with Visa to enable real-time funds disbursement to their entire fleet. The new feature, called "Instant Deposits" runs on Visa Direct, Visa's real-time push payment platform, and is available to the entire Postmate fleet across the United States.[8]

Examples of instant payment services

A non-exhaustive list of systems available today, and in the near future, is the following:

CountrySystem
 Japan ZENGIN,[9] deployed in 1973
 United Kingdom Faster Payments Service (FPS),[10][11] available since 2008
 China IBPS - Internet banking payment system,[12] deployed in 2010
 India IMPS - Immediate Payment Service,[13] deployed in 2010
 India UPI - Unified Payments Interface,[14] deployed in 2016
 United States Zelle,[15] available since 2016
 United States Venmo,[16] available since 2018
 United States RTP - Real-Time Payments,[17] available since 2017
 Europe RT1,[18] available since November 2017
 Europe TIPS - TARGET Instant Payments Settlement,[19][20] available from November 2018
 Australia NPP - New Payments Platform,[21] available since February 2018
 Sweden
 Denmark
 Norway		 Swish, since 2012; Denmark, MobilePay, since 2013; and Norway, Vipps, since 2015 - these three systems are utilised by over half of their respective countries' users, and has contributed to the move towards cashless societies
 The Netherlands Dutch Payment Association,[22] Rollout completed on September 10, 2019 allowing payment within 5 seconds
 Russia Система Быстрых Платежей - Fast Payments System, available since 2019

Comparison with digital wallets

In digital wallet based payment systems like Paytm, PayPal, Apple Pay, AliPay, WeChat Pay, etc., users receive immediate notification of the transaction, but funds are transferred at best in the next business day.

The settlement time depends on the underpinning payment method chosen by the customer, while for instant payment systems, the funds are transferred within seconds or minutes.

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See also

References
  1. "Are instant payments becoming the new normal? A comparative study" (PDF). European Central Bank. Retrieved 5 August 2020.
  2. "Instant payments definition". www.ecb.europa.eu. European Central Bank. 2017. Retrieved 8 September 2018.
  3. "Digital transformation of the retail payments ecosystem" (PDF). www.bancaditalia.it. Banca d'Italia. 30 November 2017. p. 3. Retrieved 2 September 2018.
  4. "What are instant payments?". www.instapay.today. InstaPay. 2018. Retrieved 2 September 2018.
  5. PYMNTS (1 January 2019). "2019: The Year Of Instant Payments". PYMNTS.com. Retrieved 20 August 2019.
  6. "Instant payments are the future - here's why". insights.nordea.com. Nordea. 2018. Retrieved 2 September 2018.
  7. PYMNTS (14 December 2017). "Walmart Pays Workers In Real Time". PYMNTS.com. Retrieved 20 August 2019.
  8. "Visa, Postmates to deliver instant payouts to delivery drivers". PaymentsSource. Retrieved 20 August 2019.
  9. "Zenging system". www.zengin-net.jp. Japanese Bank’s Payment Clearing Network. 2012. Retrieved 2 September 2018.
  10. "About Us". Faster Payments. 1 May 2018. Retrieved 5 August 2020.
  11. "Celebrating 10 amazing years – 24/7 since 2008". Faster Payments. 25 May 2018. Retrieved 5 August 2020.
  12. "Payment, clearing and settlement systems in China" (PDF). www.bis.org. Bank for International Settlements. 2012. p. 24. Retrieved 2 September 2018.
  13. "Immediate Payment Service - Frequently Asked Questions". www.onlinesbi.com. State Bank of India. Retrieved 2 September 2018.
  14. "Unified Payments Interface - Frequently Asked Questions". www.npci.org.in. National Payments Corporation of India.
  15. "Introducing Zelle". www.zellepay.com. Early Warning Services LLC. 2018. Retrieved 2 September 2018.
  16. "Send money and make purchases at approved merchants". venmo.com. Venmo. 2018. Retrieved 8 September 2018.
  17. "RTP". www.theclearinghouse.org. The Clearing House - RTP. 2018. Retrieved 2 September 2018.
  18. "EBA CLEARING's instant payment activities". www.ebaclearing.eu. EBA Clearing. 2017. Retrieved 2 September 2018.
  19. "TARGET Instant Payments Settlement" (PDF). www.ecb.europa.eu. European Central Bank. 9 February 2017. Retrieved 2 September 2018.
  20. Karen Birkel; Lorenzo Giammò (13 December 2017). "TARGET Instant Payment Settlement" (PDF). www.ecb.europa.eu. European Central Bank. Retrieved 2 September 2018.
  21. "New Payments Platform". www.rba.gov.au. reserve Bank of Australia. 2018. Retrieved 2 September 2018.
  22. "Razendsnel online overboeken, 24 uur per dag, 7 dagen per week". www.betaalvereniging.nl. Betaalvereniging Nederland. 2019. Retrieved 10 September 2019.
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