Instant Payments in the Experience of a European Payments Provider

In addition to the requirement to be able to both receive and send real-time payments, the introduction of instant payments includes further verification obligations for banks, such as matching the IBAN with the account holder and sanction screening. In addition, real-time credit transfers should not cost the end customer more than a conventional transfer in the future. While many banks fear considerable additional expense, the SEPA Instant Credit Transfer Scheme is already an established payment standard in the Netherlands. There, the outsourcing of process structures has proven its worth: In cooperation with their service providers, banks are increasingly relying on modular solutions that can be linked to existing infrastructures and flexibly expanded with value-added services.

As critical as these infrastructures are, they should be optimized in terms of efficiency and costs in the future by exploiting all economies of scale. As a distinction to the mere execution of a payment, efficient access to these and successful integration into existing corporate processes can be a competitive differentiating factor. For financial institutions in Switzerland, which will also have to offer instant payments from August 2024 or 2026, the Dutch approach could well be a model.

Large retail chains stand out as the most likely beneficiaries. They have the critical mass to add new payment methods to their loyalty apps and reduce their default risk through instant payments without relying on a scheme. This is because while recall is possible with both card-based methods and a direct debit, real-time credit transfers are final. For the merchant, there are thus advantages at this point of an instant guaranteed payment. But it's not just retailers; big tech companies also have the opportunity to gain new data by integrating payments.

For banks, it means gaining a clearer picture than ever of their own future position, whether through an active approach at the customer-bank interface or a rather passive approach in the background for third-party service providers. In any case, the future lies in offering data- and service-driven value-added services.

Jacqueline Good Ziltener
Wordline Switzerland