Real-Time Payments- Benefits for Businesses and Consumers
Real-time payment (RTP) is a technology designed to provide the near-instantaneous transfer of funds between two parties. This might be for an employer paying a worker, for a consumer buying a product, transferring money to family and friends, or for a vendor settling their invoice with a supplier. We’ve explored RTP before, and it’s worth digging into the latest trends to understand how businesses, consumers, and others are taking advantage.
The Benefits of Instant Payments
Real-time payments are big business, with the industry predicted to grow between 50 and 80 percent per year. A Mastercard report highlights benefits to various parts of society:
- For consumers: 24x7x365 instant payment services, zero-friction payments, and the ability to transfer money to family and friends in an instant, including cross-border transactions.
- For businesses: Efficient e-invoicing and billing, better liquidity management, and improved customer service.
- For employees: Immediate access to earnings without having to wait for payroll to clear.
- For government: Anytime, traceable benefit programs and increased taxation income from GDP growth.
- For the economy: Increased velocity of money through financial systems, GDP growth from higher payment volumes, and market efficiencies from competition
- For society: A reduction in crime and security issues from cash handling, reduced systemic risks, and a 24×7 service culture.
“Real-time payments can benefit financial institutions (FIs), merchants, consumers, and society by offering enhanced visibility into payments, by enabling better cash management and by helping businesses better manage day-to-day operations by improving liquidity. The liquidity improvement can be especially impactful to small merchants who may be used to waiting days for their settlement, possibly creating a positive impact on their cash flow and daily sales outstanding.
Simple and Secure Disbursements Improve Economics
Replace costly, risky, and time-consuming checks with digital or prepaid delivery of funds. With flexible funding and delivery models, programs are configured to your unique needs. Plus, absolve your organization of escheatment and customer service responsibilities associated with the payment. Payment workflows that can benefit from digital or prepaid delivery include:
- Consumer or corporate refunds.
- Loan proceeds
- Consumer or dealer rebates
- Legal Settlements
- Financial Assistance
Immediate Payment Cards Provide Payroll Funds Access to Employees
Earned-wage access is becoming increasingly important to employees, especially those living paycheck-to-paycheck. Payroll departments can combine RTPs with payroll debit cards to give employees immediate access to their wages—this can even be expanded to cash advances or instant payments after completing a shift.
Some of the Employee Wage Access RTP benefits include:
- Allowing employers to load funds directly to an employee’s card account.
- Providing a “virtual” debit card for wage distribution until an employee gets a physical card.
- Providing employees with immediate access to their wages, on a day-to-day, shift-to-shift, week-to-week, or other regular basis.
- Helping employees to budget more effectively, reducing stress and anxiety from not having funds to pay bills or buy essentials.
The growth of the gig economy is one of the major factors impacting how and when employees get paid, as gig economy-supported platforms are renowned for offering workers the ability to be paid immediately for work performed. Evolving technology is also playing a leading role in this shift, as is the fact that 78 percent of Americans live paycheck to paycheck (according to a CareerBuilder survey)—that’s a major portion of the population who may benefit from an alternate payroll frequency than the bi-weekly or monthly norm. Ultimately, employees who are happy and fulfilled in their personal life – which includes financial well-being—are more likely to be engaged in their work.
Real-Time Payments Make it Much Easier to Send Money to Family and Friends
Domestic and international money transfers are also benefitting from real-time payments. Consumers can take advantage of this in how they transfer funds to family members and friends across the globe. Our global remittance capabilities, ReadyRemit, makes use of RTP systems to manage payments, including across borders- right from our app.
The benefits of RTPs for family and friend money transfers are:
- Providing the recipient with immediate access to money, which is helpful for emergency situations.
- Removing some of the complexity from currency transfer and making it fast and easy.
- Integrating with existing peer-to-peer money transfer apps to make the process transparent to the end user.
As you can see, real-time payment technology is advancing rapidly—both in terms of its convenience and in its adoption around the world. It’s time to adapt RTPs into your business, and enjoy the benefits it brings to your recipients and payments workflows.
Ready, Set, Pay! Speed up your financial journey today.
Deloitte, Real-Time Payments are Changing the Reality of Payments 1
HR Technologist, How Faster Payments are Impacting the Future of Work 2