by Francis De Roeck, Head of SEPA Offering, BNP Paribas Cash Management
One of the most important payment innovations that we are likely to see over the next two or three years is the birth of instant payments in Europe. Although similar payment schemes already exist in individual countries such as UK (Faster Payments) and Singapore (Fast and Secure Transfers – FAST), Denmark (express transfers) and Australia (in development), the introduction of instant payments across the Eurozone will revolutionise payments across 338.3 million people and 19 countries. BNP Paribas is leading innovation and driving momentum in instant payments, recognising that instant payments represent a once-in-a-decade opportunity to improve customer satisfaction, reduce cost and fraud, and revolutionise both established and emerging sales models.
Defining instant payments
When we refer to ‘instant payments’, we are discussing payments that can be made 24/7, with immediate transfer of value, credit to the payee’s account and ability to re-use funds. The two parties to a transaction are informed straight away that a transaction has, or has not been successful, enabling the goods and services to be transferred, and credit limits freed up. Real-time, 24/7 payments are no longer an aspiration but an expectation for both consumer and wholesale payments, and there is considerable motivation amongst payment providers (both banks and non-bank payment service providers or PSPs), users and regulators to deliver on this expectation. The question, however, is how we get there, given the scale of undertaking and disruption to existing payment and collection processes. Therefore it might be interesting to see how the uptake took place (or is still taking place) in the instant payment schemes already in place. Like every major industry undertaking, the development of instant payments is likely to take place through a number of distinct phases (figure 1).