Even with the expansion of newer payment modalities like credit cards and paper checks, the exchange of hard currency has always been the most convenient way to pay in real time. Unfortunately, cash and coin just aren’t a sufficient means of payment in our increasingly digital world.
Traditionally, the payments space has been slow to adapt to consumer demands. Checks can take up to a week to process, credit card transactions don’t move funds for three to four days, even direct deposits can be “pending” for a couple of hours before they land in an account. Unless you’re planning to hand over hard currency, there was previously no way to pay immediately — until real-time payments.
Real-time payments (RTP) are bank-to-bank money transfers that settle instantly.
Currently, they’re the most efficient way to move money electronically. As real-time payments become more mainstream among business transactions, 81% of business leaders expect RTP to dramatically transform the way business is done — and for good reason. Real-time payments provide a new avenue for businesses looking to optimize cash flow, increase customer satisfaction and simplify the overall consumer experience.
Here are three reasons why your business should offer real-time payments:
- Real-time Speed
The future of payments is focused on one thing: speed. Not only is being faster a competitive advantage, but consumers expect efficiency. Thanks to smart devices, the ability to order food or purchase a new vacuum instantly is at their fingertips. When it comes to moving money, these modern consumers have the same expectations. They don’t want to wait for funds to land in their account. Real-time payments offer the opportunity for businesses to instantly transfer funds–which is faster than ever before. The receiver has the payment within seconds of the sender initiating the transaction, which means there is no waiting around for funds to be processed.
- Real-time Customer Satisfaction
The transition to digital payments has only been accelerated by the pandemic.Today, the need for instant gratification is higher than ever. By 2026, digital natives will account for 59% of all consumers. Not only does speed matter to these digitally-driven customers, but availability and simplicity is equally important. With RTP, there is no hold or “pending” status on money transfers because of business hours, weekends or holidays. Real-time payments can be processed 24 hours a day, 365 days a year. This always-on modality allows businesses to drive value by offering more convenient payments and flexible timing, depending on the needs of each customer.
- Real-time Fraud Protection
As with anything digital, there is always a risk of fraudulent activity. This is especially true when money is moving. This time last year, cyber attacks against the financial sector increased by 238%. As more professionals opt to work from home in the future, cybersecurity threats show no signs of slowing down. Security and compliance are vital components of real-time payments. Because real-time payments run through the Clearing House’s RTP® Network, which requires standard security practices from all participants, these instant transfers are at a lower risk to potential fraud.
Paired with the right security practices, business leaders can rest assured their funds are protected.
Real-time payments are reshaping our reality for moving money. According to FIS, the “introduction of an RTP platform by The Clearing House (TCH) ushers in the next wave of applications.” As business operations continue to accelerate and organizations seek out more efficient ways to move money, real-time payments won’t be the “shiny new object” among a sea of payment options, they will be the standard for efficient, effective money transactions.
Brady Harris is the Chief Executive Officer of Dwolla. With over 20 years of experience in the payments industry, he’s making programmable payments the standard for any industry. Prior to Dwolla, Harris was the President of Payscape, a nationwide FinTech/SaaS provider that offers dynamic payment solutions. At Payscape, he was a member of the senior executive team, overseeing more than 1,000 employees between 13 global offices. He played a key role in the merger between Payscape and Payroc, creating a full-service payment powerhouse that operates in 46 countries, to 60,000+ businesses with over $25 billion in annual payment volume. In his 18 year history of leadership in FinTech, Payments and SaaS industries, including multiple successful private equity transactions, Harris excels at accelerating growth and successfully scaling businesses. In 2017, he was recognized as the 3rd highest rated CEO nationwide by Glassdoor.