Thoughts about real-time payment systems

What are the key elements of an effective real time payments systems?

Consumer loyalty is the key to success for any retailer, which is why consumer preference must be a priority when choosing to embrace a real-time payments system. With real-time payments, banks are presented with the opportunity to offer a wide array of payment options to grow volumes, revenue, and their client base, however, they need to be ready to embrace this new trend in order for the real-time payments system to work efficiently. Most importantly, a variety of methods for confirming a transaction should be offered, i.e. TAN via SMS or apps. Whilst this may be vital in terms of functionality, trust needs to be developed through security reassurance, which is why retailers should choose the method of redirection as opposed to overlay. Although overlay might be the easiest choice, this requires customers to share their bank details with the online retailer, rather than going directly through their brank provider.

Which countries are leading the way in the introduction of such systems?

The Netherlands is the best example of how to launch a direct bank transfer payment and gain a large market share by beating competition to develop the most popular online payment method, iDEAL. Introduced to the Netherlands in 2005, iDEAL allows an immediate online transfer from a purchaser’s bank account to the bank account of an online retailer or organisation. Belgium, Scandinavia and the DACH countries are also well developed when it comes to online banking and bank transfer utilisation

What benefits have these countries’ financial systems derived from the introduction of real-time payments?

By adopting real-time payment systems, banks are able to benefit from transaction fees and do not only participate in the online payment business, but they strongly influence it. With the high demand of real-time payments from consumers, financial institutions are presented with the opportunity to educate consumers on the benefits of real-time payments and to drive transaction volume and fee revenue with payment systems than banks control. They also help financial institutions provide the most convenient online and mobile banking experience, and can help service as a springboard for new payment services.