Unravelling the Power of Instant Payments

Payment systems worldwide are changing fundamentally to meet the growing demand for immediate payments and digital payment solutions. Instant Payments are set to drive the most significant transformation in the global payment landscape.

Even in a pre-Covid world, regulations and payment best-practices have started to shift into opening resources, increasing access to banks’ APIs, and disassembling the monopoly of pre-defined payment flows and restrictions. We see a positive change in opening the path to new initiatives that promote competition in the industry to make online payments more efficient, secure, and straightforward—to merchants and customers alike.    

 

In a nutshell, Instant payments are electronic retail payments that are processed in real-time, and the funds arrive at the recipient’s account immediately, with no latency. Instant payment’s most significant advantage is improving the customer checkout experience for a faster, safer, and easier way to perform payments with the end-user in mind.  

 

 

The benefits of Instant Payments   

Multiple instant payment solutions may help achieve competition, innovation, and integration objectives, but the caveat is that different geographical locations have designated needs. In Europe, for instance, Instant Payments need to have a pan-European reach. Still, if they are developed locally, they should be integrated with additional solutions to compensate for possible fragmentation.   

 

Instant payments around the world

Covid-19 has been a springboard to many Fintech innovations, and Instant Payments has also benefited from this leap. The effect has not spared countries worldwide.

Here’s a brief recap:  

 

In Europe, pan-European instant payments are spreading rapidly among PSPs, PayU included. The challenge for the EU at this point is the vast fragmentation that still exists, whether it’s mobile wallets only working on a national level or incompatibility of some EU countries with other EU countries. As for the United Kingdom— Brexit has not affected the UK instant payments sphere, and it is still a member of SEPA, so payments between the UK and EU are treated the same as before.  

 

In Asia – and especially in China and Japan – we see fast adoption of digital payments, as smartphone-based instant payments are used heavily and are one of the most popular payment methods. In 2019, the Japanese government even announced a subsidy for promoting cashless transactions in the country. As part of that initiative, it envisions offering shopping points to customers using cashless payment methods, thus creating even more incentive to use said method. In India, the country’s digital payments use is also growing rapidly, but so does fraud. It’s expected that real-time payments volume will mount to almost 72 percent of all payment transactions in 2025, but cyber-attacks are also showing a problematic state, with a surge to more than 11 million attacks last year.  

 

In Brazil, the state-owned instant payment system “Pix,” developed by the Central Bank of Brazil, aims to accelerate and simplify transactions and attract big players in the instant payments space like Facebook and Google.  

PayU Offering

PayU currently collaborates with 18 banks in Poland, 7 in the Czech Republic, 6 in Romania, 2 in Hungary, and 1 in Croatia to facilitate said ability. The cooperation is based primarily on connections of the pay-by-link type* and on the acceptance of cards. Thanks to a collaboration with the Krajowa Izba Rozliczeniowa (KIR – Polish Clearing Chamber), Polski Standard Płatności (owner and operator of the BLIK system), and the Visa and MasterCard payment scheme, we help promote more payment methods already popular in the market, such as electronic wallets Click to Pay Visa or MasterPass, or mobile payments e.g. Google Pay, Apple Pay, and BLIK.     

  

Fast transfers (pay-by-link)

Pay-by-link or direct, Instant Payments were developed to transfer funds to the seller without latency while maintaining the highest security standards. Speed, convenience, and safety are the three pillars that customers are looking for in online transactions. This method is tailored to the needs of the modern shopper and ecommerce. While paying, it is enough for the user to click on a specially generated link that transfers them to their e-banking system, where the transaction needs to be approved. The seller immediately receives information about the transfer. When using direct pay-by-link transfers, both parties enjoy a process that saves time and eliminates the risk of errors that may occur if transfer data is entered manually.  

   

BLIK  Payments

PayU supports the BLIK mobile payments system, which is tailored for eCommerce and supports payments taking place in Point-of-Sale stores and service points and ATM cash withdrawals.   

 

A transaction in the BLIK mobile payments system is performed between the customer who has an active mobile application (issued by the bank), and the merchant (a store, a service point etc.), serviced by the paying agent. The one-time codes are the core identification mechanism under the BLIK mobile payments system. The whole payment process takes mere seconds to perform. In addition, it is even possible to opt out of generating a one-time code each time by expressing consent in the banking application during the payment process for BLIK OneClick payments. Then, the following payment only requires choosing the BLIK option and confirming the payment in the banking application.    

   

PSD2 Payment Initiation Service

Another service PayU has implemented, which facilitates Instant Payments, is a solution based on Open Banking and payment initiation service. PayU has integrated 8 APIs in Poland and 4 in the Czech Republic thus far, and more are planned in the pipeline.   

 

*PayU 2020 stats, Global Payment Report 2020, World Bank 2020  

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