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.