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  • Thierry Spanjaard

Instant payments are coming… instantly!

Trustech, the leading event in the secure transactions industry, focuses on payment and ID among a few other themes. Instant Payment, one on the major topics of the time, was the subject of one of the conferences.

Instant Payments, are defined by the European Central Bank, ECB, as “electronic retail payment solutions that process payments in real time, 24 hours a day, 365 days a year, where the funds are made available immediately for use by the recipient.”

Already many experiences are ongoing. The UK has had “Faster Payments” for over a decade. In the European Union, many financial institutions have already launched some sort on Instant Payment services.

Interestingly, the evolution to instant payments goes on with an evolution of business models: some banks in France or in Spain succeed in charging end-users an extra fee for instant payments demonstrating they are not only eager to pay but want their payment to be expedited as fast as possible.

Instant Payments will only succeed in Europe if they allow a transaction to be completed instantly between any users, consumers and merchants alike, located anywhere in the EU, with an account at any EU financial institution. Consequently, the Instant Payment infrastructure is built at the European level, based on TIPS (TARGET Instant Payment Settlement), the settlement infrastructure of the ECB, European Central Bank Eurosystem. TIPS can also be considered as a technical base to achieve the sovereignty goal set up for PEPSI, the Pan European Payment System Initiative launched a few weeks ago.

In the US, services like Venmo, a Paypal-owned service that provides P2P payments, or Zelle, a P2P service owned by American financial institutions, are among the first implementations of instant payments.

In Africa, Instant Payment projects are flourishing in Central and West Africa communities, in SADC (the Southern African Development Community) and independently in countries like Morocco or Madagascar.

Furthermore, Uber Money, which allows drivers to be paid at the end of each ride can be seen as a specific implementation of instant payments. Uber goes even further and faster when they propose to pay the first ride even before it happens to allow drivers to buy gas when they start their day.

Actually, instant payments can be using different payment rails to complete their objective: credit transfer, direct debit, credit cards, debit cards, mobile money, … and will bring a new rationalization to the payment environment. The point is not just to be faster than before, but instant payments are bound to be the foundation for the development of new services, new applications and new businesses that will become the new driver for adoption.

In the US, peer to peer payment is the first application to be launched for instant payments, while historically, in Europe retail payments have always been at the forefront of innovation. Instant payments may become the unifying force providing the same payment experience to users regardless whether they are paying a person or a merchant, and regardless of the communication technology : mobile, smart card, QR codes or others.

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