Specialist article • 16.06.2017

Instant payment solutions offer great potential

For customers, making payments is becoming as easy as sending an email

Photo: Instant payment solutions offer great potential...
Source: panthermedia.net/LDProd

Until recently, instant payment was a term only known to experts and also had many different types of definitions assigned to it. Here is an attempt to bring some order to this chaos and give an overview.

What are instant payments?

The van den Berg AG gives a great definition: it defines instant payments as electronic multichannel compatible payment solutions that are always available (24/7). Immediate or close to immediate within seconds after initiating payment, a payment confirmation is sent to the payee’s bank, payment is confirmed to the sender, payment is credited to the account of the payee and is made available. Unlike the classic alternatives that merely send a payment advice note, in the case of instant payments, the amount is available in the recipient’s account within seconds.

Meanwhile at the European level and based on SEPA instant payments, a rulebook (SCTInst) has been created that specifies the processes between the participating banks from the receipt of a remittance transfer at the sender’s bank to the entry at the recipient’s bank. The implementation of the rulebook is not mandatory and optional for banks. From a user’s point of view, it’s important to note that respective instant payments have to be processed within 10 seconds (starting at the time of transfer of the sender bank to the infrastructure) and are limited to a maximum value of 15,000 Euros.

When it comes to instant payments, banks have to build new infrastructures, moving away from the “batch structure“ (collection of data sets and processing “in one go“) and moving towards an instant structure (just-in-time process).

Significance from a retailer’s point of view

Instant payment processes are able to redesign today’s payment processing. Instant payments take the demands of today’s business into account. The benefits of a tit for tat exchange with cash transactions are being elevated to a digital level. So-called cashless cash transactions are rendered possible and offer (not just) the retail sector new possibilities in transaction processing without relying on the payment guarantees by payment systems.

However, the newly created European rulebook is only the beginning because so far only interbank payment and settlement mechanisms are being considered here. It’s important to opt for an end-to-end consideration from sender to payment recipient. It is essential to develop the corresponding products that use the banking infrastructure that needs to be redesigned. Banks should be motivated to accept and process instant payment transfers, also to ensure the future of the giro model.

What needs to be done?

Retail is working on standardizing all necessary interfaces that are required to make payment information available for processing and to show received payments on the retailer’s account at the checkout. Under the auspices of GS1 Germany, a global organization committed to promoting standardization, retail interfaces in instant payment processes are currently being standardized across Europe. In particular, the interfaces between “checkout and banking app“, “retailer account and checkout“ and “retailer app to banking app“ are being defined. The point is to make the necessary data available and to collect it, respectively, in a standardized format. In doing so, new payment service providers are able to connect to retail systems.

Banks should actively offer and accept SCTInst. They should build the necessary infrastructures to be able to process instant payment methods. Banks can also create their own products or enhance already existing methods of payment to become instant models.

Ulrich Binnebößel is payment expert at The German Retail Federation (HDE)....
Ulrich Binnebößel is payment expert at The German Retail Federation (HDE).
Source: HDE/Hoffotografen

Advantages of instant payments

The retail industry can disengage from the constraints of previously existing payment methods and return to setting up their own internal processes again. The corresponding interfaces are made available, while in-house processes are developed autonomously. Processes pertaining to the customer end of things are left to the banks and service providers.

In turn, banks can be certain that all payments are processed through the banking account, while there is a reduced risk of disruptive activities thanks to international payment processes.
Service providers are able to develop and pursue their own products by using the banking infrastructure. This can create a competitive environment, while additional services can result in added benefits.

The German Federal Government should have a positive view of this subject. Payments are a key issue between business stakeholders and are a part of closing any business transaction. A potential increase in efficiency thanks to instant payments benefits all stakeholders and reduces friction. Especially in online retail, uncertainty when selecting a payment method is often closely connected with canceling a purchase. A Europe-wide and standardized retail payment solution that can be adapted to every consumer thanks to an individual product design, can help to solve this issue.

Instant payments have great potential. Existing methods of payment could be adapted to the yet to be built infrastructure. New products could be created by third-party service providers. The giro model remains at the core of all methods of payment. Established banks could differentiate themselves from payment platforms.

Advertisement
Author: Ulrich Binnebößel, payment expert at The German Retail Federation (HDE)

related articles:

popular articles:

Thumbnail: Photo: Toshiba lifts customer experience & sales for Brookstone...

Company News • 04.07.2017

Toshiba lifts customer experience & sales for Brookstone

Dynamic content related to the products creates new shopping experience

Thumbnail: Photo: Enhancing customer experiences: Tango Point of Sale terminals...

Company News • 14.09.2017

Enhancing customer experiences: Tango Point of Sale terminals

DataVan’s stunning Tango POS terminal recently awarded the Computex design & innovation award

Thumbnail: Photo: Shopping with voice command

Voice assistants • 26.09.2017

Shopping with voice command

Voice commerce more than just another customer touchpoint for retailers

Thumbnail: Photo: Four questions for an IT manager

Company News • 11.10.2017

Four questions for an IT manager

Interview with IT manager Kaspar Hioväin from Coop in Estonia

Thumbnail: Photo: Knauber Freizeitmärkte emphasize digital signage for improved quality...

Report • 23.08.2017

Knauber Freizeitmärkte emphasize digital signage for improved quality of consulting

“We want to use the digital world to optimally serve our customers“

Thumbnail: Photo: CCV re-equips new payment infrastructure at Tchibo...

Company News • 31.07.2017

CCV re-equips new payment infrastructure at Tchibo

New hardware allows contactless payments via NFC

Thumbnail: Photo: Online giant Alibaba seeks to boost brick-and-mortar retail in China...

Interview • 21.09.2017

Online giant Alibaba seeks to boost brick-and-mortar retail in China

Integrated omnichannel model to deliver a seamless customer experience

Thumbnail: Photo: Robots and automated processes are the future of warehouse logistics...

Report • 01.07.2017

Robots and automated processes are the future of warehouse logistics

Staff shortages and the e-commerce boom call for all resources

Thumbnail: Photo: HiConversion joins Shopify Plus Partner Program...

Company News • 03.07.2017

HiConversion joins Shopify Plus Partner Program

HiConversion, adaptive testing and personalization solution, announces that it has joined the Shopify Plus Partner Program.

Thumbnail: Photo: Unmanned stores: what local supply might look like in the future...

Report • 02.08.2017

Unmanned stores: what local supply might look like in the future

Mom-and-pop stores turn into apps

Supplier

DataVan International Corporation
DataVan International Corporation
10F., No.186 Jian 1st Rd.
Jhonghe Dist., New Taipei City 235
StrongPoint
StrongPoint
Schießstrasse 35
40549 Düsseldorf
Permaplay Media Solutions GmbH
Permaplay Media Solutions GmbH
Aschmattstr. 8
76532 Baden-Baden
APG Cash Drawer
APG Cash Drawer
5250 Industrial Blvd NE
55421 Minneapolis
Delfi Technologies GmbH
Delfi Technologies GmbH
Landgraben 75
24232 Schönkirchen
SES-imagotag Deutschland GmbH
SES-imagotag Deutschland GmbH
Bundesstraße 16
77955 Ettenheim
POSIFLEX GmbH
POSIFLEX GmbH
Kaiserswerther Straße 85
40878 Ratingen
CCV Deutschland GmbH
CCV Deutschland GmbH
Gewerbering 1
84072 Au i.d.Hallertau
Axis Communications GmbH
Axis Communications GmbH
Adalperostraße 86
85737 Ismaning