The True Value of Real-Time Global Payments

Fast, convenient, efficient — whether it’s a B2B or B2C transaction, customers favour banks and businesses that have these characteristics. Far from being a ‘nice to have’, these characteristics are expected features of payment services all around the world. Real time payments (RTP) allow companies to meet those expectations, creating the best possible end-user experience for their customers.

But what are real time payments? Wise can help you understand the difference between real-time payments and faster payments, and explain the value this instant service provides.

Contact our sales team to learn how Wise Platform can supercharge your FX offering to your customers.

Get in touch today

Real-time payments vs. Faster payments

Though they may sound similar, real-time payments are not synonymous with faster payments. While faster payments move money much quicker than traditional payment rails, the time frame is unspecific. Faster payments solutions include platforms such as Zelle, Nacha’s network, and debit-push payments.

On the other hand, real-time payments are instantaneous, landing in the recipient’s account in a matter of milliseconds. Those milliseconds count when a patron is faced with an emergency that requires speedy access to funds, for example needing to cash an insurance claim check to fix their roof. In stressful cases like this, ‘faster’ is not always fast enough. But you can count on real-time payments to land in the blink of an eye.

So, like other payment networks, real-time payments are processed via a digital infrastructure on a rail. Unlike other networks, the payments settle almost instantaneously at the destination.

Another difference between real time payments and faster payments is the transaction limit. While faster payments can generally facilitate up to £250,000 in a single transaction, real-time payments have a limit of $100,000 for same-day transactions. Depending on the size of your business, this may or may not present a problem, but it’s good to be aware of, in any case.

Why should your bank or global business care about RTP?

Although it’s still in its infancy, organisations around the world are already on board with real-time payments. Around 80% of retailers, billing organisations, and retail banks have expressed keen interest in open banking and real-time payments.

There are 3 main reasons for this; first, companies can count on real-time payments to reduce administrative costs. Real time payment networks are often completely automated, meaning companies can save significant time and money by replacing manual processes. This opens up resources for employees - particularly those dedicated to handling accounts receivable and accounts payable - to focus on value-added activities, which in turn drives growth and revenue. This also simplifies payroll and means employees can get paid faster or reimbursed quicker for business expenses.

Secondly, RTP means organisations are less reliant on third parties. Rather than processing payments through a number of intermediaries or correspondent banks, they can cut out the middle men and streamline the process, which results in lower transaction costs for the end-user. This is particularly relevant when it comes to cross-border transactions, which are too often blighted by hidden fees.

Most importantly, RTP creates a better customer experience. The clearest example of this is when a customer is owed a refund; RTP can significantly reduce the time they spend waiting for the credit to land in their account. Returning money to customers quickly increases goodwill and makes it more likely that they will trust your organisation when making a future purchase.

In the US, significant progress on RTP is already being made, with more countries sure to follow. The RTP network Clearing House is now available to use for all federally insured U.S. depository institutions, and a new programme called FedNow is launching in 2023 as an alternative to Clearing House. FedNow will have the capability of clearing and settling payments between all financial institutions, and will operate 24/7 every day of the year, including holidays.

Staying ahead of the curve on real time payments will keep your organisation competitive and make sure that your customers are always receiving the best possible service.

How RTP can improve FX payments

As mentioned above, payments are often processed through a number of intermediaries and correspondent banks before they reach the end recipient, with fees adding up at every turn. Nowhere is this more true than where money crosses a border.

RTP has the potential to be game changing for small and mid-size businesses (SMBs) hoping to expand internationally. While digital transformation and modern technology makes it possible for SMBs to grow and compete globally, they often don’t have the cash flow or capital capacity to do so rapidly or at the scale they want to.

For SMBs, real time payments means fewer days and weeks spent waiting to settle accounts. It means money is freed up instantaneously to invest in infrastructural development, growth and people, saving valuable monetary and human resources by improving cash flow. This allows SMBs to focus less on accounts and liquidity and more on what really matters: building and scaling their business.

It’s not just payment processes that RTP can simplify for SMBs and large organisations - it also has the potential to make hiring the right talent a breeze. Freelancers and independent contractors solicit work from all over the world, and with the rise of remote work, finding the right people can also mean hiring people situated abroad or outside of major cities. While it’s relatively straightforward for both parties to connect and collaborate across the miles, it’s not so straightforward to pay remote employees for their work.

Using traditional payment rails, paying overseas employees in their country of origin can entail high fees and lengthy delays. The story looks very different with real time payments - employees receive their paycheck the moment it is processed by their company, no matter where they are in the world. This has the potential to boost employee satisfaction and means that the valuable work they are doing can continue without interruption.

Wise Platform — the world’s biggest instant payment network

Over the past decade, Wise (formerly known as Transferwise) has built a global payments infrastructure that has revolutionised how money moves around the world. Our mission is money without borders for everyone. We believe that moving money across borders should be as easy as sending an email.

Wise Platform is Wise - but for banks, large businesses and other major enterprises. It allows our partners to utilise our infrastructure, meaning they can seamlessly embed the best way to send, receive and manage money into their existing infrastructure, creating value for their business and customers. We save partners years of development costs and growing pains, allowing them to innovate quickly and serve, retain, and grow their customer base.

Wise Platform offers multiple integration methods, working with partners to find the solution that best meets their needs. To find out more about Wise Platform, visit the Wise Platform website or contact our sales team today.