# Instant payments and the need for standardization Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2021-11-19 Category: FINANCE Category URL: https://financedigest.com/category/finance Meta Title: The Rise of Instant Payments: Opportunities and Challenges Meta Description: Learn how instant payments are transforming the payment landscape in Spain and Europe, offering faster transactions and improved cash flow for businesses and URL: https://financedigest.com/instant-payments-and-the-need-for-standardizationhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/storyblocks-woman-paying-for-unhealthy-food-by-credit-cardbp2jl1-tqg-sbi-328456526-1736837146527-compressed.jpg) _By_ **_Arnaud Crouzet,_** _VP Security & Consulting at Fime_ ![](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/arnaud-crouzet-450x484-1736837146671-compressed.png) Arnaud Crouzet, VP Security & Consulting at Fime Instant payments are electronic payments processed in real time, with funds immediately made available to the recipient. In 2020, instant payments surged globally by 41%, demonstrating increasing demand. For businesses, instant payments offer the potential to reduce [late](https://www.financedigest.com/the-late-payments-toolkit-how-to-keep-the-cash-flow-strong.html "THE LATE PAYMENTS TOOLKIT – HOW TO KEEP THE CASH-FLOW STRONG") payments and improve cash flow. From a consumer perspective, payments can be made or received easily and safely in seconds. For example, when paying online or transferring funds to a friend via a person-to-person payment. For the most part, however, widespread deployment of [instant payments](https://www.financedigest.com/5-ways-to-maximise-the-value-of-instant-payments.html "5 ways to maximise the value of instant payments") is still a work in progress with implementations at different stages in different regions. **What do [instant payments](https://www.financedigest.com/more-banks-join-european-instant-payments-pilot-from-end-2023.html "More banks join European instant payments pilot from end 2023") currently look like?** Spain has already embraced the technology. While cash usage has traditionally been high in Spain, [digital payment](https://www.financedigest.com/can-i-please-speak-to-someone-why-building-relationships-is-still-crucial-in-digital-payments.html "“Can I please speak to someone?” Why building relationships is still crucial in digital payments") methods have gained popularity over the last two years. Now [daily volumes of instant payments exceed 1.5 million.](https://www.ebaclearing.eu/news-and-events/media/press-releases/15-june-2021-eba-clearing-and-iberpay-launch-interoperable-sepa-request-to-pay-services/) Spanish consumers are turning to instant payments as a viable alternative to cash, and usage has grown ever since the launch of this technology in 2017. We expect to see a similar growth across the rest of Europe, where [73% of payments](https://www.pymnts.com/news/payment-methods/2021/europe-is-ripe-for-instant-payments-where-73-of-all-transactions-are-still-done-in-cash/) are still made in cash. There is a desire for this service, but there are still obstacles preventing it from [gaining significant](https://www.financedigest.com/smart-mining-market-projected-to-gain-significant-value-by-2016-2025.html "Smart Mining Market Projected to Gain Significant Value by 2016-2025") traction. Consumers and merchants are both unsure of how instant [payments differ from other services](https://www.financedigest.com/igtbs-payments-services-hub-faq.html "iGTB’s Payments Services Hub – FAQ") such as traditional cards or Click to Pay. Education on the advantages of this [payment acceptance method for both groups](https://www.financedigest.com/crown-agents-bank-owner-explores-sale-of-british-payments-group-sources.html "Crown Agents Bank owner explores sale of British payments group –sources") should therefore be a priority to encourage its adoption. Transaction fees, which still remain unclear, are also causing concern. Consumers and merchants could both be hit by fees to use instant payments. This may discourage [businesses and consumers](https://www.financedigest.com/essity-mulls-selling-vinda-stake-and-consumer-tissue-private-label-europe-business.html "Essity mulls selling Vinda stake and Consumer Tissue Private Label Europe business") from adopting instant payments, or limit them to using this method for larger transactions only. This is especially true when there is the option of using card-based solutions with no [consumer fees and more competitively priced](https://www.financedigest.com/ikea-reports-record-sales-as-price-hikes-offset-weakening-consumer-confidence.html "IKEA reports record sales as price hikes offset weakening consumer confidence") merchant fees, when compared with the potential fees for instant payments. While these costs will become insignificant if volumes grow, businesses may be reluctant to invest while momentum surrounding this [payment method](https://www.financedigest.com/freelancer-payments-methods-what-you-should-know.html "Freelancer Payments Methods: What You Should Know") is still growing. **Striking the balance between speed and security** Consumers and [merchants are understandably cautious about fraud](https://www.financedigest.com/three-online-fraud-trends-beauty-and-cosmetics-merchants-should-watch-out-for.html "Three Online Fraud Trends Beauty and Cosmetics Merchants Should Watch Out For"), with phishing being a concern with instant payments. [Customers need reassurance when using any new payment](https://www.financedigest.com/stay-ahead-of-the-curve-and-meet-your-customers-payments-needs.html "STAY AHEAD OF THE CURVE AND MEET YOUR CUSTOMERS PAYMENTS NEEDS") method that their money is safe, especially when it’s faster than traditional methods. The main challenge with [protecting instant payments is to strike the right balance](https://www.financedigest.com/regulators-need-to-strike-the-balance-between-protection-and-strangulation.html "REGULATORS NEED TO STRIKE THE BALANCE BETWEEN PROTECTION AND STRANGULATION") between speed and security. Card payments are a known quantity, having been tried, tested and [trusted for many years](https://www.financedigest.com/2019-year-must-re-build-public-trust-finance.html "2019 is the year we must re-build public trust in finance"). Instant [payments are still in earlier stages of development](https://www.financedigest.com/payment-community-engagement-in-the-development-of-the-emv-specifications-increases.html "Payment Community Engagement in the Development of the EMV Specifications Increases") by comparison. Customers should remain vigilant about the methods that fraudsters use to [try and gain access](https://www.financedigest.com/what-needs-to-happen-to-improve-the-landscape-for-smes-trying-to-access-finance-options-in-the-uk.html "What needs to happen to improve the landscape for SMEs trying to access finance options in the UK") to their money. However, they must also remember that banks implement advanced anti-fraud tools to prevent fraudulent activities from taking place. As we’ve seen from its use in Spain, the [risk of fraud from instant payments](https://www.financedigest.com/how-can-you-reduce-the-risk-of-fraud-in-b2b-payments.html "How can you reduce the risk of fraud in B2B payments?") is no higher than for other forms of payment. Initiatives are underway to improve customer authentication, in particular for account access and other KYC procedures, to combat [increased fraud](https://www.financedigest.com/fintechs-how-to-increase-loyalty-through-user-experience-and-fraud-prevention.html "FinTechs: How to increase loyalty through user experience and fraud prevention") via phishing. Additionally, Strong [Customer Authentication is the responsibility of banks](https://www.financedigest.com/christmas-debt-hangovers-how-banks-can-help-customers.html "CHRISTMAS DEBT HANGOVERS: HOW BANKS CAN HELP CUSTOMERS"), and therefore the threat of fraud should not be a concern for merchants, who remain protected. **Use cases** There are several [ways instant payments](https://www.financedigest.com/5-ways-banks-can-compete-in-payments.html "5 ways banks can compete in payments") can be used to facilitate the seamless transfer of funds. For example, they offer new methods for bill-splitting, e-commerce and cross-border transactions. Some providers allow users to make instant [payments using only their mobile](https://www.financedigest.com/what-is-the-optimum-mobile-payment-mix.html "What is the optimum mobile payment mix?") phone number, irrespective of the recipient bank. Request-to-Pay enables a [business or individual wishing to receive](https://www.financedigest.com/controlling-your-business-cash-flow-with-effective-accounts-receivables-turnover-ratios.html "Controlling Your Business Cash Flow With Effective Accounts Receivables Turnover Ratios") a payment, to send an electronic request for that payment. Instant payments could also be used at the physical point-of-sale – providing yet another option for consumers to pick from. However, current use cases for instant payments are still in development, and therefore this ecosystem is not standardized. Standardized communications between the [payment stakeholders involved are required to ensure an easy and quick consumer experience](https://www.financedigest.com/curating-a-fully-contactless-customer-experience-for-payments.html "Curating A Fully Contactless Customer Experience for Payments "). **From standardization to success** It’s evident that standardization is necessary for the [future of instant payments](https://www.financedigest.com/the-future-of-biometrics-in-payments.html "The Future of Biometrics in Payments"). Nonetheless, standardization should not become a [barrier to innovation](https://www.financedigest.com/removing-the-capex-barrier-in-cleaning-innovation.html "Removing the capex barrier in cleaning innovation           "). The [European Payments Council](https://www.europeanpaymentscouncil.eu/) creates the rules for services such as instant payments, which are currently broad. The EPC needs to continue to review the regulations for instant payments and Request-to-Pay, similar to what exists now on the acceptance-to-acquirer domain for cards payments with nexo standards. Learn more about the importance of harmonization in payments here. --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---