Instant payments allow users to transfer funds in a matter of seconds. The convenience and transparency that this allows businesses to provide has led to growing adoption as users demand a seamless payment experience. 75% of small and medium-sized businesses that use a platform or marketplace to run their business have voiced their desire for same-day settlement or faster.
Arnaud Crouzet (AC), Vice President of Fime Consulting, recently spoke with Virginie Melaine-Christensen (VC), Country Manager France at Adyen, about how instant payments can help merchants enhance their customer experience, and the challenges of implementation.
Arnaud Crouzet: Virginie, could you begin by introducing Adyen’s view on the European payments landscape?
Virginie Melaine-Christensen: The European payments ecosystem is currently witnessing a lot of change within the industry, driven by consumer needs and technological advancements. A huge challenge for merchants is dealing with the issue of abandoned carts. Nearly 70% of shoppers online abandon their carts due to unwanted friction. To address this, merchants must evolve the modes of payment they offer their customers to provide the seamless experience demanded without compromising on security.
To combat these challenges, providers such as Adyen have created financial technology platforms to help merchants accept instant payments and manage their finances while ensuring a seamless customer experience for their end-users.
AC: How does instant payments fit into this landscape, and what are the benefits for merchants?
VC: Instant payments is a win-win for both customers and merchants. The ability to pay in real time provides unparalleled transparency to a transaction, giving a consumer confidence their money has been sent to the right place. Meanwhile, merchants gain instant access to their funds, and this increased cash flow can then be reinvested or used to cover expenses straight away. This means no more waiting days or even weeks for a transaction to be settled.
By joining a payments ecosystem free from delays, merchants can differentiate themselves from the competition. Suppliers, vendors and staff can be paid exactly when needed, while customers can still use their preferred payment method, meaning that everyone can be paid how they want and when they want.
AC: And what are the main challenges instant payments face?
VC: Frequent use of instant payments is already becoming a reality. However, the current fragmentation of the ecosystem and the slow implementation processes this causes highlight the need for a standardized, interoperable framework to overcome these challenges.
Furthermore, the speed with which money can now be moved brings with it an inherent risk. Fraudsters are increasingly exploiting the vulnerability of instant payments to target exposed account credentials to make malicious transactions before people even realize they are under attack. It is therefore crucial that instant payments rails are designed with security at the core, leveraging supporting innovations such as tokenization to protect the integrity of an account and its data.
AC: So what do you see in the future for instant payments?
VC: In Europe, instant payments are already seen as a key driver of future revenue growth. As the volume of payment transactions being made digitally continues to grow, the transparency and convenience of instant payments will become an expected norm rather than a major differentiator. Merchants must make sure they are ahead of this trend to retain their competitive advantage.
There are also an increasing number of situations where instant payments sets itself apart from traditional payment rails. New methods for bill-splitting, e-commerce and cross-border transactions are bringing unparalleled convenience and security to the digital economy like never before, especially in emerging markets. Merchants can take advantage of instant payments to develop their offer and generate a host of new revenue streams.
Increasing customer convenience and transparency unlocks a host of benefits that merchants can use to generate new revenue streams and build consumer trust. However, the fragmentation of different services and a general lack of education and awareness about how the technology works is making wide scale deployment a challenge. By partnering with a trusted partner such as Fime, you can learn more about how you can adapt instant payments for your own business in a safe and reliable way. By taking advantage of standardized protocols, merchants can build seamless customer experiences without compromising on security.