Economic Climate Offers Big Gains For Small Biz ACH Adoption

A new survey conducted by YouGov for ACI Worldwide demonstrates how attractive real-time payments are to small and medium enterprises (SMEs). The study revealed that most U.S. and European-based company owners would be persuaded to change over to another bank if they were to offer real time payments to their customers.

Which Countries Are Ready to Make the Move to Real-Time Payments?

According to the survey, small and medium enterprises interviewed in Germany, Italy, France and the United States believe switching to real-time payments would boost their business performance.

However, it was company owners in Europe that are more prepared to embrace faster payments, with 56 percent in Germany and 50 percent in Italy seeing real-time payments as ‘essential’ to their business success.

The survey also revealed that companies in Germany were the most likely to make the move, with 90 percent saying they’d would change if banks were offering real-time payments. There was also an appetite for faster payments from U.S. businesses, with 65 percent stating they’d switch to a new bank if real-time payments were available.

And as consumers warm to the idea of faster payments – and as the move towards mobile payments takes pace – the survey concluded that banks not providing real-time transactions could lose out to competitors that do.

Global Demand for Real-Time Payments

Although the demand for real-time payments was particularly strong in Europe, the YouGov research also revealed a strong demand for faster payments globally. 50 percent of small and medium enterprises worldwide want to access real-time payments, according to the study.

Banks that offer a 24/7 payment service all year round were on the wish list for company owners, the survey revealed, and concerns over payment delays were also highlighted. 51 percent of U.S. customers and 65 percent in Italy admitted to finding the delays frustrating, and they’re also bad for business.

In a press release, Kilingsbury said:

“2017 will be a crucial year for real-time payments globally. Banks have a real opportunity to work with their customers and offer the new and innovative services they really want. Delayed and unpredictable cash flow can significantly affect the success of businesses, particularly small ones.”

Previous Research Supports Call for Stronger Payments

The YouGov survey isn’t the only one to uncover a desire for real-time payments; previous research has shown a strong desire for real-time transactions from both consumers and banks.

A 2013 study by FIS examined the most typical banking challenges and whether real-time payments could address them.

Consumers stated that immediate access to their money was one of the most important features they were looking for, with 80 percent feeling the receiver of an international money order should be able to access the money straight away. Likewise, 41 percent of P2P users wanted immediate access to their money, as did 58 percent of A2A users.

Other findings indicated a ‘strong adoption potential’ among consumers if real-time payments were made available through mobile devices and apps direct from their banks.

And an update on a previous study from ACI Worldwide, which was carried out in 2015, found that a quarter of banks thought the United States should move to real-time payments. The survey was carried out at the NACHA conference and most of the visitors interviewed stated they thought real-time ACH payments would “become a reality within five years”.

How Faster Payments Will Improve Business

As detailed in the YouGov research, there are several major areas where real-time payments can help businesses, including reconciliation. However, as the European Payments Council explains,  faster payments provide greater affordability, improve cash flow, and reduce the need to borrow money from other sources.

In addition, real-time payments are likely to reduce the number of cash transactions, and they’ll improve transparency for both parties.

Moreover, the option of real-time payments will make banks more competitive, leading to new products for customers who want a quicker payment system, while supplying a secure environment for customers to complete their payments.

Real-Time Payment Initiatives

However, the survey also showed how little awareness businesses have of some of the new faster payment initiatives that are currently being developed, namely the pan-European EBA SEPA Instant Credit Transfer Scheme and The Clearing House Real-Time payments scheme.

The pan European Instant Payment scheme will launch in 2017, and will make money transfers available 24 hours a day, seven days a week. Payments and transactions will be completed in approximately 10 seconds, and financial institutions are currently being invited to join.

In the United States, the Payments Clearing House is working on an ‘industrial strength’ clearing/settlement system. It was announced in April 2017 that industry testing was about to get underway, and incubator services have been launched for early adopters.

With this schemes soon to launch, Barry Kislingbury, Director Solution Consulting, Immediate Payments, ACI Worldwide, argues that “banks are missing a big trick”, as now is the time to start offering their clients the products they are looking for.

However, despite the efforts that are being made to make payments faster, experts state it’s likely to be some time before the consumer adopts real-time payments.

Conclusion

From both the banks and consumers’ perspectives, it seems the time is right for real-time payments.

Real-time payments suit the way companies want to do business, however, they also fit with the way technology is developing. More of us are now using smart phones and tablets, which is make banking and paying on the go popular.

Schemes are underway to bring real-time payments to the U.S. and Europe, and there are numerous benefits that can be gained from their introduction. However, regardless of these benefits, experts are warning that it’s likely to be some time before the consumer in general is ready to use real-time payments in volume.