PYMNTS Intelligence: Merchants Can Ride Faster Payments to Improved Customer Loyalty

Shifting preferences favoring transaction speed and ease have led many organizations to move toward faster payment methods. In fact, 54% of North American businesses say payment speed is a primary reason for adding digital payment options at all. Especially with lingering inflation and economic uncertainty on the horizon, faster payments can be a significant driver of customer loyalty. This is one reason why three in four businesses say such payments have had a highly positive impact on their organizations.

Instant payments take faster payments’ desirable results to a new level, tied to their immediate, 24/7 availability. Consumers can send and receive instant funds securely and reliably while avoiding overdraft and late fees. Businesses, meanwhile, can benefit from instant payments by better managing cash flow, improving the efficiency of B2B payments and streamlining reconciliation processes.

How faster payments transform business operations, revenue

The benefits of faster payments extend to operational efficiencies and more kept revenue for the organizations that implement them. Manual data entry is no longer required to process transactions, reducing administrative costs and freeing staff to focus on bigger-picture tasks. This organizational impact is why more than seven in 10 executives expect new, faster payment processing systems to have a transformational impact on their businesses in the next 36 months. Integrated or embedded payment solutions, in particular, can offer a dual benefit of faster transactions for customers and improved reconciliation in the back office.

Demand fuels growing features, use cases for faster payments

Faster payments have wide appeal for all types of businesses, with most planning instant payment adoption by 2024. These systems not only bring about accelerated payment processing but also provide timely notifications of payment arrival or funds availability and remittance or invoice information. Features such as these help businesses operate more efficiently and enable consumers to gain visibility into transactions. B2B (93%), person-to-business (85%) and business-to-person (81%) are the leading use cases for faster payments. Businesses are also widely using faster payments for account-to-account transfers, payroll and recurring bills and invoice payments, demonstrating the enormous demand for speed and convenience.

Overcoming implementation, cost challenges key for successful instant payments adoption

The transformational benefits of real-time payments are well-established, but the speed of real-time payments also carries some perceived challenges, stifling overall adoption. Some businesses are concerned that instant payments are so fast that they are irreversible: There is no time to remedy a mistake once a payment is sent. New payment methods also typically bring new security threats that are always evolving.

Modernizing legacy systems to accommodate real-time payments integration also could entail major expenditures, making cost a leading concern in both sending and receiving payments. The limited number of users is also a top concern. The potential business growth from real-time payments, however, will be driving many firms to find ways around these obstacles. Businesses that make the move toward instant payments stand to gain a competitive advantage and stay ahead of change.