How Choice Drives Real-Time Payments Adoption With Canada’s SMBs

As real-time payments make their way to ubiquity in markets around the globe, more small- to medium-sized businesses (SMBs) are exploring how instant transactions may be able to add value to their own operations.

In Canada, one of the most popular means of instant payments is the Interac eTransfer service, which facilitates real-time movement of funds from one account to another. Speaking with PYMNTS, Bryan Beattie, vice president of business operations at Everlink Payment Services, said there is ample opportunity for financial service providers to collaborate and introduce new use cases for instant payments in Canada — with SMBs a greenfield opportunity to gain traction.

In an initiative aimed at driving the adoption of real-time payments, Everlink earlier this month announced a partnership with FINTAINIUM, which sees Everlink integrating its eHub Digital Payments Platform within FINTAINIUM’s working capital management capabilities.

“Within the last couple of years, we’ve seen a real emergence of APIs [application programming interfaces] as enablers of our digital economy,” Beattie told PYMNTS. “We needed to position ourselves to respond to that emerging trend from a technology perspective.”

API integrations can make it easier than ever for third-party FinTech solutions to enhance their own payment capabilities. But often, particularly when it comes to real-time payments, those initiatives are centered around consumer and peer-to-peer transactions.

Yet the Everlink-FINTAINIUM collaboration has its sights set on the SMB landscape.

More SMBs are “seeking to displace their traditional methods of payments, or their traditional method of requesting payment — whether it’s paper-based, issuing a check, paying by credit card,” said Beattie. “Of course, with COVID starting earlier this year and wreaking havoc, that need has never been greater.”

Connecting SMBs to real-time payments functionalities can be an important value add for businesses that need better management of their working capital and finances. Increasingly, said Beattie, online transfers are the preferred payment method of smaller companies, but legacy mechanisms like electronic funds transfers (EFTs) place lag time on the transaction. This can be particularly troublesome for businesses waiting to receive payment, while for payers, the cost associated with these transfers is another common pain point.

Enabling real-time payments via Interac can not only help to mitigate those challenges, but also introduce value-added functionality for SMBs.

Support for both batch and individual real-time transactions gives SMBs enough flexibility to wield the capability depending on the use case. For instance, payroll workflows can be optimized through batch real-time transactions, while individual vendor payments may gain efficiencies, too.

One of the biggest opportunities in real-time payments, according to Beattie, is they can arm SMBs with leverage when working with their vendors. The option to pay in real time means a business can negotiate with vendors, potentially allowing for early payment discounts, structured payments or more favorable payment terms.

Data from real-time payments is another valuable proposition for SMBs and supports enhanced cash flow management as businesses have greater ability to capture transaction data and ingest it into back-office systems. This is particularly true with adoption of the ISO 20022 payments messaging standard, said Beattie, which promotes “enriched data transmission” and “leads to quicker, more informed and more efficient reconciliation processes.”

What’s truly important for SMBs, he added, is that they have choice — choice to initiate real-time transactions in bulk or individually, choice in which use cases they choose for real-time payments, or choice in whether they want to use real-time payments or another payment method altogether. But as adoption of instant payments grows, the value proposition for SMBs will, too, and will play a critical role in the survival of SMBs and economic recovery overall.

“From a real-time payments perspective, flexibility in choice of payment methods, improving cash flow management and the ability to provide enhanced data for business management will be critical as we continue to work our way through this pandemic,” Beattie said.