Should Businesses Consider Adopting Accelerated Payment Methods?
Real-time payments, a new addition to the payment processing industry, are gaining traction, but their practical applications in the world of commerce remain a topic of debate.
One of the key figures in the discussion is Don Apgar, Director of the Merchant Payments Practice at Javelin Strategy & Research. Apgar suggests that real-time payments may not have significant impact on merchants in terms of practical applications. He believes that consumers are unlikely to be persuaded to use pay-by-bank and sacrifice all their dispute rights.
Real-time payments, much like wire transfers, are irreversible. Once the money is sent, it cannot be reclaimed if sent in error or under fraudulent circumstances. This irreversibility could pose challenges for merchants, especially when it comes to resolving disputes.
However, there are some areas where real-time payments could prove beneficial. For instance, in industries where funds are needed immediately and the transaction is indisputable, such as buying cars on marketplaces or real estate transactions, real-time payments could offer a faster, more efficient solution.
The Federal Reserve's FedNow platform and the Clearinghouse's RTP network are expected to roll out in 2023 and 2024 respectively, further propelling the adoption of real-time payments. As of now, RTP handled 343 million payments per day in 2024, while FedNow settled 2.13 million payments in the second quarter of 2025.
Despite these advancements, real-time payments settle during business hours, limiting their availability. Additionally, a payment must be initiated by the purchaser, limiting what the merchants can do to initiate a payment. This could potentially be addressed in the future with the implementation of automated request for payment, allowing merchants to initiate transactions themselves.
In the realm of consumer goods, the current state of fast payments does not offer practical applications. However, initiatives like Wero, a European instant payment system, are aiming to change this. Wero, available since summer 2024, initially focused on peer-to-peer payments and plans to expand into retail by 2026, offering fast, efficient, and fully European-compliant payment options. This can reduce chargebacks, speed up transactions, and allow integrated services like loyalty programs, benefiting merchants if easily integrated into existing systems.
Mobile payment methods using smartphones and wearables are also increasingly used for quick and contactless retail payments, supporting faster checkout experiences and adapting to changing consumer habits. Fast payments are likely to become more important in commerce in the future due to these ongoing developments.
One potential use case for faster payments in the future could be in the automotive industry. PrivateAuto.com, a marketplace for used cars, could act as an intermediary for both parties, handling the title exchange and money exchange.
In conclusion, while real-time payments may not have immediate practical applications for merchants, their role in commerce is evolving. As initiatives like Wero and the rollout of FedNow and RTP continue, the landscape of fast payments is set to change, potentially offering merchants new opportunities for efficiency and growth.
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