The trends emerging with Instant Payment Systems are:

1.    Increasing in-country systems being released and promoted

 The latest major country to introduce instant payments is the USA. The Federal Reserve switched on their instant payment program called FedNow in July 2023. Starting out with 35 banks and credit unions and FedNow is planning to add 9,000 banks & credit unions ‘over time’. 

In Switzerland, instant payments process is underway. The system has been designed analogous to the European SEPA Instant Credit Transfer standard. By August 2024 the biggest of the Swiss banks will process instant payments with the remaining banks following through to 2026.

There are now some 60 countries offering instant (real time) payments. The appeal is payments can be initiated and settled almost immediately. Meeting the old expression, ‘Cash on the Barrelhead’ as immediate cash settlement.

 In addition with virtually everyone owning a mobile phone payments can be made anywhere at any time. The adage for delaying payment of the invoice was ‘the check is in the mail’. This could become ‘the phone needs charging’.

The EU is implementing a Directive commencing this year will make the all the countries in the community to offer instant payments. Today only 11% of euro payments are instant. India, by example, actively promotes the use of digital payments by offering UPIs (Unified Payments Interface) improving ease of use. India made 90,000 million transactions in 2022, up 77% on 2021.  

 2. Confirmation of Payee (CoP) becoming mandatory

Establishing the true ownership of the payee bank accounts are being demanded by the regulators.  

The UK Payment Systems Regulator (PSR) is finalising the final details of the timetable for the UK Banking Market to install CoP along side reimbursement terms and conditions.

The EU legal directive to install CoP across the communality has started. Effective date is 2024.

3.    The move to instant cross border payments is upon us

The age of faster international payments, once the preserve of SWIFT, is here.  Actively being pursued by FinTech worldwide and soon instead of faster payments in one currency, the choice of the second currency will be allowed. So moving from domestic (pound to pound) to international (pound to euro or US Dollar or Australian Dollar) could soon come at a tap on the mobile phone. This follows the increasing e-commerce demand shown by consumers and companies across the globe.

4.    Scam activities to continually increase

The UK Supreme Court has ruled the bank must make the payment if the Payer has given valid payment instructions. These instructions can create misdirected and scammed payments and are the responsibility of the account owner and not the bank. Therefore any reimbursements policies are up to the local regulators.

UK’s PSR is finalising reimbursement policies for consumers and SMEs to commence in 2024 complementing/replacing the existing voluntary agreements. For companies with revenue in excess of £5 million there is no reimbursements as the belief is these companies can afford their own fraud protection.

In Australia, an early and active user of instant payments had payment fraud loss of £1.3 billion in 2022. The Australian Security and Investment Co (ASIC) reported major banks reimbursed 2 - 5% of scam losses. The Australian Government announced in May 2023 a £30 million a national anti-scam center to address these criminal activities.

An exciting time for consumers, companies, banks and Governments as payments take seconds to make. As the payment infrastructure is legacy often using overnight processing the need for real time and connected solutions is vital. We need to take the lessons learnt from the early instant payment users to help eliminate the hassle around faster payments and eliminate misdirected and scammed payments.