However, the majority of people today do not yet use fast transfers. Instant payment isn’t complicated. Like with classic online transfers, the user must fill in a template with the recipient, IBAN, amount and reason for payment and release the order. The key difference is that now their money reaches the recipient within seconds. “Instant payment is first and foremost not a new payment system, instead in replaces the no longer up-to-date processing of bank transfers in the digital age,” explains Anke Brummack, Payment Analyst at OTTO. So it ‘catches up’ classic transfers to other direct payment methods. With the advantage that payments are immediately credited on the recipient’s account.
The fact that real-time transfers are still not a part of many people’s lives is due to other factors. The sluggish introduction process in Germany is one of these. Though the first German financial institutes (like Hanseatic Bank or the Sparkasse group) offer instant payments already, many banks are still working on their implementation. As real-time transfers can only be used if the sender and the recipient’s banks both offer this service, this type of payment is still not possible in a lot of cases. Some financial institutes also currently charge an additional fee for real-time transfers.
Although online payment services like PayPal have captured even the German market, purchase on invoice isn’t out in Germany. This is shown by a representative study by Kantar TNS on behalf of the internet retailer OTTO. Though every second online shopper in Germany frequently uses the online payment service PayPal to make payments online, the second most popular payment method is purchase on invoice. 43 percent of those surveyed use the payment option regularly. Women in particular prefer the classic invoice. 51 percent use purchase on invoice to pay online, but only 44 percent use PayPal. Other payment methods, however, are not used as often. Only one in five regularly pay online using direct debit, credit card or direct transfer.
There is a further problem for retail: instant payments transfer the money from the customer to the retailer in a few seconds, but they do not receive direct confirmation that the payment has been made and so the advantages of the fast money cannot be passed on to the customer. A forerunner for this in Germany is OTTO. Together with the Otto Group and Hanseatic Bank, the online retailer has taken the initiative and developed their own programme interface (API). With this, OTTO can immediately receive instant payments and directly link these with customer service.
With instant payments, users can now make transfers in seconds without giving their data to a third party service provider.
In practice this means that customers who pay by real-time transfer in turn can see on their customer account within one minute that the payment process has been successful. “With other direct payment methods this has long been standard practice. With instant payments it is now also possible for purchases on invoice, which are very popular for many Germans,” explains Anke.
Another scenario with added value for the customer is when making an advanced payment or down payment; here the money arrives in the retailer’s account within seconds and this can directly initiate the dispatch process - the customer’s order is much faster. Another advantage from the user’s point of view is that: “Their data stays with their bank. They no longer have to give them to a third party service provider for a transfer lasting seconds,” says Anke.
If banks and retailers do their homework on instant payments, and make them extensively available to use without additional costs, the payment method has lots of potential for the future. Those who know the industry think instant payments may replace direct debits at some point. The following business models will also be plausible in future. An admission ticket or the release of a subscription may be paid for within seconds in this way and the ticket or subscription receipt is directly issued to the user. Or in the insurance sector, insurance taken out begins automatically with the receipt of payment via instant payment.