What Are Instant Payments?

Instant payments, also known as real-time payments, constitute a significant breakthrough in the Fin-tech industry. They are electronic payments that are processed and settled immediately, without the need for batch processing. There is no delay in the funds being deposited.

Traditional payment processes are often a great source of delay for businesses. For example, a fabric supplier in China might sell their goods to a U.S. clothing manufacturer. The buyer would typically pay by wire transfer, which can take up to three days to deposit the funds into the seller's account.

During that time, the seller cannot access the funds and must wait for the payment to clear. This delay can create problems if the seller needs to pay their suppliers promptly.

How Do Instant Payments Benefit the Supply Chain?

The benefits of instant payments for the supply chain are many and varied.

1. Reduced Costs

One of the most significant benefits is that it can help reduce costs. The cost of processing payments manually can be high, especially if multiple parties are involved.

With instant payments, the entire process is automated, saving businesses a significant amount of money. In addition, companies can avoid late fees and other penalties associated with delayed payments.

2. Improved Efficiency

Another benefit of instant payments is that they can help improve efficiency. When payments are delayed, it can cause a ripple effect throughout the entire supply chain.

For example, suppose a supplier does not promptly receive payment for their goods. In that case, it can lead to delays in the production process and, ultimately, delivery of the product to the consumer.

3. Increased Customer Satisfaction

Instant payments can also help increase customer satisfaction. When customers receive their products sooner, they are more likely to be satisfied with the overall experience. Businesses that can provide a seamless and efficient payment experience are more likely to build trust and loyalty with their customers.

4. Improved Cash Flow

One of the best things about instant payments is that they can help improve cash flow. When businesses have to wait for payments to clear, it can put a strain on their cash flow. That can lead to late payments, negatively impacting relationships with suppliers.

How Do Instant Payments Work?

Now that we've seen how instant payments can benefit the supply chain let's look at how they work.

Instant payments are processed and settled in real-time, which means that the funds are immediately deposited into the recipient's account. The funds are immediately transferred from one account to another when a payment is made. This feat is made possible by using a network of banks and financial institutions that are connected in real-time.

RTP Network

One of the most popular instant payment networks is the Real-Time Payments (RTP) Network from The Clearing House in the U.S. The RTP network is a real-time payment system that connects banks and credit unions across the United States. It launched in 2017 and has processed over 50 million transactions totaling more than $1 trillion.

RTP is unique in that it uses a single, shared network to process payments. This allows for faster processing times and reduced costs. However, it is not accessible to all financial institutions.

Smaller banks and credit unions may have to partner with larger financial institutions who are already a part of the network.

FedNow

Another instant payment network is FedNow from the Federal Reserve. Unlike RTP, FedNow is accessible to all financial institutions, regardless of size. FedNow is still in development and is not expected to be available until 2023. However, it has already received widespread support from the banking community.

It will provide instant payment services to consumers and businesses across the United States when it launches.

How To Upgrade to Instant Payments

If you're interested in upgrading to instant payments, there are a few things you'll need to do. First, you'll need to find a payment processor that offers this service. Here at PingPong, we provide a complete solution that includes instant payments.

We'll take care of migrating your existing payments to our platform and setting up instant payments for your business. The entire process is seamless and won’t disrupt your business processes.

With our API connected, you'll be able to integrate instant payments into your existing systems and processes efficiently.

The Future of Instant Payments

The future of instant payments is very promising. More and more countries are beginning to adopt this new technology, and it is only a matter of time before it becomes the new standard for payments.

As the infrastructure for instant payments continues to improve, we'll see even more adoption from businesses and consumers. We already see a shift in the way people pay for goods and services. With the proliferation of mobile devices and apps, people are used to instant payments and fast deliveries.

In the meantime, cryptocurrency puts additional pressure on the traditional banking system to adopt instant payments.

Bottom Line

Instant payments are a major breakthrough in the Fin-tech industry, with the potential to revolutionize the way businesses operate. They offer many benefits for the supply chain, including reduced costs, improved efficiency, increased customer satisfaction, and improved cash flow.

If you're interested in upgrading to instant payments, PingPong can help. Contact us today to learn more about our solution and how we can help you take advantage of this game-changing technology.