Why 2021 Will Be Real-Time Payments Banner Year

Nov 30, 2020

Real-time payments or (RTP) has become the latest catchphrase in the payment industry. It’s growth in popularity is attributed to its ability to provide speed, safety, as well as convenience. 

RTP has a lot to offer. It makes funds available immediately, the settlement is finalized, there is an instant confirmation, and “integrated information flows”. All this is included with the payment processed in a matter of seconds. It is clearly the best solution to an age-old challenge.

According to Mike Ranta, payments practice lead at Alacriti, 2021 will be the banner year for financial institutions to transition into RTP at record levels. 

The Case For Real-Time Payments

In this increasingly rapid-changing digital world, customers are demanding to instantly send and receive their money. Currently, the use of a mobile app to carry out these transactions are meeting their needs. 

Financial institutions are quickly realizing that they must compete at the customer service level. This goes for non-banking institutions and banks. Constant evolution is necessary to keep up with these customer demands. If they fail on this front, their customers will conduct their business elsewhere. 

Banks that refuse or simply flounder at getting involved with real-time payments stand to lose competitive advantage. Faster payments are becoming a primary selling point in order to provide top-level customer service. In terms of long-term strategic planning, it’s critical that these FIs start looking closer at getting involved with RTP.

By offering RTP, it will help to greatly improve the customer experience. It will also greatly reduce “attrition rates”, and even help with the monetization of consumer engagement. By offering a highly valued RTP, customers can look into the FI’s website for more financial products to use, opening them up for cross-selling. 

The current pandemic has ushered in more demand for RTP than ever. With dramatically less face-to-face interaction, consumers need RTP in order to face these uncertain times. Millions of people are facing unstable incomes, businesses are seeing their profits diminish, while still having to meet their financial responsibilities. 

Banks and FIs that deliver RTP, especially during the current COVID-19 crisis, will position themselves as leaders and innovators, addressing the pain points that many consumers and businesses are facing. They will be seen as solution providers, well beyond the health crisis.

The use of outdated legacy systems that are clunky and complex will simply not do in the current economy. Real-time payment options are what consumers are requiring today. 

More US Deposit Accounts Have Access To RTP Network

According to The Clearing House, FIs that hold 70% of “demand deposit accounts” or (DDA) will now have access to RTP through banking technology providers that are currently connected to the RTP network. 

This greatly facilitates banks and credit unions to provide RTP services for their customers. 

Steve Ledford, Senior Vice President of Product Development and Strategy at The Clearing House had this to say:

“In addition to institutions that are already processing on the network, we have over 150 banks and credit unions of all sizes signed up to join the network during the next few months and the network now has the technical capability to reach thousands of more financial institutions.”

The Future Lies In Real-Time Payments

If the current economic climate is any indication, more FIs are beginning to see the urgent need to provide payments for their customers safely and quickly. As more FIs jump on board, more instant payment needs will be met, mitigating the financial interruptions that millions have already faced during the pandemic. 

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

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Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

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EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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