As those in the U.S. hear so often, Europe is far more advanced in the development of a modern payments infrastructure that better meets the needs and opportunities of a digital marketplace. While the U.S. market is very different, it is beneficial to note how new payment types and form factors are progressing in other countries, particularly those deemed more advanced, to look for trends, issues, and areas of success that bear repeating or should be avoided if possible. An article posted to Market Research Telecast looks at the state of real-time payments, specifically “SCT Inst fast transfers,” (SEPA Instant Credit Transfers) that have been operational since November 2017. The article finds that in Germany, consumers are selective in how they take advantage of real-time account to account transfers, suggesting that real-time payments is more of a niche product. Here’s more from the article that outlines some of the reasons why, focusing on fees for real-time transfers and differences in the way they have been implemented:
Time is money – but real-time payments are still the exception in Germany. “From our point of view, instant payment has not yet arrived in people’s everyday lives. Banks tend to place it as a niche product and are therefore still a long way off from the political will and the requirements of retailers to be considered the “New Normal,”” summarized Ulrich Binnebößel, Payment transaction expert at the German Trade Association (HDE).
In Europe, the “SCT Inst” called “SCT Inst” fast transfers have been possible since November 21, 2017. On the same day, Hypovereinsbank (HVB), part of the Italian Unicredit Group, tested the system; since November 27, 2017, HVB customers have been able to order transfers in real time via online banking. In mid-July 2018, the savings banks followed suit, and Deutsche Bank and Commerzbank as well as various cooperative banks also offer the service.
According to the Deutsche Kreditwirtschaft (DK), “real-time transfers have established themselves as a new standard alongside conventional transfers”. Nevertheless, “the switch to real-time transfers (…) does not make sense for all applications for customers,” said the umbrella organization of the five major banking associations in Germany. “Depending on their needs, customers clearly differentiate between which transactions they are using which transfer method.”
We can hear from the industry: Most private customers only resort to real-time transfers, which are usually chargeable, in exceptional cases. For companies, collective transfers via instant payment are now technically possible, but the company’s IT systems must be upgraded accordingly, for example in order to process pay slips for the workforce in this way.
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group
