Trust, Choice and Scalability Can Unlock Instant Payments Growth

We have come a long way since the U.S. Mint issued the first dollar coins.

And while the evolution of money didn’t happen in an instant — really, it took centuries — the transfer of money is now increasingly instant itself.

But what will it take for instant and real-time payments to garner widespread adoption across both consumer-focused and business use cases?

“We have a lot of people who want to receive instantly. But not a lot of people who want to send instantly,” Doug Brown, president and general manager at NCR Voyix, told PYMNTS CEO Karen Webster for the series “What’s Next in Payments – Instant Payments: What will turbocharge Instant Payments growth in 2024?”

“There needs to be a value proposition on both sides of the coin,” Brown said.

When it comes to the appeal of instant payments to consumers, observers believe their desire for immediacy is driven by the peace of mind that comes with readily accessible funds.

Brown suggested that consumers might be willing to pay for the convenience of instant transactions and drew parallels with merchants passing on card fees.

“The convenience factor in connected commerce today is telling us that I’m willing to pay a bit more and I think instant payments will have the same gravitas … but I need to understand what [instant payments] are, and I don’t think that’s been defined yet,” he said.

After all, consumers and businesses are always going to both pay and be paid, but the context around that money movement is what broader marketplace adoption rests on.

Prioritizing Instant Payment Users

For instant payments to turn into an instant success, the scalability of their applications needs to be use-case dependent.

“Once merchants start to reward the people who are willing to provide the instant payment mechanism, it [could kick off] a slow adoption pattern,” Brown said. “Do you get white-glove service for using those rails, that type of thing.”

He gave as an example a plumber who prioritizes customers based on who uses instant payments and can pay them the fastest, or hotels and retailers that offer special rooms and discounts to customers who can pay them instantly.

“It’s not just payments for payments sake, it’s payments integrated into an experience,” Brown said.

“There are very few receivers who don’t want their money as fast as possible,” he added, emphasizing that the incentives layered around instant payments need to be focused on the sender experience — because having money in hand in real-time is typically enough for the other side of the transaction.

Still, that doesn’t mean there aren’t challenges hindering widespread adoption.

Brown pointed out a significant concern in the instant payments: the challenge of addressing mistakes and the potential for repudiation.

“You have one fatal mistake and then it’s like, wait a minute, I don’t like this anymore,” he said. “People don’t really understand [instant payments] yet … and while a lot of times it is user error, when something goes wrong it is tough to get that attention back.”

After all, consumers are used to the protections provided by intermediary systems like credit cards, which have established an ongoing need for building trust and ensuring consumer protection to overcome hurdles related to errors in the instant payments process.

Beyond just trust, there is also the importance of choice in the evolving landscape, as consumers are accustomed to having options that suit their preferences and needs.

Holiday Season Stress Test

With the holiday season in full swing, Brown said he anticipated a potential stress test for instant payments as the real-world challenges of returns and changes to purchases during the holiday rush could reveal the strengths and weaknesses of instant payment systems.

“We’re seeing at a macro level the tightening of cash positions for households, we’re seeing savings dwindle and cash flow is becoming more important,” Brown said, noting that extended waiting times for refunds and credits can be of particular concern during the holidays.

Still, when it comes to the utility of instant payments across merchant categories, it boils down to whether or not consumers will play favorites.

“Sometimes we like to remain anonymous, make it transactional. Sometimes we’re deeper into a more sustained merchant relationship. Those factors all come into play, and it’s certainly not one size fits all when it comes to the value proposition of instant payments to each type of merchant,” Brown said.

The idea is to foster relationships that go beyond transactional interactions, creating an environment where both senders and receivers feel a higher level of trust.

Looking ahead, Brown said, “institutions that have both a deep merchant portfolio and consumer portfolio can bring together a community that fosters an umbrella level of trust over [instant payments].”