SEPA Instant Payments Retailer Survey – 10 core insights
Maria Veleva, product manager for White Label Payments at G+D Mobile Security, tells us about the future of instant payments and the outcome of a recent retailer survey on instant payments.
What is an instant SEPA Credit Transfer, SCTinst?
In general, instant payments are payment solutions where digital money flows within seconds (or minutes) from one account to another. They are available 24⁄7 and can be done via an online bank transfer, a card payment at a point of sale (POS) or any other payment instrument. In Europe instant payments needed a more precise definition in order to avoid fragmented solutions within the SEPA (Single Euro Payments Area). Therefore, the EPC (European Payments Council) has defined instant payments based on the existing SCT (SEPA Credit Transfer) with the additional requirements that the money is available in the recipient’s account within 10 seconds and the resulting payment method, SCTinst, is available around the clock. European financial institutions can use the instant clearing and settlement platform, such as that provided by EBA Clearing (Euro Banking Association Clearing), or wait until November 2018 when TIPS (TARGET Instant Payment Settlement) goes live.
Instant payments are digital payment solutions where the payee can access the transferred funds within seconds
Why do we need SCTinst?
There are already some domestic payment solutions in Europe, such as Faster Payments in the UK, Swish in Sweden and Jiffy in Italy. As these are limited to the borders of their countries of origin, this trend put the success of a harmonized SEPA in danger. Therefore, a pan‐European instant payment credit transfer scheme was needed. In addition, an instant payment scheme is long overdue in a world where almost everything else is real‐time. The digital transformation is a trend that has been challenging many companies recently. We at G+D Mobile Security have run a couple of think tanks in order to get more insights on relevant market trends and their interaction. As another step to gain more insight on the topic, we conducted a survey together with GS1, experts in global standards in business communication, on the benefits for both retailers and banks. Infografic. With this know‐how and our best practices, we are very well prepared to guide our customers on their journey towards a more digitalized portfolio.
What benefits does SCTinst offer to the different market players?
Unlike an EMV card payment, SCTinst is a push payment transaction. As a result, the issuer is in full control of the transaction and no network provider (Visa or MasterCard, for example) is needed. Therefore, the issuing bank does not need to place any logo but their own on a physical or virtual card. SCTinst will provide a better business model for the issuer than an EMV card payment after the interchange fee cap in Europe. This means the issuer will try to drive the consumer behavior towards SCTinst via incentives. The merchant could offer this payment method within their own apps, profiting from brand recognition and gaining more control, e.g. over loyalty programs . Those loyalty programs will become dynamical and can be based on user behavior analysis. But the true potential of SCTinst lies in enabling the merchant to provide a true omni‐channel, not multi‐channel experience because SCTinst can be used for e‐Commerce as well.
The consumer follows the overall trend to consolidate everything in the smart phone and digital payments fit this purpose perfectly. G+D Mobile Security sees SCTinst as a natural part of the digital transformation, and a driver for the industry. We are working with relevant partners in order to guide our customers and support them in getting fit for the market and increase their services and offerings. G+D sponsored GS1 in a survey on SEPA Instant Payments this autumn.
We asked 37 prominent retailers to evaluate the challenges of – and expectations from – instant payments, and the results of the survey were illuminating. Interestingly, all retailers surveyed – 100 percent – thought clear standards, policies and processes would determine how successful SCTinst would be, and they all also agreed that payments should be quick and easy to process. And when asked about “responsibility” (specifically “who is responsible for communicating to the consumer?”), 96 percent of retailers said the banks, with 55 percent of retailers saying they would be willing to take responsibility. A very valid comment from one of the participants of the survey was: “Instant payment is not a product, it’s an infrastructure for products” meaning that in the near future the payment functionality will be added to many different apps and be seen as added value instead of being the core of a separate payment app.