Why real-time payments will revolutionise financial operations for small businesses

The global financial payments landscape is experiencing a transformation from classic payment methods to a new era of real-time bank account payments (RTP), also referred to as instant or Immediate Payments (IP), Chris Dahl, Co-CEO, Pin Payments explains the benefits for businesses.

Real-time payments enable quicker access to funds, lower costs for online transactions for vendors, streamlined bank-to-bank transfers to individuals, businesses, and government entities, and optimised operations for payment processing through the automation of tasks.

This shift is changing financial transactions across the globe, marking a significant departure from the traditional payment models characterised by high fees and time delays. While it is currently operational in 56 countries, with India and Brazil leading the charge, RTP is rapidly gaining momentum and is poised to be a pivotal force in the upcoming revolution of payment systems.

So, what impact could this have on small businesses in Australia?

How real-time payments could revolutionise your business

 Payment providers and financial institutions are beginning to roll out real-time payments to customers in Australia. Australia’s real-time payment infrastructure, the New Payments Platform (NPP), was launched in 2018 to enable near-instantaneous money transfers 24/7. Several real-time services built upon the NPP now exist within Australia which have the capacity to revolutionise how payments are taken.

PayTo, a new digital payments method, has recently become available in Australia, which seeks to improve payments processing times and remove delays for businesses that come with traditional direct debits and online payments. For businesses, the ability to receive instantaneous funds is a game changer.

PayTo fits many settings and frequencies including one off payments, recurring payments or ad-hoc or account-on-file transitions. Payments are requested by third parties in the form of a ‘debit agreement’, where customers are prompted to provide authorisation for the agreement through their secure banking application.

The agreements made through PayTo are safely stored in a highly secure and encrypted database, managed by NPP Australia, with customer data stored centrally, not with merchants, reducing the risk of hacking and data breaches, and the burden on merchants to store their direct debit agreements for years.

This technology validates and authenticates transactions upfront, reducing the chance of fraud down the line. What’s more, PayTo helps your business stay compliant while reducing overheads and manual admin.

For businesses, real-time payments will provide greater visibility, streamlined payments and increased control over payment arrangements. Real-time payment solutions, like PayTo, work for both businesses and customers. Businesses can validate accounts instantly and verify funds in real-time, they’ll stay up to date by being notified when customers pause, change or cancel a payment agreement, and get paid instantly

Likewise, customers will gain improved visibility and control over their debit agreements, like rent, bills and memberships, all from their banking app. Along with additional conveniences like paying using their email or phone number instead of account numbers and BSBs.

 How to use real-time payments for your business

If you’re currently using a payments provider, check with their customer support to see if they are offering real-time payments or if they are planning to in the future. The Reserve Bank of Australia has information about the New Payments Platform (NPP), which you can familiarise yourself with before making any decisions that impact your business.

Real-time payments technology is set to revolutionise the way customers and businesses make payments offering a banking solution that will change the way small businesses operate, whilst improving business and financial banking in Australia overall.

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