Instant payment (sometimes referred to as real-time payment or faster payment) is a method of
electronic funds transfer
Electronic funds transfer (EFT) is the transfer of money from one bank account to another, either within a single financial institution or across multiple institutions, via computer-based systems.
The funds transfer process generally consists ...
, allowing for almost immediate transfer of money between bank accounts. This was in contrast to the previous transfer times of one to three business days that had been in place until the mid-2010s.
Since the mid-2010s many countries have implemented instant payment systems that speed up the transfer between bank accounts in response to customer demand for faster transactions.
The ''Euro Retail Payments Board'' (ERPB) in 2018 defined instant payments as:
History
Originally clearing of payments was based on the
cheque clearing
Cheque clearing (or check clearing in American English) or bank clearance is the process of moving cash (or its equivalent) from the bank on which a cheque is drawn to the bank in which it was deposited, usually accompanied by the movement of the ...
cycle that required physical cheques to be exchanged by banks at
clearing house
Clearing house or Clearinghouse may refer to:
Banking and finance
* Clearing house (finance)
* Automated clearing house
* ACH Network, an electronic network for financial transactions in the U.S.
* Bankers' clearing house
* Cheque clearing
* Cl ...
s for payments to be made between bank accounts. When electronic payments entered the banking systems from the 1970s onwards, the same timeframes and processes were used to settle these electronic payments.
The growth of
e-commerce
E-commerce (electronic commerce) refers to commercial activities including the electronic buying or selling products and services which are conducted on online platforms or over the Internet. E-commerce draws on technologies such as mobile co ...
since the 2000s has caused a change in people's spending patterns and expectations. Shopping is no longer confined to regular business hours, creating new challenges for funds transfers.
Similarly, merchants require faster and more reliable money transfer systems to keep up with consumers' demands.
Traditional electronic payments like
bank transfers, that perform the electronic funds transfers within a few business days, are not in line with user expectations.
Notable instant payment systems by country
See also
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Clearing (finance)
In banking and finance, clearing refers to all activities from the time a commitment is made for a transaction until it is settled. This process turns the promise of payment (for example, in the form of a cheque or electronic payment request) i ...
*
European Central Bank
The European Central Bank (ECB) is the central component of the Eurosystem and the European System of Central Banks (ESCB) as well as one of seven institutions of the European Union. It is one of the world's Big Four (banking)#International ...
*
EBA Clearing
EBA Clearing is a provider of pan-European payment infrastructure wholly owned by shareholders that consist of major European banks. It derives its name from the Euro Banking Association which was instrumental in its establishment in June 1998, b ...
*
SWIFT
Swift or SWIFT most commonly refers to:
* SWIFT, an international organization facilitating transactions between banks
** SWIFT code
* Swift (programming language)
* Swift (bird), a family of birds
It may also refer to:
Organizations
* SWIF ...
for
NPP
*
Settlement (finance)
Settlement is the "final step in the transfer of ownership involving the physical exchange of securities or payment". After settlement, the obligations of all the parties have been discharged and the transaction is considered complete.
In the con ...
References
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Securities clearing and depository institutions
Payment networks
Payment systems