The evolving European real-time payments landscape
The global pandemic acted as a catalyst for digital adoption and fast payments trends that were already underway. As buying habits continue to shift online, expectations about how funds will be transferred and received are rising.
When it comes to receiving funds, consumers and small businesses in Europe now expect faster and more convenient payment solutions that prioritise security and user experience. If an individual is due a payment from a marketplace or a small catering company is awaiting payment for services, they now expect speed and convenience. If payments are faster in other areas, such as transfers to friends and family, this will also influence expectations.
It’s a constant feedback loop of expectations driving innovation, and then the elevated experience that comes with this fuelling higher expectations. As the money movement ecosystem strives to modernise and organisations adopt new solutions to remain competitive, consumers and clients are only going to expect even faster, simpler and more secure transactions. So, what are consumers and small businesses used to when it comes to receiving payments and what do they want going forward? And how far along are businesses when it comes to adopting real-time1 funds disbursements?
According to research carried out by Visa and Edgar Dunn and Company in 2021, consumers still primarily receive disbursements from companies through bank transfers. This might be receiving funds for sales on an online marketplace, cashing out from investment platforms, gig economy salaries or online content creation earnings. Bank transfers are also common for government disbursements like tax rebates and welfare payments. However, when it comes to receiving payments from individuals, there is more of a split between bank transfers and digital wallets2, and a significant number of payments are still made in cash.
When it comes to how small businesses in Europe receive funds, the picture is fairly similar, with bank transfers dominating the landscape. However, there is less of a reliance on bank transfers in marketplace use cases, where transfers to digital/mobile wallet2 transactions are also popular. This suggests that bank transfer becomes less dominant where a convenient alternative payment method is offered.
So, what are some of the inconveniences and issues consumers and small businesses are faced with when they receive funds via current payment methods? Over a third (36%) of consumers and over two-thirds (63%) of small businesses say that have experienced some sort of problem with bank transfer as a method for receiving disbursements. Knowing exactly when funds will arrive in their bank account is the biggest concern for small businesses and consumers alike. Consumers are also particularly frustrated by the user experience and how slow or unintuitive these processes can be.
Real-time1 payments can offer a solution. They can help organisations improve the customer experience by offering fast payment options, including cross-border payments. With the right provider, real-time1 payments also offer increased security, which is something organisations can struggle to implement with the high operational costs of traditional payment processes. This chimes with what consumers and small businesses say they are looking for when it comes to payments solutions – primarily security and trust, availability and speed.
According to 2022 research by Forrester and Visa, decision-makers in EMEA are generally quite familiar with real-time1 funds disbursements. However, as of 2022, the majority of businesses that use real-time1 funds disbursements had only been doing so for under two years. This suggests that many organisations still have a way to go to fully utilise this technology.
Indeed, the research found that many organisations are planning to expand or upgrade their real-time1 funds disbursements in the near future, citing better control of costs and fraud, and better insight into transaction status as key drivers of adoption. Leaders interviewed for the research wanted better security but struggled with the high operational costs of traditional payment processes. Many interviewees said that simplifying customer identification and verification could improve the payments process and therefore the user experience.
It’s clear that, whether they are there yet or somewhere along the journey, most decision-makers strongly agree real-time1 funds disbursements are important for the future of their business. As the bar of innovation continues to rise and customer expectations increase simultaneously, organisations need to stay ahead of, or at least in step with, the curve.
For more information on real-time payments, visit visa.co.uk
1 Actual fund availability depends on receiving financial institution and region.
2 Wallet functionality varies by market. Please consult your Visa representative.
