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Instant Payments in Italy – And Beyond: Lessons from Il Salone Dei Pagamenti

 

Taking the pulse of instant payments in Europe

Javier Santamaria, chair of the European Payments Council, concurred with the findings of our 2018 Global Payments Insight survey with Ovum, stating that “78 percent of banks globally believe that the combination of instant payments and open banking will see the importance of payment cards decline over time.” This, Santamaria suggested, will be further driven by the 100 percent reliability level now provided, and the 2.5 second average transaction time that will generate new use cases. He also pointed out the business case against cash, with 24/7/365 real-time payments availability providing a springboard for payment service providers (PSPs) to create new products and revenue streams. Overall, the message was even more buoyant than their TIPS Market Consultation on Volumes prediction back in March, which stated that instant payments growth is expected to rise to 13 percent of total payments for all payment methods by 2020, and to 23 percent by 2023.

The evidence for proving the business case for instant payments is out there – with 66 percent of the banks in markets that have live instant payments infrastructure viewing it as a revenue driver for their financial institution.

In fact, Intesa Sanpaolo – the first bank to go live with instant payments in Italy – stated that 50 percent of its clients had used instant payments as a replacement for traditional money transfer more than once, reaching 2 billion Euros (to date) in volume of transactions and growing. Intesa Sanpaolo rolled this out to customers without fees for the first three months, then saw a temporary drop in usage in April when they started charging. However, once Intesa’s customers saw the value they were missing, they reengaged, and have since seen increased leveraging of instant payments.

Another key takeaway from this year’s event was the pressing need to invest in education and information for customers so they understand the advantages that instant payments offers and how to use this payment method effectively, whilst avoiding exposure to fraud as transactions are irrevocable. Ann Borestram from the European Central Bank stated that “instant payments are the new norm for PSPs and merchants – now payment providers need to take it to customers.” We already know that both corporate and retail Italian customers have one of the highest appetites for instant payments from small and medium sized businesses, with 90 percent saying they would consider switching bank providers if they weren’t offered it, and 50 percent saying it would be essential to the success of their business.

The business case is further strengthened by consumers globally saying instant payments was second only to loyalty discounts and offers as the most popular offering that banks could offer. The more education on instant payments, the greater the push from customers to demand their banks offer faster access and reachability. This will drive adoption and prioritize instant payments as a key strategy for banks over other projects.

The message from Il Salone dei Pagamenti was clear – banks need to develop their strategies and accelerate their instant payments roll-outs pronto – or they will lose out to their more innovative competitors.

 

With the launch of TIPS, there are now even more Clearing and Settlement Systems for banks to leverage, and ACI provides payment processing solutions for all EBA payment types: RT1 (real-time payments), Euro1 / Step1 (High-Value Payments) and STEP2 (SEPA Batch ACH Payments). ACI also supports ECB TIPS real-time payments, access via STET CSM, SWIFT and ACH through its UP Real-Time Payments solution.

Head of New Business

As a financial services veteran Giorgio massed vast experience in the financial sector, acquiring knowledge about the innovative aspects of new business models in the area of payments and real time payments. In his 30+ years carrier he has been involved in several successful projects by enabling companies to effectively compete and remain ahead of the industry and technology curve.

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