Beyond the Rails: Three Ways Instant Payments Can Drive Business Value That Transcends Transaction Speed

Despite their importance within banking operations, payment infrastructures have seen little modernization over the past several decades. In most cases, both domestic and cross-border transactions still take up to five days to settle in the receivers’ account.

This is not because of a lack of new payment offerings. Even after the introduction of instant and same-day payment rails including FedNow and same-day ACH, traditional methods such as debit and credit cards still dominate the market for both B2B and consumer payments.

These gaps in modern payments infrastructure largely come down to two factors. First, faster payments are hard to integrate into banks' existing workflows. They require building new technical infrastructure to transact in real time, new risk management protocols that achieve anti-fraud compliance, and new training and governance structures to ensure teams know how to use instant payments. Second, businesses are used to the 3-5 day settlement time that comes with traditional payment rails. It has been the status quo for decades, and changing it requires a major cultural shift.

Overcoming both of these obstacles comes with significant investment — one of the biggest reasons that payment infrastructures have largely remained the same. Offsetting the cost will require banks to look beyond transaction speed alone and instead focus on the new business use cases they can create with instant payments.

Offering consumers a peer-to-peer experience that rivals real-time fintech options is just one of these use cases. Here are a few additional examples that will transform trade finance, private capital and consumer-to-business payments as we know them.

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