Future of Payments
What you need to know:
Near real-time payments are the future. This will not just be for payments, but also refunds and reversals because it is critical consumers have near-immediate access to their funds. We have the technology and there is no reason why we can’t have faster movement of money, most industrialized countries already have this option.
“Near real-time payments are the future.”
How fast do payments move today?
It takes anywhere from 1 to 3 days for most payments to move through the transaction process today. The authorization happens almost instantaneously, but the movement of funds from the card issuing bank to the merchant’s bank account is a slower process. Other countries, such as the UK, have already moved to real-time payments.
What is an ACH payment?
ACH stands for Automated Clearing House. ACH payments result in the purchase being deducted from an existing bank account.
How long does it take refunds or holds to become available to the consumer?
It can take anywhere from 1 to 7 days for a refund to clear back into a consumer’s checking account or be credited to their card account statement. When funds are pre-authorized for items like a restaurant tip or hotel reservation, holds are placed on those funds. Sometimes it takes several days for those holds to be released by the cardholder’s bank.
“Mobile payments and internet payments are some of the fastest growing segments of U.S. commerce.”
Where is the U.S. headed in the short-term?
The Federal Reserve is working with the National Automated Clearing House Association (NACHA) to bring same-day payments to the U.S. This is an important step, but a piecemeal one when other nations are already moving toward real-time payments. Additionally, there are technology companies who, if allowed better opportunities to enter the marketplace, could significantly improve the speed and efficiency of U.S. payments.
While mobile commerce is still in the early adoption phase in the U.S., mobile payments and Internet payments (especially the latter) are some of the fastest growing segments of U.S. commerce.
Several different entities are looking for innovative ways to improve payments through increased efficiencies, better customer experience, and enhanced security. The evolution of Bitcoin and their block chain security technology is a perfect example of this. Other alternative payment means will continue to evolve.