The DOJ has approved a real-time payment network suggested by two dozen banks who want to provide faster payments to merchants using their merchant services. The DOJ wanted to make sure that this was not a move that would consolidate too much power in too few places and that there is no risk involved with the program. With the new real-time payments system, purchases and funds can be available immediately. This announcement is sending waves through the payment processing community as service providers rush to offer real-time payments.
In a statement that it released in late September, the DOJ stated that it felt that the payment processing system proposed by the banks may actually have a pro-competition impact on the market. They also noted that the system would help to repair and rebuild an aging payments infrastructure that is long overdo for some upgrades, and it’s about time.
Merchants are happy to hear about the real-time payments network as it means that they can have funds available quicker than they otherwise would have. Customers should be happy as well. The new system allows for the instant transfer of money between banks with instant recognition and status updates. That means if you need to transfer money from one bank to another, hit send and boom – it’s there. No more waiting for charges or payments to clear, it all happens instantly.
Yes, there are great implications for merchants and customers a like but when will it be ready? Banks and payment gateways are racing to get on board with the new payments network. Banks at both ends of the network (sending and receiving) for any given transaction must be setup for the new system for it to work. It is estimated that half of all payments will be over the real-time payment network by the end of 2018. You will start seeing it sooner, though. As more banks and gateways get on board you will notice more and more funding between banks happening instantly.
To me, the worst part of our financial infrastructure is the wait time on certain payments. I would think, “why in our modern world does it take 2 days for a debit card payment to process, or 3 days for a transaction to post”. The constant battle of keeping up with what is “processing” or “not posted” yet got me into trouble with my bank accounts more than once. Maybe finally we won’t have to worry so much about processing times and delays. For a merchant it means you won’t ever have to write a check that isn’t funded until the next day ever again. You will have funds from the same day available and ready for use – and that’s music to my ears.