SMEs demand real-time payments: why banks need to catch up

A global survey reveals high demand among US and European small and medium-sized businesses for fast and innovative payment and banking services. 43 per cent of SMEs globally say being able to send and receive payments in real-time would be essential to their success.

 SMEs demand real-time payments: why banks need to catch up

The majority of small and medium-sized business owners in the US and Europe would consider switching account providers for the offer of real-time payments, according to an online poll by YouGov conducted on behalf of ACI Worldwide. While two in three US SME businesses stated that if banks offered real-time payments capabilities, it would ‘encourage’ them to switch providers, 90 per cent of respondents in Italy, 75 per cent in France and 58 per cent in Germany also said the offer of faster electronic payments would be a reason for them to switch banks.

The research reveals the extent to which SMEs in the US and Europe are willing to embrace new payment methods and innovative banking services. It also shows that businesses increasingly recognise the value of fast, efficient and predictable payments to the overall success of their business.

Priority 1: banking in real-time

Of the US respondents that find faster payments appealing, 74 per cent said that they would find receiving payments from customers in real-time important, with 54 per cent saying the same about paying vendors and suppliers in real-time. 56 per cent of German SME businesses surveyed and 50 percent of those in Italy said real-time banking services would be ‘essential’ to the success of their business.

Priority 2: New and innovative banking services

Many SMEs have switched to new payment methods and providers in the last few years, a move which they say has been beneficial for their business. For example, 67 per cent of SMEs in Germany use mobile or internet banking (39 per cent in the US), and 45 per cent (32 per cent in the US) use person-to-person payment providers such as PayPal or Venmo.

Priority 3: Cutting down payment delays

Delays in payments either reaching their own account or the accounts of vendors and suppliers are among the most cited frustrations of businesses surveyed in the US and Europe (51 per cent in the US, 61 per cent in France, 65 per cent in Italy and 56 per cent in Germany).

“2017 will be a crucial year for real-time payments globally. Banks have a real opportunity to work with their customers and offer the new and innovative services they really want. Delayed and unpredictable cash flow can significantly affect the success of businesses, particularly small ones,” ACI Worldwide’s Barry Kislingbury says. “The real-time schemes currently being built in the US and Europe will empower consumers and businesses to send and receive real-time payments from their existing accounts, and will also provide a platform for banks to launch new services built around a real-time payments hub for today’s digital economy.”

According to the survey, the majority of businesses in the US and Europe are not even aware of plans to develop real-time schemes: 81 per cent of SME decision makers in the US have not heard about the TCH real-time payments scheme. In Europe, 55 per cent of French businesses and 80 per cent of those in Germany are not aware of any plans to develop a pan-European scheme.

Both the pan-European SEPA Instant Credit Transfer Scheme (SCT Inst) and The Clearing House (TCH) Real-time Payments System pilot will be launched later this year. The pan-European SCT Inst Scheme is due to go live in November 2017 and will enable consumers and businesses to make euro credit transfers in real-time between accounts across an international area—eventually spanning over 34 European countries.

“Our findings show that businesses are ready for real-time payments. The new schemes in the US and Europe will be the most comprehensive real-time payment systems ever developed. However, financial institutions still have a long way to go when it comes to educating customers about the benefits and opportunities the new schemes offer,” Kislingbury adds. “Banks that are now educating and raising awareness of their real-time offerings are those that are most likely to benefit from the new opportunities moving forward.”

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