Everything you need to know about real-time payments

FX

Posted on 24th January 2023

Can they really be that fast? How can funds move in seconds? We answer common questions on lightning-speed payments


how does real-time payments work

There’s always something exciting about things happening before your eyes. If a news reporter is saying “we’re watching these events unfold in real-time” - you know something important is going on. 

Payments are no different. There’s a certain amount of transparency and comfort when they occur in real-time. Payments are not sent into the ether, to then disappear for a while, before eventually appearing in a recipient bank account. You watch them leave, and you watch the confirmation of their arrival.

So what do we mean by real-time payments and how does your business access them? Here we provide a crash course in everything you need to know.

What is a real-time payment? 

A payment that is authorised and settled in real-time. In the past, digital payments may be taken from one account, but could take hours or even days before they appear in the beneficiary’s account and then settle. 

This is often still the case with card payments. If you go out to dinner and pay by card, the payment may be authorised when you tap the card reader. But it will show as “pending” on your balance and will usually take two working days to be processed. 

Real-time payments are different. In the vast majority of cases, it’s a matter of seconds before funds have left one account and appear in another. The payment rail operators usually caveat that a real-time payment can take up to two hours at the most.

To give a real-life example, we partnered with Bitfinex, one of the world’s largest cryptocurrency exchanges, to give them access to real-time payment rails for bank transfers. The average speed of their transactions through the OpenPayd platform is roughly half a second. 

What are real-time payment rails? 

Just as a tram runs on a rail, a real-time payment runs on a real-time payment rail. It’s what the funds use to go from one account to another so quickly. 

There are currently over 55 real-time payment rails across the globe. Some you may recognise are the UK’s Faster Payments, which connects all major UK banks, and Europe’s SEPA Instant. 

New real-time payment rails will continue to appear in the coming years and in 2023, the first multi-currency, cross-border, real-time payment rail will be launched in Scandinavia. P27 will enable individuals and businesses in Denmark, Sweden and Finland to send and receive instant payments in their own currencies. 

How do I access real-time payment rails? 

It all comes down to your banking partner. They will have the capability to run payments on certain rails - their ability to do so will depend on where they are regulated to operate as well as their tech. 

Real-time payments are not something all providers currently offer, or they perhaps only provide real-time payments in certain areas, so when partnering it’s definitely something worth asking about to make sure you’re getting the best possible solution for your business. 

Which real-time payment rails can I access with OpenPayd? 

OpenPayd offers access to real-time payment rails across Europe, including Faster Payments and SEPA Instant, and this number is growing all the time. 

We firmly believe that the future of payments is connecting as many real-time payment rails together as possible, allowing people from all over the world to transact in their own currencies as quickly as possible. We have written about this idea of ‘payment Nirvana’ before and it’s something we’re constantly working towards. 

I have another question… 

Please let us know! We’re always happy to discuss real-time payments and everything that goes with them. Reach out to our team today; your reply might not come in half a second, but we’ll get back to you as quickly as we can. 


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