Finances
What is lacking when paying in seconds
Since November 2017, money can be transferred within seconds in Europe – but very few bank customers in Germany use such real-time payments. Photo: Fabian Sommer / dpa
© dpa-infocom GmbH
In the EU, paying within seconds is now a standard offer from banks and savings banks. But most customers prefer to use conventional methods.
Time is money – but real-time payments are still the exception in Germany.
“From our point of view, instant payment has not yet arrived in people’s everyday lives. Banks tend to place it as a niche product and are therefore still a long way from the political will and the requirements of retailers to be considered the “New Normal”, ”said Ulrich Binnebößel, payments expert at the German Trade Association (HDE).
Since November 2017, transfers from account to account in Europe have been technically possible within seconds. The EU Commission had set the goal of making so-called instant payments the standard throughout the European Union by the end of 2021.
Instant Payments are account-to-account payments that are processed around the clock in seconds. With such real-time payments, the recipient can dispose of the amount received immediately after sending the payment. For example, if you sell your old car privately, you must at least take into account the risk that the buyer will not pay with other procedures. If such a transaction is processed by real-time payment, the seller can directly check whether the money has arrived in his account.
In Europe, since November 21, 2017, the rapid transfers known as “SCT Inst” have been possible. On the same day, Hypovereinsbank (HVB), part of the Italian Unicredit Group, tested the system; since November 27, 2017, HVB customers have been able to order transfers in real time via online banking. In mid-July 2018, the savings banks followed suit, and Deutsche Bank and Commerzbank as well as various cooperative banks also offer the service.
“New standard next to conventional transfers”
According to the Deutsche Kreditwirtschaft (DK), “real-time transfers have established themselves as a new standard alongside conventional transfers”. Nevertheless, “the switch to real-time transfers (…) does not make sense for all applications for customers,” said the umbrella organization of the five major banking associations in Germany. “Depending on their needs, customers clearly differentiate between which transactions they are using which transfer method.”
We can hear from the industry: Most private customers only resort to real-time transfers, which are usually chargeable, in exceptional cases. For companies, collective transfers via instant payment are now technically possible, but the company’s IT systems must be upgraded accordingly, for example in order to process pay slips for the workforce in this way.
“The use of instant payments requires extensive adjustments in the systems of banks and users,” said Bundesbank board member Burkhard Balz at the end of October. “In addition, instant payments are usually still priced as an expensive premium product in Germany. Accordingly, the question then arises whether the corresponding costs outweigh the possible added value. “
Bank: Real-time payment via app brought more users
At Hypovereinsbank, according to a spokesman, well every tenth transfer is now carried out in real time. Usage has risen sharply “since real-time payments are also possible via app and other institutes have been added as recipients,” said the HVB spokesman.
At the Hamburg retail and service group Otto, ten percent of all payments from customers are currently received as instant payments. That is “pretty much at market level,” said an Otto spokesman. “We recognize obstacles to the faster or more widespread use of instant payment, for example, in the fact that many banks still charge separate fees for this. In our opinion, however, these should not be priced differently than traditional transfers. “
In addition, the network of providers for the payment process within seconds is still incomplete. “The coverage in Germany and Western Europe is quite good, but can be expanded significantly in Northern and Eastern Europe,” summarized the Otto spokesman.
At the beginning of December, the European Payments Council listed 2322 payment service providers from 24 countries in the so-called Sepa area who offer instant payments. That is 60 percent of the payment service providers in Europe. According to DK, more than 1200 banks and savings banks in Germany participate in the EU-wide procedure for real-time transfers. “With the widespread use of real-time transfers, the German banking industry is among the leaders in Europe,” said the DK.
In the Sepa payment area (“Single Euro Payments Area”), transfers, direct debits and card payments are to be standardized across borders and thus accelerated. This single euro payment area includes the 27 EU countries as well as: Iceland, Liechtenstein, Norway, Switzerland, Monaco, San Marino, Andorra, the Vatican City and the United Kingdom.
According to the Otto spokesman, banks and savings banks could provide customers with better information about the payment process: “The service definitely has some advantages, not least in European online retail, which is being used by more and more customers. For many retailers, the shipping process for the goods sold is initiated more quickly thanks to a faster payment process and the processing of returns is accelerated. “