Global Instant Payments - the next big thing

Answering the question “what is the next big thing” well it is Global Instant Payments. The importance of this is ‘Elon Musk’s X now has a Money Transmitter License in 25 US States and the goal is a self-contained financial ecosystem within the X platform. Musk was behind PayPal ranked second in a report of 10 Best Online Payment 2024. 

While more than 70 countries support real time payments for domestic payments there is a concerted effort to make global instant payments become the payment channel of choice. The EU for example has mandated Instant Payments across the euro zone from late 2024.

Most domestic payments have little if any transfer fees for consumers by Government edict. International payments fees are permitted. International payments fees are allowed. This started with the four-bank correspondent payment model that is now supported by SWIFT. Each bank could charge a fee for their part in the process. Only two banks are ever involved with Instant Payments.  In addition to the transaction fee there is a margin on the currency change, often 2% of the payment amount. This is good value compared to remittances which fees average 7%.

Instant Payments are liked by consumers and Governments. People receive payments instantly and they in turn can use this money to immediately buy goods and services. Governments with this acceleration of payment velocity can see rises of 1 to 2% of GDP.

The introduction of Open Banking, eWallets and mandated verification of the bank account owner has created new digital banking that follows regulated protocol.

Open Banking enables access the account owner to all bank accounts they hold. A third party can access, analyse, and provide suggestions where better interest rates for savings and cheaper overdraft interest rates can be found. Upon agreement from the account owner, the third party (AI) can implement the changes recommended.

eWallets: information can be fed into, and transactions made from eWallets.  eWallets are very popular but care is needed as the eWallets need to be very secure to prevent them being ‘emptied’ by scammers on the net.

Verification: the new world of verifying the account owner is coming into force in October in UK and EU. UK has also mandated quick reimbursement to the scammed customer account. The reimbursement comes from the payor bank with the payee bank reimburses the payor bank fifty percent of the scam.

Verification is the concern in providing a self-contained financial ecosystem on social media platforms. The banking system will be validating the actual owner of the bank account. Twitter/X does charge for its Premium Service, a verified account checkmark, costing $11 a month.   Whether it matches the new banking verification requirements for Instant Payments remains open. Banks may see subscriptions as a pay for real-time verification of payment and payee.

Global Instant Payments is a move back to ‘cash on the barrelhead’ and available cashless. It will have a profound effect on consumers and their third parties in providing financial well-being. In the 10 Best Online Payment offerings, not one was from a bank.