Small business owners must be ready for the real-time payment revolution in 2025, as instantly received payments can create more precise cash flows and improve satisfaction.
Real-time payments are any account-to-account fund transfers that give the beneficiary of the transaction immediate access to the funds. This is because the payments are cleared and settled within seconds, at any time of any day, including on public holidays and weekends.
Meanwhile, traditional payment methods are often subject to fund transfer delays, creating uncertainty for small business owners who rely on prompt payments to support their cash flow. For example, checks can take a day or longer to clear, cash has to be deposited into your account, and electronic bank transfer speed depends on several factors.
This article will explore four things small business owners should be ready for ahead of the real-time payment revolution.
Be Ready For Lower Transaction Fees
A business is responsible for paying transaction fees when they process a customer’s electronic payment at a point-of-sale (POS) terminal. A payment processor may charge a transaction percentage plus an additional fixed amount, which can change depending on various factors, including card type and sales channel.
According to a Deloitte report, real-time payments cost about $1.95 per 10 transactions. This is about the same as non-instant electronic payments and significantly less than checks, which cost about $2.79 per 10 transactions.
Not only do real-time payment systems offer lower transaction fees, but they also have a more transparent pricing model than credit card processing fees, which can range between 1.5% to 3.5% of a transaction’s total. This consistency and transparency make it easier for small businesses to do revenue forecasting.
Be Ready For A More Precise Cash Flow
Credit card settlement can take anywhere from one to three business days. We know POS system payment delays can impact cash flow management, as small businesses may have to wait a few days for revenue from card transactions to land in their accounts.
With real-time payments, small businesses will receive payouts from their payment processors instantly, which helps business owners improve cash flow by receiving sales revenue in real-time.
In addition, small business owners will be able to process instant refunds, so they aren’t factoring money into their cash flow that doesn’t belong to them after a customer has returned a product. This will improve the customer experience and increase the likelihood of a customer making another purchase.
Be Ready To Meet Changing Customer Demands
Even though credit cards remain popular among US consumers, customer demands are set to change as real-time payments revolutionize the payment experience.
75% of the Americans surveyed said they trust digital payment apps, such as Zelle, PayPal, and Venmo, as much as or more than they trust traditional payment methods, such as cash, debit card, or credit card.
In addition, those surveyed cited fund transfer speed and transfer fees as the top two most important features when choosing a digital payment app. This highlights why real-time payment systems will meet customer demands, due to their quick transfer speeds and low fees.
Real-time payment systems allow small businesses to meet customer demands and stay ahead of their competition whilst enabling customers to pay using a method that suits their needs.
Be Ready For A Rise In Fraud
Fraudsters are clever, so they will always find ways to exploit new technologies as they emerge. This is no different from the revolution of real-time payments.
As more businesses introduce real-time payment systems, we can expect cases to rise among common types of fraud, such as authorized push payment fraud – when a fraudster pretends to be a legitimate business to trick their victim into transferring funds into their account.
(Image Source: Formica)
Luckily, advances in fraud detection technology, including machine learning (ML) and behavioral analytics, will make unusual urgent requests and fake invoices easier to spot. In addition, some governments are considering legislation to ensure more fraud victims receive the financial support they need.
Is Your Small Business Ready for the Real-Time Payment Revolution?
Real-time payment systems are currently operational in 56 countries, with India and Brazil leading the revolution. While it’s still early days for real-time payments in the US, understanding the value of your small business will set you up for future success.
Small businesses can leverage real-time payment systems to meet customer demands, benefit from lower transaction fees, and create a more precise cash flow. The possible rise of fraudulent activity mustn’t put you off real-time payments, as the revolution is in line with a range of new technologies and government legislation to beat fraudsters and protect victims.
