Shift to Real-Time Payments Will Transform Commerce Per Survey

PROVIDENCE, R.I. – Soon you’ll be able to forget about balancing your checkbook – or even having a checkbook – according to new research by Citizens Commercial Banking.

According to the bank’s Real-Time Payments Outlook, 90 percent of businesses expect real-time payments, the super-fast, new standard in U.S. billing and payment processing that is currently being deployed, to dramatically transform the way business is done. Nearly two-thirds said real-time payments, the biggest upgrade to the U.S. payments system since the Automated Clearing House (ACH) in 1974, will likely mean the end of cash and check payments and will usher in a new era of instant transactions, while vastly improving business cash flow.

“Real-time payments is the most sweeping change to the U.S. payment system since the 1970s and businesses see this as a crucial opportunity to modernize their payment practices,” said Michael Cummins, Head of Treasury Solutions at Citizens. “There are tremendous advantages in terms of speed and certainty of payments. Cash flow predictability and payment reconciliation will also be greatly improved. It will be absolutely transformative.”

The Citizens survey found that more than 75 percent of businesses still make or accept payments using paper checks and more than 45 percent still make or accept some payments in cash, highlighting the scope of the potential transformation.

Under the current payment model, it usually takes a day or more for checks to clear and money to move from one account to another. In contrast, payments can be made electronically by a customer through the real-time payments network and the funds instantaneously move from one account to another. Information about the transaction also travels with the funds, so recipients know where the money is coming from and why.

Other key findings include:

• The real-time payments network is gaining momentum, with 41 percent of businesses saying they are currently discussing it with their banks or implementing it.

• In addition to replacing check and cash payments, 60 percent of businesses said the new network would improve collection activity and posting to clients’ accounts. Fifty-nine percent of businesses said real-time payments would help them manage cash flow more effectively.

• Eighty-two percent of businesses said real-time payments solves for many of the problems with the current payment options, such as the gap in time between making or receiving a payment and when the funds clear. They also noted the real-time payments network’s ability to reduce fraud, include payment data with the payment and automate payments more easily.

For more information about real-time payments or this survey, please go here. The survey of decision-makers at more than 150 companies nationwide sampled a range of businesses in different sectors with annual revenue of $10 million to $100 million (37%); $100 million to $500 million (25%); and more than $500 million (38%). It was conducted in March and April of 2019.