Instant payments are becoming the baseline. So what is the differentiator?

Speed used to be the thing that set payment providers apart most, yet as instant becomes the default, the questions that decide a good payments partner are shifting.

As instant payments become standard, a provider’s headline speed figure is losing its power to tell you anything. Three things decide the difference instead: where the money can actually land, what you can see while it is moving and what happens on the occasions it does not arrive. All three were always important, but mean more now than ever before.

For years, the go to way to sell a payments service was to say how fast it was. Seconds instead of days, weekends included. That pitch worked because speed was genuinely scarce and expensive.

Today is has becoming less of either, with Europe going the furthest. The EU’s instant payments rules require providers to offer instant euro transfers and stop them charging more for one than for a slower transfer. That is a single currency in a single region, and most of the world is a long way behind it, but it is the clearest signal yet of where expectations are heading, and expectations tend to travel faster than rules do. The G20 is aiming for most cross-border payments to land within the hour, while domestic instant systems have launched or are being built in most major markets.

Although none of this makes speed unimportant. In plenty of corridors it is still the main problem and will be for years to come. What is changing is what a speed figure tells you when you are weighing up two providers, because where instant has become normal, the number on the front page is much the same number everywhere and has stopped doing any real work in the comparison. Price still varies, of course, though a cheap payment that lands late in the wrong currency was never really cheap.

Does instant mean anything if the money has nowhere to land?

Not really, which makes reach the first differentiator. A payment clears in seconds because there is a local route at the other end, and where there is not, it falls back onto a chain of banks passing it along until the seconds turn into days. A provider that is instant across Europe and slow into the markets you are opening next has not solved your problem.

That is why headline speed figures flatter so many providers. An average is built out of the corridors a provider is already good at, so it tells you little about the market you are about to enter, where the local system closes at five, or the one where the large banks pulled out years ago because the volumes never justified the compliance cost.

So the better question is not how fast a provider is in general, but how fast into this country, in this currency, on a Sunday. And once you are asking about specific corridors, the next thing you notice is how little you can see inside them.

Is knowing where the money is worth as much as getting it there fast?

Often it is worth more, which makes visibility the second differentiator. Most complaints about international payments are not really about speed. They are about not knowing where a payment is, what it will have cost by the time it lands, whether it reached the right person or whether it is quietly on its way back.

A finance team can plan around a payment that reliably takes two days. What it cannot plan around is one that might take two hours or might take two weeks, with no way to tell which until the money either turns up or does not, which is why uncertainty tends to cost more than slowness: somebody has to absorb it, usually by chasing.

So the question is not only how fast a provider moves money, but what it can tell you while the money is moving, and whether that reaches your systems automatically or sits in an inbox until you go looking. The same logic applies to the payments that never arrive at all.

What happens when an instant payment fails?

That depends entirely on the provider, which makes reliability the third differentiator and the one buyers examine least. When a payment was expected to take three days, a failure was an irritation discovered later. When it is expected to take seconds, the failure is immediate and visible, because the customer is already looking at the screen.

That changes what you are actually buying. Instant payments mean real-time operations: people who spot a stuck payment before you do, a process for the ones that bounce and somebody reachable on a bank holiday. Plenty of providers have built the fast path, and rather fewer have built the path for when the fast one does not work, which is where the difference eventually shows up in your support queue.

What should you ask a payments provider instead?

Where speed is a given, the shortlist gets harder rather than easier. Three things worth asking that a speed figure will not answer:

1. Which of my corridors have a local route today, and which fall back to the slow chain?
2. What can you tell me about a payment while it is moving, and can that reach my systems automatically?
3. What share of payments complete first time, and what happens to the ones that do not?

None of that fits on a billboard, which is roughly the point. Choosing a payments provider was always about more than the clock, and the gap between a good partner and a fast one tends to show itself in the awkward cases rather than the easy ones.

Speed is still worth having, and in many markets it is still the thing to fix first. It is just no longer the only thing that tells you which provider is the right one.