Real-time payments: the pros and cons

Cashflow management is critical for businesses. The ability to make and take payments quickly improves buying power, maintains solvency, improves business trust, allows you to pay staff and suppliers and can help avoid profitability issues. Ultimately, a shorter receivables cycles and faster payments makes for a happier business.  

What are real-time payments? 

Real-time payments are, as the name suggests, made in real-time. They are initiated, processed and settled immediately. In the UK, these are known as Faster-Payments and they’re available for GBP to GBP payments.  

The benefits of real-time payments 

Real-time payments come with several advantages, it’s easy to see how they’re so popular.  

Better cashflow 

Receiving your money instantly instead of waiting for days or weeks gives you greater buying power and improves liquidity, meaning you’re able to budget better and are less likely to run into financial problems. 

Improved efficiency 

Time is money, so you don’t want to waste it chasing yours. Spending less time worrying about receiving payments means more time on tending to and improving other areas of the business. 

Support growth  

In order to grow, companies need to be efficient and innovative and outpace their competition. Real-time payments are a great way to improve the operational efficiency and buying power. For example, companies can take advantage of stock availability sooner if they have cash immediately where there competitors may still be waiting to receive payment. As a result, you can sell to customers sooner and improve market share, reputation and brand loyalty, it all starts with cashflow. 

The disadvantages of real-time payments 

Real-time payments can be problematic if they’re not managed correctly or used with correct payment systems. These problems become less of a concern with open banking and with Crezco, they’re not an issue at all, but let’s take a look.  

Potential risk 

Being initiated and settled immediately leaves no room for correcting any errors once the payment is sent. It’s important to be extra vigilant when checking details to avoid paying the wrong person. Additionally, concerns around security with any new technology are common. As infrastructures improve, these issues are tackled with new fraud detection methods. Crezco prepopulates bank information to ensure that you always pay the right person the right amount.

Cost

The infrastructure and implementation of new technology can be costly with both time and money. Real-time payments are inherently free, it is only some payment companies that charge money for their services. Using open banking rails, Crezco users can bypass this cost with free payment processing.