By: PR Fueled

Hold on, I am checking my bank account…oh the money is still not there. Let me contact support and pray that they are having a good day. This is the reality of the modern banking sector, especially when dealing with cross-border transactions. Thanks to technology, we’ve witnessed some incredible changes in every industry, but for some reason, the banking sector feels outdated. Yes, we may have contactless payments and global transaction processing, but it’s not only about the features, it is also about the user experience.

We all want instant transactions, but we are not there yet.

When was the last time you received a cross-border wire transfer? I bet that it arrived late or you had to deal with a lot of documentation. From experience, I usually get wire transfers in 3-5 days depending on the working days and holidays. 

But it often happens that banks fail to process my payment in time, so there is a constant back-and-forth with the support team, and they usually request more documents or require a signature in person.

The question is, does it have to be that complicated? – After all, we live in digital times where we have other payment solutions that operate without a middleman and process transactions much faster 24/7.

So, something must change, and the solution might be here. It’s called instant payouts, and it is a name that everyone working in the gig economy will appreciate.

What Are Instant Payouts?

Let’s jump straight to it. Instant payouts are quite self-explanatory but we also have a definition if you are confused. Instant payouts refer to blisteringly fast money transfers that happen within seconds, anytime, anywhere. 

Sounds familiar? Not really, right? Maybe some people who use online financial services like Genome would know, but traditional banks don’t have such an option. Well, that’s because the traditional banking sector usually requires days or even weeks to process international payments.

Check out Genome’s features, including cards for advertising: https://genome.eu/cards-for-advertising/ 

We might know what instant payouts are, but are banks going to introduce a new change anytime soon? Or we will be stuck with the same old method and constantly check out the bank account to see if the funds arrived?

Well, the good news is that they are working on making the entire process faster, including cross-border transactions. How? Well, there is a new technology involved, and updating the entire global financial industry takes time. 

The Mechanism Behind Instant Payouts

The key players in the instant payout arena are Real-Time Payments (RTP) and FedNow. RTP, launched by The Clearing House in 2017, and FedNow, a newer system introduced by the Federal Reserve, are designed to facilitate seamless, 24/7 money transfers between financial institutions. These systems allow for two types of transactions: push payments (where the sender initiates) and request for payment​​.

Here’s how it works:

• Initiation: A transaction is initiated by either the sender or receiver through digital platforms like mobile apps or online banking.
• Authorization: The bank verifies the transaction, checks for fraud, and ensures the account balance is sufficient.
• Transfer: The funds are sent through the payment network and are received almost immediately by the recipient’s bank​​.

Why the Fuss About Instant Payouts?

The reasons are manifold, but the overarching themes are speed, security, and convenience. Let’s explore each one.

Speed: Because Who Wants to Wait?

It’s all about the hustle, right? In today’s fast-paced world, waiting for payments can be a drag. Whether you’re a freelancer waiting for your paycheck or a business settling invoices, time is money. 

Security: Keeping Your Money Safe

With speed often comes the worry about security. However, instant payouts are engineered with top-notch security protocols. Financial institutions are leveraging AI and machine learning to detect and prevent fraud in real time, making them less prone to cyber threats than traditional methods​​.

Convenience: Payments Anytime, Anywhere

No more bank hours! Instant payouts operate round-the-clock, unlike ACH transfers that depend on banking hours. Whether it’s a late-night payment or a weekend transaction, your money moves when you want it to​​.

Real-World Applications

Instant payouts aren’t just about personal convenience; they’re transforming industries.

The Gig Economy’s Best Friend

For gig workers and freelancers, instant payouts are a game-changer. A PYMNTS study found that 93% of truck drivers would opt for instant payouts if given the option​. This flexibility allows workers to access their earnings immediately, which can be crucial for daily expenses.

Small Businesses and Cash Flow Management

Small businesses thrive on cash flow. A delay in payments can mean the difference between staying afloat or sinking. With instant payouts, businesses can settle accounts quickly, manage expenses better, and maintain healthier balance sheets​​.

Cross-Border Transactions

Cross-border payments have traditionally been a hassle, with fees and delays. Instant payment systems are breaking down these barriers, allowing for quicker and cheaper international transactions. This innovation is not just making life easier for businesses but also for individuals sending money across borders​​.

Published by: Nelly Chavez