Instant payment (Ofer Abarbanel online library)

Instant payment is a new way to exchange money and purchase services in seconds. Compared with wire transfers, they allow the transfer of money from the payer bank account to the payee bank account almost immediately, instead of requiring a few business days. These payment systems have been developed (and are currently under development) worldwide, as the need of faster and reliable transaction is the new economy’s common requirement.

The Euro Retail Payments Board (ERPB) has provided a widely accepted definition of instant payments, that are: “electronic retail payment solutions available 24/7/365 and resulting in the immediate or close-to-immediate interbank clearing of the transaction and crediting of the payee’s account with confirmation to the payer (within seconds of payment initiation).” [1]


The growth of e-commerce has caused changes in people’s spending patterns. Shopping is no longer confined to regular business hours, creating new challenges for funds transfers.[2] Similarly, merchants require faster and more reliable money transfer systems to keep up with consumers’ demands.[3]

Traditional electronic payments like wire transfers, that perform the electronic funds transfer within few business days, are not in line with user expectations. It is predicted [4] that, in the next year, instant payments will become the standard for electronic fund transfers, where customers will be able to digitally access their insurers and manage their funds [5].


In 2017, Walmart, America’s largest retailer, announced that it will start offering instant payments to its employees via a digtial application, enabling them to access a portion of wages for the hours they have already worked. [6]

In 2018, the on-demand delivery network Postmates partnered with Visa to enable real-time funds disbursement to their entire fleet. The new feature, called “Instant Deposits” runs on Visa Direct, Visa’s real-time push payment platform, and is available to the entire Postmate fleet across the United States.[7]

Examples of instant payment services

A non-exhaustive list of systems available today, and in the near future, is the following:[8]

  • Japan, ZENGIN,[9]deployed in 1973;
  • China, IBPS – Internet banking payment system,[10]deployed in 2010;
  • India, IMPS – Immediate Payment Service,[11]deployed in 2010;
  • United States, Zelle,[12]available since 2016;
  • United States, Venmo,[13]available since 2018;
  • United States, RTP – Real-Time Payments,[14]available since 2017;
  • Europe, RT1,[15]available since November 2017;
  • Europe, TIPS – TARGET Instant Payments Settlement,[16][17]available from November 2018;
  • Australia, NPP – New Payments Platform,[18]available since February 2018.
  • Sweden, Swish, since 2012 ; Denmark, MobilePay, since 2013 and Norway, Vipps, since 2015 – these three systems have got more than half of the respective country population as users, and has together with debit cards made many stop using cash in these countries.
  • The Netherlands, Dutch Payment Association,[19]Rollout completed on September 10, 2019 allowing payment within 5 seconds.

Comparison with digital wallets

In digital wallet based payment systems like Paytm, PayPal, Apple Pay, AliPay, WeChat Pay etc. users receive immediate notification of the transaction, but funds are transferred at best in the next business day. The settlement time depends on the underpinning payment method chosen by the customer, while for instant payment systems, the funds are transferred within seconds or minutes.


  1. ^“Instant payments definition”. European Central Bank. 2017. Retrieved 8 September 2018.
  2. ^“Digital transformation of the retail payments ecosystem” (PDF). Banca d’Italia. 30 November 2017. p. 3. Retrieved 2 September 2018.
  3. ^“What are instant payments?”. InstaPay. 2018. Retrieved 2 September 2018.
  4. ^PYMNTS (1 January 2019). “2019: The Year Of Instant Payments”. Retrieved 20 August 2019.
  5. ^“Instant payments are the future – here’s why”. Nordea. 2018. Retrieved 2 September 2018.
  6. ^PYMNTS (14 December 2017). “Walmart Pays Workers In Real Time”. Retrieved 20 August 2019.
  7. ^“Visa, Postmates to deliver instant payouts to delivery drivers”. PaymentsSource. Retrieved 20 August 2019.
  8. ^“Instapay Tracker”. InstaPay. 2018. Retrieved 2 September 2018.
  9. ^“Zenging system”. Japanese Bank’s Payment Clearing Network. 2012. Retrieved 2 September 2018.
  10. ^“Payment, clearing and settlement systems in China” (PDF). Bank for International Settlements. 2012. p. 24. Retrieved 2 September 2018.
  11. ^“Immediate Payment Service – Frequently Asked Questions”. State Bank of India. Retrieved 2 September 2018.
  12. ^“Introducing Zelle”. Early Warning Services LLC. 2018. Retrieved 2 September 2018.
  13. ^“Send money and make purchases at approved merchants”. Venmo. 2018. Retrieved 8 September 2018.
  14. ^“RTP”. The Clearing House – RTP. 2018. Retrieved 2 September 2018.
  15. ^“EBA CLEARING’s instant payment activities”. EBA Clearing. 2017. Retrieved 2 September 2018.
  16. ^“TARGET Instant Payments Settlement” (PDF). European Centeal Bank. 9 February 2017. Retrieved 2 September 2018.
  17. ^Karen Birkel; Lorenzo Giammò (13 December 2017). “TARGET Instant Payment Settlement” (PDF). European Central Bank. Retrieved 2 September2018.
  18. ^“New Payments Platform”. reserve Bank of Australia. 2018. Retrieved 2 September 2018.
  19. ^“Razendsnel online overboeken, 24 uur per dag, 7 dagen per week”. Betaalvereniging Nederland. 2019. Retrieved 10 September 2019.


Ofer Abarbanel online library