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Pros and Cons of B2B Real-Time Payments

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Last editedFeb 20232 min read

The payments landscape is constantly evolving thanks to new technologies and trends. While settling invoices used to take several days, you can now send and receive payments far more quickly. Today’s B2B real-time payments help businesses manage their cash flow efficiently, but are there any downsides? In this guide, we’ll discuss the latest real-time payment options along with their advantages and disadvantages.

What is real-time payment?

Real-time payment (RTP) refers to any payment system facilitating an immediate transfer of funds. Payments can be sent and received electronically 24/7 without any working hours restrictions. Many RTP systems also include two-way messaging related to the payment, which streamlines efficiency for B2B companies and consumers. For example, you can send a request for payment, remittance advance, and payment confirmation automatically.

There are many different types of instant payment. For B2C companies, this includes digital wallets like Apple Pay and online services like PayPal that enable digital transactions. Banking apps also offer instant transfers from one account to another.

Most B2B real-time payments use a purpose-built clearing and settling network for immediate transfer of funds and two-way communication. These are separate to a bank’s same-day payments network. While same-day payments are processed together in batches throughout the day, real-time payments are processed individually on this dedicated network. The US uses the Automated Clearing House network, while the UK uses the Faster Payments service.

In Australia, real-time payments can be initiated over the New Payments Platform with its new PayTo service.

Advantages of B2B real-time payments

The benefits of real-time payments are clear for SMEs. Here are just a few of the primary advantages:

1. Improved efficiency

Paper-based payments involve hours of admin. You need to issue invoices, chase up on payments, and reconcile your accounts. With real-time payments, you save time and money on payment collection.

2. Improved cash flow

Rather than waiting days for payments to clear into your account, you have immediate access to your funds. This improves cash flow by ensuring you have the money on hand to pay your own suppliers and staff. 

3. Improved security

Dedicated RTP networks are safe and secure, and with a simplified end-to-end process there’s less chance for manual error. That also makes them less susceptible to fraud, as payments can only be sent over the network with all bank checks in place.

4. Improved global reach

Offering real-time payments is beneficial to both sides of a B2B transaction due to its convenience and speed. This gives businesses a competitive edge in a global marketplace, as you can facilitate overseas transactions and settle them quickly.

5. Improved communications

Two-way communication is built into RTP networks, giving space for payers and recipients to give additional details about the transaction. This clears up any potential misunderstandings in advance.

Disadvantages of B2B real-time payments

As you can see, the benefits of real-time payments are extensive. There’s very little downside to this payment technology, but as with any method there are a few challenges to consider. To begin with, instant settlement will always carry some element of risk because it leaves no time to correct errors. Once the payer initiates the transaction, the funds are sent straight to the recipient’s account. Correcting any errors in the payment can be time-consuming, as the payment will need to be reversed and resent.

There’s also a learning curve with any new form of technology. You’ll need to introduce this form of payment to your customers and staff, with a small investment for training.

Should you use Australian real-time payments?

Overall, using B2B real-time payments is well worth the small effort involved in getting it set up. GoCardless can help with our new PayTo solution, the latest real-time innovation from Australia’s New Payments Platform. This account-to-account technology speeds up the Direct Debit process for real-time settlement. You’ll be able to reduce costs, improve cash flow, and catch failed payments all in real time. Customers can link bank accounts to their subscriptions and bills for 24/7 convenience, every day of the year. This makes it ideal for collecting both one-off and recurring payments, all facilitated by GoCardless.

We can help

GoCardless is a global payments solution that helps you automate payment collection, cutting down on the amount of financial admin your team needs to deal with. Find out how GoCardless can help you with one-off or recurring payments.

Over 70,000 businesses use GoCardless to get paid on time. Learn more about how you can improve payment processing at your business today.

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