Instant payments herald a new era in payment transactions. But they also pose risks.
Pascal Michel / ch media
A QR invoice is processed with an instant payment within seconds.Image: Laurent Gillieron/ Keystone
In the banking country of Switzerland, moving money is a time-consuming process. Even in the digital age. Recipients have to wait hours, if not days, for their money. That is now set to change. Swiss banks are now offering instant payments. They are set to be made within 10 seconds.
What’s new about instant payments?
In spring 2023, Thomas Moser was given the task of introducing Switzerland to “the future of cashless payment transactions.” It was about the planned introduction of so-called instant payments. In order to clearly explain how they work, the deputy member of the Governing Board of the Swiss National Bank (SNB) chose to compare it with the well-known payment solution Twint. “If you twink money, it is credited to the account of the person receiving the payment in real time,” explained Moser.
Thomas Moser.Bild: keystone
But with Twint, the customer who receives money can access it immediately. The customer experience suggests that the money is transferred between accounts in a matter of seconds. But in the background, it actually takes a while for the banks involved to transfer the funds. This generates credit risks that need to be hedged. Customers feel this through fees.
This is where instant payments come into play, which have been possible in Switzerland since August 20th. Bank payments in the background are now processed in real time – or in a maximum of 10 seconds. The maximum amount is 20,000 francs.
This means that for the first time, money can be transferred around the clock, on holidays and at weekends. Online payments have the same quality as cash, at least for end customers: there is also an “immediate final transfer of value”, as the SNB puts it. Thomas Moser of the SNB is convinced that this “upgraded Twitten” will soon become the standard.
By the way: Twint also plans to offer instant payments soon.
Why is this even necessary?
According to the developers – the SNB and the stock exchange operator SIX – the technology has many advantages: Banks can reduce their risks. A trader receives the proceeds from a sale immediately and can reinvest it. Cross-border payments can be simplified. Instant payments have been available in many EU countries since 2017.
Which banks offer the new feature?
Since August 20, around 60 Swiss financial institutions have been accepting this type of payment. According to the SNB, this covers more than 95 percent of Swiss customer payment transactions. All Swiss banks must offer the service by the end of 2026 at the latest. The number of banks that make instant payments is manageable so far. However, according to the SNB, more institutions will be added in the coming months.
How exactly does this work in everyday life?
The Raiffeisen Group, for example, has integrated instant payments into its e-banking system. Customers are now asked in the payment screen whether they would like to use the option. “Since instant payments result in the amount being debited from the account immediately, customers are also asked during the payment process whether they really want to make the payment immediately,” says Raiffeisen.
How much does immediate payment cost me as a customer?
The amount of the fees varies greatly. The leader is the major bank UBS. It charges a full five francs for making an immediate payment – regardless of the amount. According to the comparison service Moneyland, there are much cheaper alternatives: Berner Kantonalbank or Hypothekarbank Lenzburg do not charge any fees. The Raiffeisen Group recommends that its cooperatives offer twelve payments a year free of charge. Those who use the service more frequently should pay 2 francs, and corporate customers 50 centimes.
Are instant payments an alternative to cards and their unpopular fees?
In fact, in the future, a dealer could rely on instant payments instead of debit or credit cards. For example, a car dealer could hand a customer a QR invoice for 15,000 francs for a used car. The customer scans it and triggers an instant payment. The dealer can see within seconds whether the money has arrived and can hand over the car keys.
How attractive such an instant payment is for both sides depends on the fees. Today, the merchant can receive the instant money for free. The solution is interesting for them because they can avoid having to go through the payment processors and card companies. However, the question is whether the customer is prepared to pay up to five francs for the instant payment, depending on the bank. And: the major payment processors, such as Visa and Mastercard, have not remained idle either. They already offer their own instant services. One thing is clear: the existing card fees are likely to come under even greater pressure.
What dangers are there?
“Instant payment also makes instant fraud possible,” said Romano Ramanti, “ethical hacker” at the Zurich Cantonal Bank (ZKB), at a seminar on the risks of the new payment method. In fact, real-time payment does not only have advantages for the customer. Fraudsters also take advantage of the technology. While their tricks have hardly changed – the criminals pose as fake police officers, for example – they are now pressuring their victims to make instant payments.
The advantage for the criminals: They receive the money immediately and the victim can no longer stop the transaction, even if they realise just minutes later that they have fallen for a trick. The UK shows how tempting this is for fraudsters.
A “fraud epidemic” has broken out there since the technology was introduced. In 2021 alone, the amount stolen through instant payments in the Kingdom amounted to 583 million pounds. The supervisory authority reacted and ordered the banks involved to refund the amount stolen. Against this background, Swiss banks are now also being called upon to increase their security measures. And customers should remain vigilant. (aargauerzeitung.ch)
This might also interest you:
The military service provider Ruag is cutting up to 35 jobs. The central innovation organization will be dissolved at the end of the year. Instead, eleven new jobs will be created at the Lausanne site, the company announced on Friday.
