Why Merchants Can’t Afford to Ignore Instant Payments

For card funding and other uses, real-time money movement is fast turning into a must-have.

For years, merchants have accepted a frustrating truth. After making a sale and accepting a card payment, they often wait days—sometimes longer—to actually receive their money as it is transferred from the card acquirer to the merchant’s bank account.

Traditional payment methods used for merchant payouts, such as the automated clearinghouse and wire transfers, come with built-in delays and uncertainty, creating cash-flow headaches and making it harder for merchants to manage their daily business operations.

But what if merchants could receive their payouts in real time? Enter instant payments.

With instant payments, a business can access its funds immediately, eliminating payout delays and gaining real-time visibility into its cash flow. Equipped with payment confirmation, enhanced-messaging capabilities, and safe and secure money movement, instant payments provide a user with a level of transparency and efficiency not offered by other payment options. Even better, a business owner doesn’t need to wait for traditional banking hours or worry about processing times —instant payments move money 24/7, 365 days a year.

Merchants are taking notice. In 2024, merchant payouts accounted for 14% of instant payments on the RTP network, signaling a shift toward faster, more efficient transactions.

How exactly can merchants leverage instant payments to transform their business? Beyond its instant availability, real-time payments can help merchants improve cash-flow management, reduce costly errors, and even unlock new revenue and customer-retention opportunities.

Merchants should take notice of these important ways instant payments can bring their business a competitive advantage.

Improved cash flow management

Without precise control and visibility over when a payment is sent and received, merchants are unable to efficiently manage their cash flows. Instant payments allow merchants to make payments and receive deposits 24/7, meaning that they can pay bills or purchase inventory outside of normal business hours.

Small and medium-sized businesses often cite having access to payment options outside of normal banking hours as a key feature they need to run their business efficiently.

Merchants can improve how they manage their working capital when they gain access to their funds immediately. For instance, imagine a customer paid a small business $10,000 via credit card through a traditional payment rail on the Saturday after Thanksgiving. The merchant may not gain access to those funds until Monday at the earliest.

However, with instant payments through its merchant acquirer, the merchant can receive payouts immediately. It’s an essential difference. The merchant now has immediate access to the capital needed to pay employees, suppliers, utilities, and other bills after normal banking hours, over the weekend, or on holidays.

Instant payments also eliminate credit holds and reduce the risk of paying late fees for various financial obligations. Alternatively, if a merchant has already fulfilled these obligations, it has the ability to fund an investment account one or two days earlier.

With greater visibility into cash flows, merchants and merchant settlement providers can make more accurate cash forecasting assessments and free up funds to maximize working capital. When merchants receive funds immediately, they have greater control, predictability, and flexibility over their cash management to better support their business needs.

Fewer error-induced delays

Thanks to the real-time nature of instant payments, merchants no longer need to face the potential delays associated with detecting inaccuracies hours or days after a transaction has been made. Errors aren’t uncommon. Some of the most frequent transaction issues include bank-account information changes and total settlement-amount discrepancies. In fact, merchants entering incorrect details is one of the top three causes of transaction errors.

However, with instant payments, merchant processors can detect and correct these issues the same day the transaction was made, ensuring a more seamless payment experience and eliminating the risk of locking up needed cash flow.

All business owners across the U.S. understand the importance of cash flow and the need for fast funding to keep their enterprises running. Unfortunately, through traditional payment methods, the payout from a batch of credit card transactions can take days to be deposited into their accounts.

Business owners know this delay prevents them from investing in new areas of their business or having complete control over their cash-flow planning. By opting for instant payout services, which are available 24/7, for credit card settlement deposits, merchants know that their funds will be available when needed.

Instant payments also have the ability to provide a better overall customer experience. As consumers and small businesses increasingly expect instant access to their funds, businesses can also provide this service to customers as a more efficient way to disburse refunds and help improve the customer experience.

For merchants, new offerings and instant refunds aid in meeting customers’ expectations in this modern, 24/7 economy and build better customer relationships.

Implementing Instant Payments

The immediate payment confirmation, irrevocability, 24/7 availability, and messaging capabilities of instant payments provide business owners with the peace of mind that their payment was received. Instant payments have become table stakes across industries, and businesses need them to have better cash-flow predictability, eliminate back-office costs, and improve the customer experience.

Long gone are the days when merchants need to wait for their money to be paid out, causing financial strain and stress when it comes to paying bills and ordering supplies on time. By gaining access to their funds instantly, merchants can then focus on new business opportunities and better serving their customers.

Merchants can start implementing instant payments for payouts by speaking with their banks and merchant acquirers to request instant-payments capabilities and ensure their financial institution meets their organizations’ overall objectives, payment strategy, and customer needs.

—Cheryl Gurz is vice president, RTP Product Management, at The Clearing House Payments Co.