What is an instant transfer?

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Nick Knuppe
Head of Product Marketing
Customer-centric marketer, fanatical about GTM.

You may not have the luxury of waiting a few days for a payment to clear if your business needs cash.

This is where instant transfers can help. They provide a way to access your funds immediately when customers pay using payment services such as Mollie. This blog post will explain instant transfers and how you can use them to grow your business.

What is an instant transfer?

An instant transfer, also known as an instant payment, allows your customers to make payments into your account instantly. This is more convenient and provides a faster alternative to traditional transfer methods, which can take several days.

How does instant transfer work?

The instant transfer process is straightforward. All you need is a linked bank account or debit card (Mastercard or Visa) and a digital banking system to send money. The service is usually available 24/7, so you can receive money instantly at any time.

Instant transfer vs. traditional transfer

It helps to understand how instant transfers work by knowing the fundamental processes of traditional transfers. So, let's quickly compare the two.

Traditional transfer

Traditional transfers are also known as wire transfers. They involve sending and receiving money electronically from one bank to another via a network. The Society for Worldwide Interbank Financial Telecommunication (SWIFT), Automatic Clearing House (ACH transfers), and Fedwire in the United States are traditional transfer networks. You can also use a nonbank method to transfer money, such as Western Union or TransferWise.

It's possible to receive payment on the same day if you and the payee are based in the same country. However, international transfers can take between 2-10 days to complete, depending on the circumstances. 

The primary cause for delayed payments in traditional transfers is the batch payment processing system. Banks have designated times for processing payments, and they do it in batches.

This means it doesn't matter when the sender makes a transaction. Their bank will process it at their designated time, which may not be in your (the receiver) favour. 

Factors that influence the time it takes for a write transfer to clear:

  • Global disruptions such as the Covid-19 pandemic

  • Local and international bank holidays

  • Transactions made on a weekend

  • Time zone differences

  • Incomplete information

The required paperwork changes depending on the bank used when carrying out a wire transfer. However, the standard information that the sender must submit to the bank is the bank name, account number, and routing number. 

Making large transfers may require extra steps. For example, banks often need the sender to visit their branch, which can be inconvenient. Transfer fees can add up, making it more expensive for the sender.

Instant transfer

While traditional transfers take a day or more, instant transfers happen immediately, usually within seconds. The difference in transfer timelines is due to batch and real-time payment processing.

Traditional transfers rely on batch payment processing, meaning the banks process and complete transactions according to their schedule. However, real-time payment processing is instant. That means you don't have to wait for more than a day to have your money.

Benefits of instant transfer

Instant transfers are becoming more popular globally because of their convenience. Consumers have access to instant transfer services to make payments anytime.

Using instant transfers means you'll receive your payments on time as a business owner. This allows you to take care of your business needs, including purchasing new inventory and settling bills. However, waiting for a payment to complete can be a headache when you have limited cash flow because of delayed local and international wire transfers.

Instant transfers are also more affordable than traditional wire transfers. It can cost between €9 and €44 to complete a traditional transfer. Alternatively, you only pay a €0.20 minimum fee (or some small percentage of the balance) for an instant transfer. Because Germany, for example, is part of SEPA, you can transfer money between German banks and other SEPA countries for the same fee as local transfers.

So, are instant transfers right for your business? The benefits are clear, and many entrepreneurs prefer receiving payments instantly rather than waiting days for them to complete. But, there are some drawbacks to instant transfers. We will address these in the next section.

Instant transfer risks

There are risks with all forms of moving money, not just instant transfers. For example, real-time payment processing takes place online, increasing the chance of fraud. The risk is high because fraudsters can instantly transfer funds to their accounts without detection.

Instant transfers are susceptible to various scam tactics. Below are some which fraudsters use:

  • CEO fraud

  • Mandate fraud

  • Fake invoice fraud

  • Money mules

  • Account takeover (ATO) fraud

  • Authorised push payment (APP) fraud

What is SEPA Instant?

SEPA Instant is an initiative of the European Payments Council (EPC) that can be used to speed up payments in the eurozone area. SEPA Instant is an instant payment service used by businesses and consumers in Europe. Below are the key features of SEPA Instant.

  • Available 24 hours a day, 7 days a week

  • Recipients should receive payments in under 10 seconds

  • €100,000 maximum transfer amount per transaction

Make instant transfers easy with Mollie

Cash flow is the bloodline of every thriving ecommerce business. It's frustrating to wait for days to receive payments from your customers. Luckily, you can avoid the hassle of delayed payments by switching to instant transfer payments. Learn more about using payments with Mollie to grow your business, or get in touch via our contact page.

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