Fast Forward
Real-time payments use case: Unlocking payments on delivery
Welcome to Fast Forward – a series that takes you on a journey into the future of account-to-account (A2A) payments, with a focus on real-time payment developments and the innovations empowering people and businesses with the choice to pay how they want.
Our first Fast Forward talks about a real-time payments use case that can help businesses grow.
How businesses benefit from Payments on Delivery
What’s this use case all about?
Payment on Delivery is one the many use cases of real-time payments. It lets small (and big) businesses pay for goods electronically and instantly at the time they are delivered. It reduces inefficiencies and fosters more seamless transactions.
What does it solve?
In today's busy world, making sure payments are quick and reliable is paramount. Waiting for invoices to go through, dealing with long settlement times, and managing working capital can slow things down. If there's a delay, it can disrupt cash flow and impact how a business runs.
Real-time payments can make a huge difference for businesses by speeding up cash flow management. There’s no need to wait for invoices to process and settle. Suppliers get paid immediately, helping them keep operations running smoothly and efficiently.
Moreover, paying in real-time builds trust and transparency with suppliers. Fewer delays mean fewer disputes, and the process becomes more predictable and reliable. This can help strengthen partnerships and make supply chains more resilient.
Who’s it for?
Really anyone can benefit from paying and getting paid in real-time, but we think this is particularly useful for small businesses whose customers still pay them in cash.
So how does it work?
As a supplier, when delivering goods, a real-time payment request can be sent through their banking channel. Thanks to the account-to-account capability known as Request to Pay, the request is instantly sent to the customer’s financial institution, and the customer receives a notification right away. The customer then gives a quick approval, and the payment is immediately processed. The funds are transferred from the customer’s account to the supplier’s account, ensuring the supplier gets their money right away.
How is it implemented?
With Mastercard’s account-to-account capabilities, markets can transform B2B payments. Request to Pay is an overlay service that can be implemented within an existing real-time payments system.
What’s the big picture?
As banks implement these real-time payment systems, they can help more people access digital financial services. By making transactions simpler and easier, these systems break down barriers and help bring more people into the formal economy, paving the way for a more connected, efficient, and inclusive digital world.
How the ecosystem benefits
Benefits to banks:
- Increased transaction volume: Request-to-pay overlay can streamline the payment process, encouraging more frequent transactions and higher volumes.
- Enhanced business trust: Providing secure and reliable real-time payment options builds trust with business clients, leading to stronger relationships and loyalty.
- New revenue streams: Banks can charge fees for real-time request-to-pay overlay, creating additional income opportunities.
Benefits to businesses:
- Security and trust: Request-to-pay overlay secures transactions, transferring funds only upon inspection of goods or completion of services.
- Improved cash flow management: Businesses and suppliers can better predict and manage their finances with real-time payment visibility and automated reconciliation.
- Reduced financial risk: Payments are made only upon delivery, minimizing risks associated with late payments or unverified goods/services.
- Convenience and flexibility: Instant approvals and real-time payment options allow businesses to manage transactions efficiently and choose when and how to pay.
- Competitive advantage: Offering secure and flexible request-to-pay options attracts more business clients who prioritize efficient payment methods.
- Enhanced business relationships: Providing transparent and reliable payment options boosts trust and satisfaction between buyers and suppliers.
Benefits to central banks:
- Oversight and regulation: Transforming use cases such as payment on delivery, from cash-based to real-time payments, provides central banks with more data and insights into payment flows, aiding in enhanced oversight and regulation of the financial system.
- Support for small businesses: Provides small businesses with immediate cash flow upon delivery of goods, enhancing their liquidity and operational efficiency.
- Promotion of digital economy participation: Encourages broader participation in the digital economy by enabling instant, secure transactions upon delivery, by those who may have previously resorted to using cash.
Why Mastercard account-to-account?
At Mastercard, we’re all about bringing ease and efficiency to everyday transactions. With over 50 years of experience across twelve countries, we're constantly investing in and enhancing our real-time account-to-account capabilities to keep pace with the speed of life. From enabling seamless B2B transactions to frictionless consumer experiences, we’re setting new standards for speed, security, and scale - delivering trusted solutions worldwide.
