To understand the importance of instant payments, it is essential to examine how payment systems have historically evolved.
For much of the twentieth century, electronic payment infrastructures were built around deferred settlement models. Banks processed payment instructions in batches, typically several times per day. Interbank settlement occurred through central bank systems during specific operating hours.
This model reflected the realities of banking operations at the time. Core banking systems were not designed for continuous processing. Communication networks between banks were slower and less reliable. Liquidity management practices were based on predictable clearing cycles.
Under these conditions, batch processing offered a practical compromise between operational efficiency and technological feasibility.
Large-value payment systems such as RTGS infrastructures provided real-time settlement for high-value transactions between banks, but these systems were not intended for mass retail payments. Retail payment systems continued to rely primarily on deferred settlement processes.
In Europe, for example, SEPA credit transfers typically settle within one business day. In many countries, domestic payment systems historically required even longer settlement times.
For consumers and businesses, these delays were often accepted as part of the banking process. Payment processing times were rarely questioned because few alternatives existed.
However, the emergence of digital commerce fundamentally altered expectations.
Online platforms, mobile applications and global marketplaces introduced a world in which information moves instantly. Consumers became accustomed to real-time interactions across almost every aspect of their digital lives. Social media updates appear instantly. Messages are delivered within seconds. Digital services operate continuously without interruption.
Against this backdrop, traditional payment delays increasingly appeared outdated.
The gap between the speed of digital services and the speed of financial transactions became increasingly visible. This mismatch created pressure for financial institutions to modernise their payment infrastructures.
At the same time, technological innovation began to make real-time payment processing feasible.
Advances in computing power, cloud infrastructure, distributed architectures and high-speed networks made it possible to design systems capable of processing large volumes of transactions within seconds. Messaging standards such as ISO 20022 introduced more flexible and structured communication formats between financial institutions.
Regulators and central banks also began to recognise the potential economic benefits of faster payment systems. Instant payments can improve liquidity circulation within the economy, support digital commerce and enhance financial inclusion.
As a result, many jurisdictions began developing real-time payment infrastructures.
Across Europe, the introduction of SEPA Instant Credit Transfer (SCT Inst) marked a major step toward real-time payments within the euro area. The European Central Bank further supported this development through the launch of the TARGET Instant Payment Settlement (TIPS) platform.
Other regions followed similar paths. The United Kingdom launched Faster Payments, the United States introduced the RTP network and more recently the FedNow system, while numerous countries in Asia and the Middle East implemented their own real-time payment infrastructures.
These systems share a common objective: enabling funds to move between accounts almost instantly, regardless of the time of day.
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