It’s a telling description of the payments industry when Bloomberg’s September 2019 panel discussion The Future of Payments remarked on an “era of instant gratification” where people expect payments to be “invisible and painless”.
That the traditional banking and finance system that governs much of our world continues to talk about real-time payments as a not-so-distant yet not-quite-there-yet financial innovation suggests that the old world of money is a long ways off from solving that age-old customer pain point of instant payments.
Traditional finance continues to lag in the instant payments sector
According to the European Central Bank: “Instant payments are electronic retail payment solutions that process payments in real time, 24 hours a day, 365 days a year, where the funds are made available immediately for use by the recipient.”
This definition already puts forth at least three obstacles to achieving instant payments — instantaneous settlements, round-the clock availability, and immediate utility of recipient funds.
Of these, only 24/7, 365 days a year has been solved by private networks like Visa and Mastercard — although even they have crashed for days at a time in recent years, causing payment chaos throughout the world in 2018 (Visa) and in 2019 (Mastercard) when either network suffered total outages. But banks and other payment processors using differing kinds of digital money like Paypal and Western Union still take bank holidays and weekends, leaving customers waiting during these regular downtimes.
The same Visa and Mastercard together form the largest payment network in the world and already achieve near-instant payment for local transactions. But cross-border payments can take days to settle, with the system normally debiting a larger amount in anticipation of forex rates, and then returning the difference in credit days later.
Other networks like SEPA also achieve instant transaction within national borders, but even SEPA can take up to three business days to transfer euros between banks within the European Union and EEA. the same can be said for global bank payments network SWIFT.
Finally, we talk about immediate utility of funds, which is probably where traditional payment methods score the worse. Here, it isn’t just consumers who are affected – merchants feel the burn too, since most payment methods, even when settled, don’t allow recipients to spend the funds immediately due to the various features like credit card or PayPal chargebacks, bank wire or payment reversals, or worse, double spending (the fraudulent attempt of spending the same funds at two places). As a result, banks, credit cards, and even digital payment providers like PayPal normally place a holding time on balances received.
Cryptocurrency: A decade of instant payments
Bitcoin’s emergence on the scene wasn’t simply about a technologically superior form of money. Sure, its decentralization, pseudonymity, and security were all incredible innovations in themselves, but for the payments industry, Bitcoin essentially turned the tide in the battle to achieve instant payments.
A Bitcoin transaction is immediate: and while 10 minutes is the average confirmation time for it, most merchants and users are happy to accept the immediate transaction as payment, confident in the secure network that guarantees eventual confirmation for non-malicious actors.
Bitcoin is truly 24/7, and it has never been down a single moment from the day it was launched. This is the true power of a decentralized network, where the network is not reliant on a few servers and people to switch them on, but on thousands upon thousands of computers all over the world ensuring the network is always available.
Finally, Bitcoin transactions can never be reversed, can never be intercepted, can realistically never be double spent, ensuring the recipient can always use their funds immediately.
The gambling industry as an early adopter
One of the quickest sectors to recognize the potential of crypto’s instant payments has been online gaming, with crypto casinos such as Pnxbet even making instant transactions part of their unique selling proposition.
Pnxbet, which runs a casino and sportsbook, has been focusing its expansion in South-East Asia and CIS countries, capitalizing on the particular lack of access in these regions to international methods of instant payments.
The ability to deposit, play and then withdraw crypto funds almost instantaneously has proven to be a hit with these players, especially during the pandemic period. Its fledgling eSports market saw over $117 million worth of bets placed to take growth to 560%, as users from CIS and South-East Asia swelled to 100,000.
Using crypto has also allowed crypto casinos to drastically lower their overheads, enabling them to offer bonuses land-based ones would kill to afford. Welcome bonuses up to $500 aren’t unheard of in crypto gaming.
Crypto’s winning ability to pay out instantly — Pnxbet gave out $42 million in winnings since launching — puts things in a winner’s perspective for the online gambling industry. People want instant gratification and they will use crypto to get that.