Turbo transfer with the savings banks

Why does some bank transfer take so long when you can exchange data in seconds? That is now changing for millions of savings bank customers.

The Sparkasse is one of the pioneers in real-time transfers.

Se since November, transfers from account to account have been technically possible in Europe within seconds. After Hypovereinsbank (HVB), the savings banks have also been offering such real-time transfers, also known as instant payments, since Tuesday.

What does “real time” mean?

So far, it has been common in the banking industry to collect transfers and process them in batches. Orders that customers place online are also usually executed with a delay. With real-time transfers, the providers promise that the money will be transferred from one account to the other within ten seconds. The Bundesbank makes it clear: “Payment service providers that offer instant transfers must be available around the clock, every day of the year, to process these payments.”

Since when have there been real-time transfers?

In Europe, the “SCT Inst” called “SCT Inst” fast transfers have been possible since November 21, 2017. “When we processed our first transaction from Germany to Italy in 2.5 seconds, we were really proud,” remembers Gerhard Bystricky, who is in charge of product development in payment transactions at HVB. Even today, more than 95 percent of real-time transfers are carried out in less than three seconds. Since November 27, HVB customers have been able to place transfers in real time via regular online banking.

What do customers get out of it?

“The big advantage of instant payments is that, unlike a paper transfer or a conventional online transfer, you know straight away whether the money has arrived. Because the receiving bank has to issue a confirmation, ”explains Ernst Stahl from the University of Regensburg. For example, anyone who sells their old car privately has so far at least had to take into account the risk that the buyer will not pay. If the transaction were processed via real-time payment, the seller would have the certainty that the money is in his account.

Those who shop online also have advantages: the faster the retailer has the money, the faster the goods will be shipped. Stahl also sees great potential for companies: when handing over goods, especially to new customers abroad, a freight forwarder could ask for payment before the truck is unloaded. However, there is currently an upper limit of 15,000 euros for real-time transfers.

Which German banks are participating?

For a long time, HVB was alone in Germany. As a result, the options for use were limited: real-time payments only work if the recipient’s bank also offers them. From July 10th, around 50 million customers of the 385 savings banks in Germany will be able to use it.

Will the savings banks enter the market bring about a breakthrough?

“This is a very important step for the German market,” says Oliver Hommel of the Accenture management consultancy. “But for a real breakthrough it would be necessary for other banks and banking groups to follow suit.” The Volksbank and Raiffeisenbanken want to create the technical prerequisites by the end of November, and in 2019 it should start for customers. “We are convinced that in the long term, i.e. in five to ten years, Instant Payments will completely replace normal transfers, because it makes no sense for the institutes to offer two parallel systems,” says Hommel.

How is it in Europe?

According to an overview by EBA Clearing from June, 22 institutions in 12 countries currently offer real-time transfers. If you add the institutions that have clearly positioned themselves to participate in the process, you potentially have almost 1,100 payment service providers in 15 countries. The Sepa payment area (“Single Euro Payments Area”), which is intended to standardize and accelerate cross-border transfers, direct debits and card payments, comprises 34 countries with a total of 4,200 payment service providers: In addition to the 28 EU countries, there are Iceland, Liechtenstein, Norway, Switzerland and Monaco and San Marino there.

Does the new service cost anything?

It depends on the account model. Some savings banks estimate 50 cents per transaction – that is “of course not conducive to the whole topic of instant payments,” says expert Stahl.

What if there are problems with real-time transfers?

In a study from 2016, the Regensburg scientists warned about Stahl: “In the event of an unknowingly or accidentally made transfer – as happens, for example, in a hacker or phishing attack – the transaction cannot be reversed and the transferred amount is lost.” Banks assure that it is possible to get back an erroneously transferred amount, as with a conventional transfer. “If the wrong amount is typed in, the money is gone for the time being. In such a case, the customer can make a normal transfer recall, ”says HVB man Bystricky.