Icon Solutions head of payments Tom Hay
Icon Solutions head of payments Tom Hay

Research reveals lower instant payment cost is opening the market

Results of a new study released by real-time payments advisors Lipis Advisors suggests it is economically feasible for small players to invest in instant payments infrastructure.

Implementing instant payments: Insights from early adopters said it is imperative smaller banks choose the proper vendor, as they are more likely to look to that vendor for guidance.

Large, established providers often charged smaller banks 20 percent of implementation costs in annual maintenance fees.

Hardware, software licensing costs and transaction volumes did not typically contribute to ongoing costs over a five-year period, suggesting that smaller banks need not worry about them impacting commercial opportunities provided by instant payments.

Other key findings of the study included:

  • Cumulative project costs over five years can be as low as €500,000
  • Maintenance fees are on average 20% of the initial solution’s cost per year
  • Transaction volumes are not the biggest driver of implementation costs
  • Integration and testing require the largest investment
  • Implementation costs are split between:
    • 40% on hardware and software licensing costs
    • 35% on system integration, configuration and customisation
    • 25% for system testing
Icon Solutions head of payments Tom Hay
Icon Solutions head of payments Tom Hay

“Building a compelling business case has been a major barrier to deployment thus far,” Icon Solutions head of payments Tom Hay said. “This research will help banks understand the approaches, challenges and complexities to aid strategic planning.

“Instant Payments is here to stay and it’s only through enabling small and medium sized banks to connect to national schemes that consumers and businesses across the world will be able to take full advantage of its benefits.”

The report Implementing Instant Payments: Insights from Early Adopters is available for download.

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