Faster payouts, quicker investments

April 20, 2023

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Faster payouts, quicker investments

The stock market as we know it today began in the 1600s, trading stocks of one of the world's most prominent organisations at the time – the Dutch East India Company. Since then, stock exchanges have been established across the globe: Most notably the New York Stock Exchange (NYSE), and locally, the Johannesburg Stock Exchange (JSE).

While these exchanges and brokerages have their place in the world, disruption in the space has made it even more accessible to retail traders looking for ways to create alternative wealth.

Fast forward to the present, and the space looks much different with the development of retail investing platforms. These platforms allow for non-broker consumers to casually trade in stocks or cryptocurrencies without being excluded from traditional markets.

Technology and Real Time Payments (RTP)

Initially, you needed specialised training and knowledge, along with access and money to take advantage of the stock market. Now, what was previously reserved for stockbrokers has been disrupted by innovations in tech and policies.

Today, disruption has opened the space to allow people with a basic understanding of supply and demand to try their hand at trading. While the evolution in technology wasn’t new, it developed in parallel to the emergence of something that was new: cryptocurrencies.  Platforms such as Robinhood, eToro and Binance are a few big names in the market today which facilitate retail traders in trading cryptocurrencies.

In addition to crypto, retail stock trading platforms such as EasyEquities, Binance and KuCoin are great alternatives for non-broker consumers to casually trade in stocks or cryptocurrencies as another form of building wealth.

The rise of Bitcoin and other alternative coins allowed non-brokers access to what was once a closed loop. As the system opened to ordinary consumers, the untapped potential of these new markets offered customers the possibility of genuine wealth creation.

To put it into perspective, the supposed creator of Bitcoin, Satoshi Nakamoto, holds over 1-million Bitcoin. As of writing this, that equates to R 523.2 billion. While that’s an impressive figure, it would be even more impressive to have access to those funds in an instant and not have to wait for the funds to reflect in your account.

The rise of cryptocurrencies

While RTP has expanded to create incredible accessibility to ordinary customers, it also allowed them to invest quicker, and to receive their money faster through payouts.

What’s interesting in the case of RTP however is the ever-changing security technology around it. In the UK, a recent security measure known as CoP (Confirmation of Payee) has been developed, whereby the account and reference details are checked instantaneously, ensuring that money isn’t paid into the incorrect account.

But much like any expanding financial service, there’s always the risk of fraud. That’s why Ozow places great emphasis on security in everything we do, embedding processes that are PCI-DSS Level 1 compliant. We’re PCI-certified, complying with some of the strictest security protocols.

The impact of faster payouts

Faster payouts or pay-ins facilitated by Third Party Payment Providers (TPPPs) go beyond just making it easier to invest. RTP technology has also allowed for a varied approach to investing.

In volatile markets, for example, RTPs make it easier to access funds quickly in the event of a financial upheaval or complete market crash. It could mean a make or break for your investment and result in the avoidance of potentially catastrophic losses. This also allows you to act on potential opportunities as they arise.

From a transparency perspective, RTPs also give you better monitoring of your funds, as there’s no traditional delay between a payout and receiving the cash. This allows you peace of mind – not only seeing the notification confirming the transaction, but also being able to see it in your account or digital wallet.

Fidelis Chiwara, Ozow’s Head of Client Success in Commercial touches on the convenience of RTP, mentioning that “the sooner you get your money, the sooner you can reinvest it.” He also added that, “this is a great value proposition for merchants too, as faster payouts to consumers allows the customer to spend those funds on their site again.”  

The Central Bank of Brazil experienced this first hand when they launched their own instant payment service, PIX, resulting in a 70% increase in transactions on their platform.  

“Customers’ mentality around investment is that once they invest their money, they’ll have to wait days or longer for a payout,” says Hwan Lee, Ozow’s Head of Partnerships in Commercial. “If merchants or platforms were able to offer instant payouts, their users would be more motivated to invest larger sums of money more frequently.”

Similarly to how those who’ve received an immediate refund are more likely to spend it at the same store, customers are more willing to capitalise and reinvest based on a quick payout.

Faster Payouts with Ozow

Much like investing, RTP has the potential to grow entire economies. According to a report from FIS Global, a financial services provider, India is currently leading the charge as RTP handles over 40-million transactions a day, more than double what it was in 2019. This speaks to the demand for RTP services in not only developed economies, but also those that are currently developing.

But who facilitates the use of RTPs? Third party payment providers (TPPP) and their API technology. This is where Ozow comes in, facilitating transactions between the merchant and customer – and successfully processing hundreds of millions in payouts within the last year.

Our technologies empower our merchants to keep their customers satisfied by offering them faster payouts through a simple, intuitive API.

To find out how we drive business results through Payouts, chat to us today or download our Payout whitepaper.

Staff Writer

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