How APIs power the real-time payments revolution in banking

What drives the development towards instant payments?

To understand the real-time payment revolution, let’s examine the key factors driving this transformation. They can be divided into three categories:

Customer expectations: In today’s on-demand world, consumers expect instant gratification. Just as they stream movies or hail rides at the touch of a button, they expect money transfers to be immediate. This shift represents the natural evolution of payments in our digital age.

Infrastructure evolution: The backbone of real-time payments is provided by networks such as SEPA Instant (EU), FedNow (US), UPI (India) and Faster Payments (UK). These systems create the necessary rails for instant transactions, while APIs make them accessible to banks, fintechs and, ultimately, end users.

Regulatory support: Central banks and regulators are increasingly supportive of real-time payments as a way to modernise financial ecosystems and foster competition. A prime example is the Instant Payment Regulation (IPR), which aims to modernise payment practices in the EU by ensuring that credit transfers are executed within a 10-second window, 24/7/365.

Why APIs are crucial for real-time payment networks

APIs enable seamless integration with real-time payment networks. Several factors make APIs crucial in real-time payments:

• Speed: APIs provide the interface to instantly initiate and confirm payments.
   
• Automation: Businesses can automate cash flow processes, improving liquidity and reducing reliance on manual banking portals.
   
• Transparency: APIs allow for real-time payment tracking, enhancing reconciliation and trust.
   
• Programmability: Developers can integrate payment triggers into various workflows—for instance, paying a driver the moment a delivery is marked complete. 

“New banking APIs are designed and developed using technologies that enable real-time payment processing, in contrast to the older APIs that were designed using a batch oriented architecture,” explains Mikko Päivinen, Domain Architect at Nordea Open Banking. 

“These modern APIs are the enabler of the true instant experience, as they don’t rely on nightly batches. Instead, they open up a real-time ecosystem where data flows instantly and securely between banks, partners and customers,” Mikko concludes.

New opportunities for corporates

The ability for corporates to retrieve transaction data almost instantaneously after it is booked, and to initiate payments executed within 10 seconds, is reshaping the financial market. It opens up new possibilities that were previously out of reach. By leveraging API offerings on the market, corporates can establish fully automated and secure processes, eliminating manual tasks related to both retrieving transaction data and initiating payments.

Maria Dalin, Senior Product Manager at Nordea Open Banking, says: “For some corporates, implementing API integration with their bank has been a game-changer. They gain full control over how and when to access data, which enables them to optimise internal processes and enhance the experience for their end users. Transaction data can be shared instantly with apps, portals, websites—or even displayed in live broadcasts at events, as one of our customers does.”

The ability to provide recipients access to funds within seconds, regardless of their bank or cut-off times, redefines the customer experience. With instant outbound payments, corporates can determine how quickly their customers receive funds. For example, insurance companies can settle claims much faster and more efficiently than before.

“The combination of API integration with instant payments is transforming the financial transaction infrastructure and setting a new industry standard,” Maria concludes.

Challenges to watch out for 

While instant real-time payments are here to stay, there are some challenges to be aware of on this journey into the instant future:

• Interoperability: Different real-time payment systems across regions may lack standardisation, requiring smart API design.
   
• Fraud risks: The irrevocable nature of real-time transactions raises the stakes, making robust fraud prevention via APIs critical.
   
• Bank readiness: Not all banks have real-time rails or mature APIs, potentially creating gaps in end-to-end speed. That is why it is crucial for corporates to choose a bank partner with a broad selection of API services that are built to meet instant requirements.
   
• Local payment infrastructure and ERP/system vendor readiness: Many countries’ payment infrastructures need to be updated to meet the requirements for real-time payment. Similarly, some ERP and system vendors will need to make adjustments to their systems, as not all currently accommodate the new use cases. 

Conclusion: APIs are a perfect fit for real-time payments

Banking APIs are the gateway to realising the full potential of real-time payments. As the infrastructure matures and customer demand for speed grows, API-enabled real-time payments will likely define the next wave of innovation in finance. 

Nordea’s strategy prioritises an “API-first” approach, advising clients to select the best-fitting technologies for their use cases. For example, in the corporate host-to-host world, that could be moving from batch-oriented APIs to instant and event-driven APIs when the use case requires. 

By embracing an API-centric approach, we are better equipped to meet the real-time needs of the future. As real-time payment ecosystems mature, APIs will not only accelerate transactions but redefine how businesses, consumers and banks interact with money itself, turning immediacy into the new default expectation.