Katrin Boettger: ACI Worldwide and GlobalData recently launched Prime Time for Real-Time, a new global report tracking and analyzing real-time payments volumes. Why is this new industry research so important?
Craig Ramsey: The report is the most far-reaching research ever undertaken into the world of real-time payments, tracking growth and dynamics across 30 important global markets. Crucially, the report outlines the five strongest indicators of a market’s real-time payments success. Recognizing the key indicators of real-time adoption or further real-time growth is critical to getting ahead of the competitive curve. These indicators suggest what needs to be done to unleash the potential of real-time payments and will empower stakeholders to make the right decisions.
KB: It was the first time that ACI discussed the report with a wide group of industry stakeholders. What were the most important takeaways for you?
CR: The discussion confirmed that the COVID-19 pandemic, which has already led to massive changes in business and consumer behavior, is accelerating the adoption of digital payments and the interest in real-time payments across the globe. For example, 36 percent of the webinar’s participants had seen an increase in digital transaction volumes over the last few months, and almost half (47 percent) a shift of transactions across digital channels. The crisis is likely to lead to long-term behavioral changes and businesses need to adapt their strategies accordingly.
KB: What does this all mean for the future of payments and banks, merchants and other stakeholders across the payments ecosystem?
Ruth Fornell: The key messages of our study — real-time is here, real-time is an opportunity for all payment players and real-time is driving increased digital transaction volumes — are more relevant than ever before. Many merchants are likely to continue to increase acceptance of electronic payments, and real-time payments could offer a cheaper, faster way to pay than cards, which have interchange fees and slower settlement to the merchant. In the near-term, we expect to see greater innovation, and the launch of many more payment services into the market to capitalize on the shift away from cash.
KB: How can banks and merchants prepare for the seismic shifts that are likely to come?
RF: For me there are several important takeaways. First, if your business is not planning to invest in alternative payment methods, including real-time payments, you may not keep up with the competition. And you may risk losing customers over the short or long term. Second, data suggests that the growth in real-time payments goes hand in hand with the growth in other payment methods; for example, we are still seeing growth in cards. Third, if you want to accelerate the growth of real-time, you need to create incentives to drive that shift. And finally, fraud — new payment types bring along new fraud types with them. Investing in the right fraud prevention is therefore a crucial element of any shift towards real-time payments.
The good news is that many stakeholders are investing in real-time with the clear ambition to derive more value from it. Asked why they are investing in real-time, half of the respondents during our webinar said they are planning to develop new value-added services as a competitive differentiator.
KB: Let’s talk about those value-added services, or digital overlay services, what’s driving the adoption?
Leo Lipis: Countries that have seen early adoption of real-time payments seem to be leading in terms of adoption of digital overlay services. The U.K. has launched a number of successful B2B services for example, while P2P services are popular in Sweden. India is arguably the country that has seen the most successful adoption of overlay services so far, and it is also the country with the most explosive growth in transaction volumes. There are a variety of ways in which countries will benefit from real-time payments; banks need to take a view on what they want to focus on, whether financial inclusion, digitization or B2B payments, and then develop use cases accordingly.
KB: The report outlines several indicators of a market’s real-time payments success. What are the key factors?
CR: One key factor for countrywide change is the backing of a motivated market force for a real-time scheme, whether governmental or collaborative stakeholders. Real-time growth is also strong in markets where access to easy-to-use payment types exists for both business and consumer users. When a market has broad ecosystem acceptance, combined with the convenience of rich overlay services and strong functionality, real-time payments can grow significantly.