A Real-Time Payments Retrospective

Real-time payments growth is accelerating globally — growth that is documented in detail in the 2022 Prime Time for Real-Time report, which covers 53 markets around the world. Beyond the wealth of data — including for the first time a detailed economic impact study — this year’s edition explores the trends shaping real-time and looks at what lies ahead.  

With the latest edition hot off the press, what better time to take a look back at our previous forecasts and see where our expectations were exceeded, and if there were industry expectations that did not materialized as hoped. 

Brazil and the meteoric rise of PIX 

The volume of transactions handled by Brazil’s PIX real-time payments system in 2021, its first year of operation, has massively outperformed the forecast within last year’s report (1.8 billion) with an incredible 8.7 billion transactions. Strong adoption was expected, but the scale of overachievement is testament to the impact of launching new schemes as all-purpose payment services.  

PIX provides consumer access to real-time payments for almost every scenario in everyday life, allowing it to quickly capture P2P and C2B transactions that would otherwise have been cash only in a very informal economy. 

India is still showing the world how it’s done 

Astronomical real-time payment volumes for India’s UPI interface are not new news. However, the growth continues to outperform our forecasters’ best efforts. We’ve now increased our five-year estimates for real-time transaction volumes in India, from 27.5 percent CAGR in last year’s report, up to 33.5 percent for 2021-26.  

Several reasons lie behind UPI’s stunning winning streak. First, it is now the center of an embedded financial ecosystem that is much wider than simply banking and finance apps. Second, it is able to use this position to create a flywheel effect for innovation, generating new use cases to compound its utility for consumers. Look no further than the major upgrades through 2021 and early 2022, which introduce new features including cross-border QR code payments, QR code ATM withdrawals and support for the country’s digital currency, the e-RUPI. 

Request to Pay — ready to breakthrough? 

Request to Pay (R2P) has been tipped for a breakthrough into the mainstream for some time. Now, R2P is finally riding the global success of real-time payments, gaining popularity as a modern capability aligned with end consumers’ digital expectations. It is safe, secure and brings about more control and visibility for consumers and businesses. It is also considered to be a relatively lower-cost method compared to other payment collection solutions. And, it has become an entry-level requirement for new real-time schemes around the world.  

With many markets around the world now in possession of the infrastructure and know-how required to make for a seamless R2P user experience, many of our experts are tipping 2022 to finally be the year. The go-live of R2P in the U.K. in 2021 shows that even mature markets are continuing to add value to their real-time payments ecosystem.  

Peru paves the way for modernization 

Peru is in the early stages of upgrading its first-generation real-time payments scheme in response to faster and larger-than-expected growth in real-time payment volumes. Our forecast for 2021 was 24 million transactions, but in fact it reached an incredible total of 63.7 million transactions. Among the updates to the system are a move to genuine immediate clearing and settlement and 24/7/365 availability.  

With most of Peru’s banks already signed up to the scheme, and a concerted effort underway to bring down the country’s unbanked population, this is expected to almost immediately unlock additional growth. More broadly, Peru’s experience is illustrative of the modernization needs of first-generation, real time schemes. Many of these have suddenly experienced rapid growth, due to changing consumer expectations, plus a COVID boost to adoption. This in turn has laid bare the need to modernize in line with technological advances since the scheme first launched (such as mobile banking and ISO 20022). 

B2B real-time payments are still to take off 

Despite several years of expectations that real-time B2B payments would take off, and solidify revenue-generating opportunities, usage remains low. Transaction limits are one culprit, with generally low limits still making the expensive RTGS system the only viable option in many cases. Corporate B2B payments are also typically a high-care service with repair, verify and extra security checks, which are valued by corporates; while real-time payments have less touchpoints and can be considered more consumer-focused by banks. And with RTGS services carrying a higher margin, it would be little surprise if banks were protective of them (though this wouldn’t be sustainable for long, as customer awareness of cheaper and faster services grows).  

Ultimately, the business case for real-time payments is as much about staying relevant with customer expectations as it is about driving revenue. So rather than corporates having to forego the high-care RTGS experience in exchange for the benefits of real-time payments, they should have the flexibility to choose based on different payment needs. 

Back to the future… of real-time 

There’s a reason why it’s called forecasting… and just like with the weather, it’s always a pleasant surprise when it turns out better than expected. It will be exciting to see in the year ahead how real-time payments continue to evolve and which markets really hit their stride.

And this time next year, we’ll be look back at the freshly-minted 2022 Prime Time for Real-Time report, with the benefit of 20/20 hindsight, to take stock of the hits and misses.