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Craig Ramsey, Head of Real-Time Payments at ACI Worldwide, shares his expertise on real-time payment trends and predictions for 2024 during an interview with The Paypers.
How does ACI support real-time payments?
ACI Worldwide has been supporting real-time payments since 2005, processing hundreds of millions of payments monthly across 26 networks. We provide software solutions to participant banks and central banks, facilitating secure real-time payment processing and offering fraud protection services. ACI also enables real-time payment switches in countries including Indonesia, Malaysia, the Middle East and South America. With more than 130 direct customers globally and indirect bank connections to Zelle and EU’s TIPS, ACI plays a significant role in the real-time payments ecosystem.
What factors are contributing to the widespread adoption of real-time payments worldwide?
Some countries have mature real-time payment systems, while others are growing or just beginning their journey. Maturity doesn’t solely depend on how long real-time payments have existed but on how effectively they’ve been used. For instance, regions like the U.K. and Europe have real-time payments but haven’t fully optimized their potential.
Consumer behavior plays a big role. Many consumers are used to instant gratification of service; they want instant gratification of payments, as well. Younger generations prefer debit cards for their real-time liquidity management, unlike older generations, who rely more on credit cards. Real-time payments eliminate uncertainty about account balances, offering instant clarity. Real-time payment networks often offer cheaper transaction fees, benefiting merchants and corporations, and ultimately lowering service costs for consumers. Government involvement has made an impact, as government payments constitute a significant portion of transactions. Embracing real-time payments enhances liquidity control for individuals and businesses, facilitating faster reuse of funds.
How does real-time payments adoption impact the global economy?
If we can move money faster, we improve liquidity and the economic benefits of that money as it’s moving around. A couple of years ago, there was this unproven statement in the market about the boost real-time payments give to the GDP. ACI did some research that confirmed there is a direct connection between the growth of the GDP and instant payments. As a result, the EU representatives have been very excited about our research because it helped their reasoning and their cases as to why they want to mandate the use of instant payments. We found 1.6%-2.4% of GDP growth directly attributable to the use of real-time payments in a country. Therefore, that’s a good reason why we see almost every country wanting to embrace real-time payments, because it’s an easy boost to the economy, and everyone’s a winner when they use it.
What about benefits for stakeholders, how can banks make money from real-time payments?
Take Brazil, for example. With the introduction of PIX, they’ve seen a whopping 40 million new bank accounts pop up. Now, that’s a lot of folks putting their money into banks. But here’s where it gets interesting for banks: being part of the real-time payments network is like having a golden ticket. It’s not just about the numbers; it’s about what those accounts bring. They present avenues for engaging in lending activities with individuals and small-scale enterprises. Furthermore, managing these accounts facilitates the provision of supplementary services and opportunities for value-added services. So, it’s not just about payments; it’s about opening new revenue streams and staying ahead.
What are the benefits for consumers?
What do real-time payments mean for financial inclusion? Real-time payments bring significant benefits to consumers and promote financial inclusion by offering immediate access to funds, particularly for recipients of social security benefits and those facing urgent financial needs worldwide. Maybe you’re in Florida and a hurricane has just come through your house. You haven’t got a letterbox anymore to receive a check. So, receiving a check through the mail is no longer a reality. Instead, getting that money instantly from your insurance company enables you to promptly pay your builder. Furthermore, real-time payments streamline B2B transactions, facilitating faster trade relationships and prompt settlements, crucial during crises like the pandemic or labor shortages. This agility empowers businesses to establish partnerships and procure supplies promptly, without the constraints of traditional credit processes.
What are your predictions for the direction of real-time payments in the next 12-18 months? What potential developments can we expect to see?
Real-time payments are poised for wider merchant adoption, observed prominently in India, Brazil and Asia. Although Europe and the U.S. lag, there are indications of adoption by major U.S. retailers. In Europe, initiatives like the EPI digital wallet underscore the growing importance of instant payments in settling transactions. While Europe may initially trail the U.S. in merchant adoption, it’s expected to catch up swiftly. The mandated use of real-time payments in Europe is anticipated to foster financial inclusion and literacy, enabling broader access to financial services. Looking ahead, cross-border real-time payments emerge as a key focus. Despite technical feasibility, regulatory challenges pose significant hurdles. Initiatives like Swift’s GPI have alleviated some of these pressures. Regionally, Asia, Africa, South America and the Middle East are positioned to witness initial cross-border implementations, followed by traditional remittance corridors. Subsequently, the integration of central bank digital currencies is envisioned to revolutionize cross-border payments, making a significant milestone in the evolution of real-time payment systems.
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ACI Enterprise Payments Platform 
Craig has over 25 years' experience working with banks throughout EMEA with their corporate payments and banking needs. He has been with ACI for over 12 of those years, providing specialist consulting to wholesale banking customers. Through the initiatives of the Euro, SWIFTNet, CLS, TARGET, TARGET2, SEPA, and UK Faster Payments (amongst others), Craig has helped customers leverage the power of the ACI solutions to ensure that the business needs are met. Craig is currently Head of Real-Time Payments, Product Management. Working with customers, prospects and industry players alike, he helps to ensure that ACI's products are industry-leading and are always ready to help our customers.
