As evidenced by ACI’s most recent Prime Time for Real-Timeglobal payments report, the real-time payments revolution has taken hold around the world. Consider, in just the past year and a half:
- India’s UPI set a record for monthly transactions with more than 3.5 billion in August 2021
- The U.S. launched its FedNow pilot program to drive real-time payments
- Brazil launched its first ever real-time payments scheme, PIX
- Value-added services such as Request to Pay experienced rapid growth in markets such as Malaysia and the U.K.
While the global pandemic certainly accelerated the demand for faster disbursements, contactless payments and simplified ways to shop from home, the path to real time was firmly established long before.
So, why real-time payments?
Around the world, real time is known by different names — immediate payments, instant payments, faster payments and rapid payments. Each revolves around the idea of sending and accepting payments in the blink of an eye. But the benefits go beyond speed.
For billers and merchants, real time improves liquidity management, payments data and analytics, and cost savings by avoiding interchange fees. These payments are also more convenient, leveraging technologies such as mobile wallets, usage of which grew in all 48 of the markets explored in our Prime Time for Real-Time report.
The current use cases for real-time payments are growing, but mainly center around low-value, person-to-person and consumer-to-business payments. Banks must connect to national real-time payment schemes to both capture these rising volumes and offer customers accurate-to-the-second account information. Real time can also be used to develop further value-added services that create new revenue streams.
We mustn’t forget large corporate needs and high-value payments, however. As ACI’s Chief Product Officer Jeremy Wilmot wrote in our report, “it’s early stages in this process, but there’s no technical reason preventing the infrastructures being put in place from handling payments of millions of dollars. Reserve bank or central government sponsorship inspires ample confidence in the reliability of real-time payments.”
COVID-19 shined a spotlight on the usefulness of real-time payments. Governments in mature markets were better able to work with financial institutions to accelerate the disbursement of stimulus funds. In the U.S., Zelle and Venmo continue to set the standard for payments simplicity — creating new expectations for payments, especially among younger payers.
And, while payment volumes of all types were initially impacted by lockdowns, eCommerce was a standout performer in aiding the recovery of economies throughout the world. In fact, research shows that even grocery shoppers changed their habits to include more online shopping, a trend that we expect will further proliferate the merchant and billing worlds.
From a technical standpoint, governments and regulators continue to flesh out initiatives and mandates aimed at increasing real-time payments development. The adoption of ISO 20022 globally will be another key business driver, allowing connected institutions to gain access to greater payments data, increased security and more opportunities to develop value-added services.
To learn more, visit our real-time payments industry guide featuring the top questions and benefits surrounding real-time payments for banks, merchants and billers.