Real-time or Instant Payments networks operate 24/7 and provide numerous advantages, across flexibility, enhanced security, cost reduction and instantaneity. They also enable almost immediate money transfers between accounts, enhancing transaction speed, convenience, and efficiency, thereby reducing delays associated with traditional payment processing methods.
With an anticipated 2023-2033 CAGR of 12.2%, instant payments are on track to increase global market position, according to a 2022 study from Future Market Insights (FMI). Market value was estimated at $28 billion in 2023 and predicted to reach up to $125.7 billion by 2033.45
More than 79 countries across six continents have adopted real-time payment systems, representing 63% year-on-year growth and 195 billion transactions in March 2023, according to an ACI Worldwide and Global Data report.
Since 2016, India’s rapidly expanding Unified Payments Interface (UPI) for real-time payments became the largest platform in terms of transaction volume, with 89.5 billion transactions. Following India, other prominent markets which have implemented QR-based payment systems include Brazil, China, Thailand, and South Korea.
Whats the catalyst?
Real-time payments are at the core of the swiftly evolving payment landscape across B2C and B2B payments.
The US Federal Reserve’s June 2023 launch of the instant payments service FedNow signalled a North American inroad into real-time payments adoption. According to an October 2023 update, 107 financial institutions and the US Department of the Treasury’s Bureau of the Fiscal Service were actively using FedNow and offering its services to customers.
A Straits Research study valued the 2022 US B2B payments market at $186 billion and projected it would reach nearly $197 billion in 2023. At that rate, the US B2B payments market value could reach over $390 billion by 2031, for a 7.5% CAGR (2023-2031).49
Survey results from the World Payments Report 2023 indicate that businesses seek streamlined and effective cash management, with 59% of respondents expressing a desire for continuous 24/7 access to their firm’s liquidity position.
51% of business respondents said instant payment services could potentially reduce their organization’s cash conversion cycles.
What’s next?
Instant payments are transforming the sector through quicker settlement times, heightened efficiency, enriched customer experiences, convenience, elevated security, and more effective financial management.
In Q4 2023, Finnish asset manager, bank, and life insurer Aktia selected Swiss enterprise software specialist Temenos to upgrade its payment functions. Aktia Bank will implement the Temenos Payments Hub to introduce pan-European instant payments and centralise its payment rail processing onto a unified platform.
The European Payments Initiative (EPI), backed by Rabobank, BNP Paribas, Groupe BPCE, Credit Agricole, Deutsche Bank, Société Générale, and many other financial institutions across Europe, unveiled its digital wallet solution wero (we + euro) in October 2023.
EPI aims to officially launch wero by mid-2024 in Belgium, France, and Germany, followed by the Netherlands.
The expansion of applications built on instant-payment use cases—such as bill payment, point of sale (POS), and e-commerce—will fuel an increase in transaction volume.
Instant payments will build better customer experiences and help shift customers from more costly check accounts.
For example, individuals can easily split a restaurant bill with friends and receive funds immediately. Businesses – especially small and medium-sized companies – can control cash flow more tightly.
Moreover, by using instant payments, merchants can provide services such as instant refunds, adding to the convenience. Instant payments will also enhance transparency and compliance, optimize working capital cycles, and disrupt traditional payment processors and intermediaries.
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