A collaborative and accessible ecosystem are crucial tenets for the success of real-time payments.
Enough institutions need to be bought in – whether through mandates or market-driven demand – and systems and infrastructure need to be supportive of new partnerships with non-licensed players who will bring great value and innovation in new strategies.
The report, Prime Time for Real-Time 2024, produced by ACI Worldwide, highlights not only encouraging growth, but consistency therein, such that it represents sustainability and permanence, as markets around the world tap into and thrive on the benefits of real-time payments.
Some of which include greatly reduced risk and greatly improved liquidity when compared to cash and cards respectively.
The report’s forecast couldn’t be heathier- in 2023 just under one fifth (19%) of all electronic payments globally were real time, and this is projected to be more than a quarter (27%) by 2028.
Real-time payments might represent different rails and schemes for payments services providers and some of their clients, but for the end user consumer at large, they are just a faster version of any payment.
Perhaps where the consumer reaps the benefits most tangibly, if unwittingly, is in the expansion of banking and payments services that real-time initiatives have driven.
It is the expansion and increasing ubiquity and accessibility of real-time rails through mobile wallets mostly, that has enabled great leaps in financial inclusion.
Governments globally have been keen proponents of real-time both for this reason as well as improving tax collection and generally fostering more buoyant economies.
Increased financial inclusion brings more commerce to businesses too, of course, but they really benefit from the many more attributes of real-time, i.e. visibility and control.
New Reality
Payment services businesses would be wise to remain at the helm of this “new reality”.
The report shines a light on the five largest markets by volume- in order: India, Brazil, Thailand, China, South Korea. And the key traits they have in common to spell out success.
Institutional, wide-scale backing from governmental bodies and financial authorities, as well as an open and collaborative approach between banks and fintechs to generate momentum for mutual benefit.
This was certainly the case in India and Brazil, the top two growth markets.
Adoption should be made seamless and instant for merchants to stimulate ubiquity, and ubiquity needs to extend to use cases as well, for example, the payment of bills via QR codes and the like.
Free at the first point of service is the trick here: case in point, Brazil’s PIX.
Launched in November 2020 as part of Banco Central do Brasil’s drive towards financial inclusion (by decentralising financial services and increasing competition), PIX enables 24/7 instant A2A transfers and is one of a number of fee-free P2P services, easily integrated into wallets and existing bank systems.
77% of the population now use PIX, according to the report.
India’s UPI- arguably the greatest real-time success story here- similarly took flight thanks to a strong government drive and a collaborative effort among authorities to eradicate cash and stimulate the electronic payment economy.
Ubiquitous reach was achieved through eradication of associated onboarding fees for merchants and through the simplicity of a QR code in most cases.
Furthermore, the democratisation of the financial and payments system in India has paved the way for fast-paced development of overlay services and use cases.
Keeping one eye on the future, perhaps the most important tenet for long-term sustainability, however, as the report mentions, the amelioration of real-time payments cross-border.
Growing volumes of cross-border payments are inevitable and taking stock now of how that can be supported – by all players – will ensure smooth and steady growth.
PAYMENTS CARDS & MOBILE OPINION:
Asia-Pacific will be the barometer for long term cross-border growth and sustainability in the next five years.
How systems expand across its myriad sub-systems of local payment methods and landscape of richly different jurisdictions as regards infrastructure and payments data, will be both educational and benchmark-setting.
Because simultaneously, this region currently plays host to four of the top five global markets for real time payments, as per ACI’s report. The real leapfrog moment will be the expansion of real-time volumes cross-continent.
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