Surging demand for digital payment methods suggests that the use of real-time payments is about to mushroom, according to new research from ACI Worldwide.
The electronic payments company said it expected global real-time payments to grow at a compound annual growth rate of 23.4% between 2019 and 2024. In the United States, the anticipated compound annual growth rate was 42.1%.
“Recent events have given digital payments mainstream attention, and faster access to funds for individuals and small business has never been more critical,” ACI Worldwide Banks & Intermediaries group president Jeremy Wilmot said. “The financial inclusion benefits of payments digitalization, including the launch of real-time payments, should not be overlooked, and they should be considered in tandem with national and global economic benefits. We see that internet access is now a necessity, and the ability to transact online is inextricable from the need for connectivity. Everyone needs to be prepared to handle the growth of real-time transactions, as well as digital and alternative payments and non-financial transactions.”
In the United States, immediate payment (IP) methods are relatively new and existing consumer habits are pretty deeply ingrained. However, the growth of Zelle, the Real-Time Payments network and other IP offerings is boosting adoption, it said.
“The need to deliver IP services to customers has never been more pressing for banks, credit unions, processors, acquirers and fintechs. However, the U.S. payments ecosystem — and its infrastructure — must keep pace with global markets to remain competitive, and interoperability between IP systems will be key,” ACI Worldwide noted.
America’s heavy reliance on debit and credit cards suggests that there have to be compelling use cases or additional features and benefits involved in order for immediate payments to rise to levels in other countries, ACI Worldwide also noted.
In the U.S., adults have 4.75 debit, credit and charge cards on average, it noted. About a third of all adults (32%) who have a mobile wallet have used it in the past year. In 2019, electronic payments were 74.1% of all transactions in the United States; ACI Worldwide predicted that they would rise to 81.7% by 2024.
“There’s no doubt that what the U.S. needs now is an industry-wide drive toward IP. FedNow has reinvigorated the conversation around IP adoption, and global experience tells us that having system choice can provide benefits in terms of driving adoption and transaction volumes. That will be a win for all parties,” it said.
ACI Worldwide said five factors typically drive the success of real-time payments: Centrally driven payments modernization initiatives, a seamless and integrated payments experience, a connected ecosystem of players, mature digital payments and openness to alternative payment methods.
“Our research reveals that despite vastly different cultural, economic and technological factors, there are a number of traits that determine if real-time transaction volumes will see a rapid upward trajectory, and within what timeframe,” ACI Worldwide global head of real-time payments Craig Ramsey. “Recognizing the key indicators of real-time adoption (or further real-time growth) is critical to getting ahead of the competitive curve. These indicators suggest what needs to be done to unleash the potential of real-time payments and will empower stakeholders to make the right decisions.”