Consumers want faster, convenient, and reliable payments and real-time payments (RTP) have delivered on all fronts. Today, it is no longer limited to a select few. According to Bankless Times , 72% of the world’s population now has access to RTP.
“Global adoption of RTP is expected to experience an annual growth rate of 23.6% from 2020 to 2025,” said Sophia Gonzalez, Debit and Payments Analyst at Javelin Strategy & Research. “Though not widespread in the U.S. for general purchases, U.S. cardholders do utilize RTP for P2P transactions.”
“For example, money exchanged on the Zelle network is considered a form of RTP,” she said. “Europeans have paved the way for a broader application of RTP and enabled RTP at the POS. In fact, Europeans account for over half of the global market in instant payments. Currently, European financial institutions charge consumers anywhere between a few cents to as high as €8 per transaction.”
“The U.S. can take many learning lessons from Europe’s application of RTP. Currently, the Clearing House is the only RTP network in the US; however, FedNow, the Federal Reserve’s network, is set to launch later this year.”
The Benefits of Real-Time Payments
Although speed is an important benefit to using RTP, it’s not the only one. It’s the immediate, on-the-spot clearing and settlement that enables businesses to see less of their money caught up in sluggish processing that sweetens the deal.
By having immediate access to funds, both consumers and businesses have a clearer picture of their overall financial health and liquidity, ensuring the efficient management of funds.
RTP is revolutionizing industries such as the retail sector, where merchants can accept customer payments easily, especially in underserved areas. Not only will this drive more sales for the businesss, but customers will benefit from a more frictionless payment experience.
What’s more, real-time payments are sent alongside data that is specifically formatted to a global messaging standard. This enables businesses to reconcile payments automatically, enhance efficiency in the back-office, slash processing delays, and facilitate the resolution of errors.
That being said, RTP payments can also be considered a key driver in the quest for financial inclusion. As RTP continues to drive digital payment modernization via P2P payments, online banking, and mobile payments, it opens the door to underserved communities, such as the unbanked and underbanked worldwide. It also paves the way to assist with new payment technologies such as digital wallets and cryptocurrencies.
Real-time payments will also enable users to pay their bills easier and faster. They can make payments on e-commerce marketplaces, directly from their bank account, as well as payment on delivery.