The COVID-19 pandemic has triggered a significant shift in global payment preferences, leading to a surge in newer payment methods such as Buy Now Pay Later (BNPL), one-click payments, and real-time payments. Real-time payment systems offer substantial advantages in terms of cost reduction and payment success rates for both consumers and businesses.
According to a recent report, the market size of real-time payments is projected to experience a double-digit compound annual growth rate (CAGR) from 2022 to 2028, with a value expected to reach billions of euros by 2028. The report highlights that major firms are actively modernizing their payment ecosystems to streamline instant transfers. As of July 2022, nearly three-quarters of global firms using real-time payment systems regarded their capabilities as highly important.
The introduction of Zengin in Japan has prompted other countries worldwide, including India, Brazil, Singapore, Thailand, Australia, and the UK, to implement their own instant payment systems. Currently, the Unified Payments Interface (UPI) in India and PIX in Brazil are leading the usage of instant payment systems. Moreover, countries in other regions such as the Middle East and North Africa, Africa, and Latin America are catching up.
For example, the New Payments Platform (NPP) in Australia has facilitated over a billion transfers amounting to trillions of euros since its launch. Similarly, Thailand’s real-time payments system, PromptPay, recorded transactions valued in the billions of euros as of October 2022, according to the latest available data.
While many real-time payment solutions have emerged through collaborative efforts between governments and central banks, Colombia’s Transfiya system has developed through private arrangements to support the country’s financial inclusion goals, showing consistent growth since its launch.
Other instant payment systems worldwide, such as CliQ in Jordan, Fawri+ in Bahrain, and GhIPSS Instant Pay in Ghana, are also experiencing increased adoption and usage.
Despite the relatively slower growth of real-time payment infrastructure in Europe, countries in the region are taking steps to encourage adoption and usage. The launch of the Single Euro Payments Area (SEPA) in 2008 revolutionized the payment landscape in Europe, facilitating the smooth functioning of credit transfers and direct debits across the EU.
To promote alternative payment methods like real-time payments, the European Central Bank (ECB) introduced the TARGET Instant Payment Settlement Scheme and later SEPA Instant. However, the adoption and usage of SEPA Instant vary among European nations.
According to the report, Luxembourg, Malta, and Italy have the highest share of respondents claiming access to SEPA Instant, while Greece has the lowest. Germany leads in the number of participants in both SEPA and SEPA Instant, with the number of real-time payment transfers expected to grow exponentially between 2021 and 2026, reaching billions by 2026. Banks offering SEPA services will also be obliged to provide SEPA Instant services to foster growth.
Furthermore, the Netherlands is projected to witness a significant rise in the share of real-time payment transactions by 2026, while Russia’s real-time payment system, SBP, has exhibited consistent progress in transaction volume and value from Q1 2021 to Q2 2022, according to the publication.
15 June 2023