ACI Worldwide has been supporting real-time payments since 2005, processing millions of payments monthly across 26 networks. We provide software solutions to participant banks and central banks, facilitating secure real-time payment processing and offering fraud protection services. ACI also enables real-time payment switches in countries including Indonesia, Malaysia, the Middle East, and South America. With over 130 direct customers globally and indirect bank connections to Zelle and EU’s TIPS, ACI plays a significant role in the real-time payment’s ecosystem.
Some countries have mature real-time payment systems, while others are growing or just beginning their journey. Maturity doesn't solely depend on how long real-time payments have existed but on how effectively they've been used. For instance, regions like the UK and Europe have real-time payments but haven't fully optimised their potential.
Consumer behaviour plays a big role. Many consumers are used to instant gratification of service; they want instant gratification of payments as well. Younger generations prefer debit cards for their real-time liquidity management, unlike older generations who rely more on credit cards. Real-time payments eliminate uncertainty about account balances, offering instant clarity. Real-time payment networks often offer cheaper transaction fees, benefiting merchants and corporations, and ultimately lowering service costs for consumers.
Real-time payments bring significant benefits to consumers and promote financial inclusion by offering immediate access to funds, particularly for recipients of social security benefits and those facing urgent financial needs worldwide. Maybe you're in Florida and a hurricane has just come through your house. You haven't got a letterbox anymore to receive a check. So, receiving a check through the mail is no longer a reality. Instead, getting that money instantly from your insurance company enables you to promptly pay your builder.
Furthermore, real-time payments streamline B2B transactions, facilitating faster trade relationships and prompt settlements, crucial during crises like the pandemic or labour shortages. This agility empowers businesses to establish partnerships and procure supplies promptly, without the constraints of traditional credit processes.
Real-time payments are poised for wider merchant adoption, observed prominently in India, Brazil, and Asia. Although Europe and the US lag, there are indications of adoption by major US retailers. In Europe, initiatives like the EPI digital wallet, underscore the growing importance of instant payments in settling transactions. While Europe may initially trail the US in merchant adoption, it's expected to catch up swiftly. The mandated use of real-time payments in Europe is anticipated to foster financial inclusion and literacy, enabling broader access to financial services.
Looking ahead, cross-border real-time payments emerge as a key focus. Despite technical feasibility, regulatory challenges pose significant hurdles. Initiatives like Swift's GPI have alleviated some of these pressures. Regionally, Asia, Africa, South America, and the Middle East are positioned to witness initial cross-border implementations, followed by traditional remittance corridors. Subsequently, the integration of central bank digital currencies is envisioned to revolutionise cross-border payments, marking a significant milestone in the evolution of real-time payment systems.
This interview was originally published in The Paypers` Global Payments and Fintech Trends Report 2024. The report compiles insights and expertise from leaders representing companies across the financial services spectrum and it delves into the latest innovations and trends in payments and fintech across key markets worldwide.
Craig holds over 35 years of experience working with banks on their corporate payments and banking strategies. As Head of Real-Time Payments at ACI, he ensures our products lead the industry and meet the needs of our global customers.
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