Data Snacks, Member Exclusive

Data Snack: Real-time payments contribute a meager 0.9% to US transactions, FedNow expected to change that

  • The US real time payments industry is small, with just two networks, neither of which span across the country.
  • Federal Reserve’s country-wide real-time payments network initiative, FedNow, is expected to become one of the biggest payment clearance settlement systems in the world upon release.
close

Email a Friend

Data Snack: Real-time payments contribute a meager 0.9% to US transactions, FedNow expected to change that

Real-time payments are no longer the most novel idea in the realm of payments. However, with limited prevalence so far, experts argue the technology’s true potential is yet to be unlocked, and that is expected to remain the case for the short-to-medium-term future.

ACI Worldwide, a provider of payment solutions to banks, recently released a report studying the global landscape of real-time payments. The report tracks RTP volumes and growth globally and measures the economic benefits of RTP for consumers, businesses, and the broader economy.

Real-time payments are no longer the most novel idea in the realm of payments. However, with limited prevalence so far, experts argue the technology’s true potential is yet to be unlocked, and that is expected to remain the case for the short-to-medium-term future.

ACI Worldwide, a provider of payment solutions to banks, recently released a report studying the global landscape of real-time payments. The report tracks RTP volumes and growth globally and measures the economic benefits of RTP for consumers, businesses, and the broader economy.

A global view

The report argues that governments and central banks must look at enabling RTPs to unlock economic growth and accelerate financial inclusion for today’s fast-growing gig economies. The research indicates that governments that are proactive in building a fast, frictionless, and thoroughly connected payment system will create a ‘win-win situation for all stakeholders.’

RTPs are expected to help traditional financial institutions future-proof their business by speeding up their modernization, moving to the cloud, and becoming more data-oriented. They may also help national governments boost economic growth by reducing the size of their shadow economy and creating a fairer financial system.

Some of the things that governments gain by promoting RTPs are more obvious, like the fact that they could promote market efficiency and address cash flow concerns for economies by settling transactions instantly and securely. The argument here is that RTPs reduce the payment float time while also addressing the uncertainty and information asymmetries regarding payment failures, hence making the market more efficient and payments cheaper to process.

However, RTPs could also help support the increasingly significant gig economy, for workers and employers both. They would enable workers to get paid more quickly, allowing them to plan their finances better.

Additionally, RTPs may present an opportunity to formalize informal sectors of the economy. The study revealed that for countries where the informal economy made up more than 30% of GDP in 2021, like Brazil, Nigeria, and Pakistan, RTPs, even with limited penetration, had encouraging results.

Real-time payments in the US

 


This content is available exclusively to Tearsheet Outlier members.

Tearsheet Outlier information and signup Missing out? Subscribe today and you’ll receive unlimited access to all Tearsheet content, original research, exclusive webinars and events, member-only newsletters from Tearsheet editors and reporters and much more. Join Outlier now — only $49/mo. Already an Outlier member? Sign in to your account

0 comments on “Data Snack: Real-time payments contribute a meager 0.9% to US transactions, FedNow expected to change that”

Lending, Member Exclusive

Lending Briefing: Customers would share data to improve their creditworthiness

  • Over 75% consumers believe that a credit score shouldn’t be the only determinant for loan eligibility.
  • In the absence of lending products that fit their needs, consumers are turning to fintechs and their families to avoid predatory loans or rejections.
Rabab Ahsan | December 07, 2022
Data Snacks, Member Exclusive

Data Snack: The dawn of bank branch 2.0?

  • The ‘death of the branch’ saga was all the rage back in 2020.
  • But now, with back-to-routine vibes emerging, it’s time to re-evaluate the role of a bank branch.
Rivka Abramson | December 05, 2022
Data Snacks, Member Exclusive

Data Snack: Millennial retail traders rise during the bear market

  • Millennials opened 46% of all new retail trading accounts in the first half of 2022, according to DriveWealth’s Global Investor Report.
  • The ability to invest with small dollar amounts was the most frequently cited motivator to start investing.
Lindi Miti | December 01, 2022
Green Finance, Member Exclusive

Green Finance Briefing: The stroll to zero – finance has a long way to go

  • At COP27, there were no commitments to phase down or reduce fossil fuel use in the final overarching deal, and there was no breakthrough in the rules of finance either.
  • GFANZ faces a serious question: what is the purpose of a net-zero alliance when members are allowed to continue investing in fossil fuel expansion?
Iulia Ciutina | November 30, 2022
Embedded Finance, Member Exclusive

Embedded Briefing: SMB servicing presents strong potential for embedded finance

  • Across the US, UK, and Europe, the SMB embedded finance market presents a $110 billion opportunity.
  • SMBs are demanding easier access to capital, simplified financial management, and card issuing capabilities.
Subboh Jaffery | November 29, 2022
More Articles