Covid-19 has the potential to be transmitted on nearly anything that has been touched by an infected person (asymptomatic or not). With the virus said to have a lifespan of 24 hours on carboard and up to three days on plastic and stainless-steel surfaces, people are advised to avoid touching as much as possible. That includes most forms of currencies.
And with people still needing to buy goods and services, this may present additional impetus for governments and industry to accelerate adoption of digital payments as another measure to contain the spread of the virus.
The Prime Time for Real-Time report from ACI and Global Data estimates more than half a trillion real-time payments transactions will be processed over the next five years, at a Compound Annual Growth Rate (CAGR) of 23.4% from 2019 to 2024.
The report outlines the five strongest indicators of a market’s real-time payments success, with a combination of two or more being sufficient to drive the initial growth explosion.
Centrally Driven Payments Modernization Initiatives—The backing of a motivated market force, whether governmental or collaborative stakeholders, is key for countrywide change—as countries like India, Nigeria and Malaysia have proven.
Seamless and Integrated Payments Experience with Rich Overlay Services—End users want convenience, and unsurprisingly, real-time growth is strong where access to easy-to-use payment types exists for both business and consumer users.
Connected Ecosystem of Players Enriching User Experience—When a market has broad ecosystem acceptance, combined with the convenience of rich overlay services and strong functionality, real-time payments can grow explosively.
Digital Payments Maturity Level and Ingrained Payment Habits—In regions with historic reliance on paper-based payments such as cash and checks, real time provides an easy digital alternative—and when this shift is backed by a government initiative, adoption can be significant.
Openness to Alternative Payment Methods—Alternative payment methods like mobile wallets continue to surge. Adoption is greater when real-time overlay services are offered, particularly the integration of real-time payment capabilities within mobile wallets.
Jeremy Wilmot, group president, Banks & Intermediaries, ACI Worldwide suggested that the financial inclusion benefits of payments digitalization, including the launch of real-time payments 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,” he concluded.
Instant payment in Asia
China: The Chinese people’s openness to accept payment innovation has seen the country lead in global mobile wallet adoption, with 87% of adults having used one in 2019, compared to 35% in 2014. ACI says there is still room for growth.
More to be done to bring the Chinese market to maturity and fully establish IP. The expected CAGR over five years is just shy of 20%, with a huge 38.8B IP transactions predicted for the year 2024.
India: The country is poised to lead the world in real-time payments volume over the next five years, with transaction volumes set to grow from 15.3 billion in 2019 to a staggering 52.8 billion in 2024. Thanks in part to the governments roll out of the Unified Payments Interface (2016) and the Immediate Payments Service (2010).
Indonesia: The country is still in the planning stages of launching an IP system with no date set for deployment. Still, the country presents a high potential market for IP adoption, with the strong mobile wallet adoption an indication of willingness by the population to embrace new forms of payments.
Japan: Launched in 1973, the Zengin System plays an important role in Japan’s payment infrastructure. However, cash remains strongly embedded in the Japanese psychology. However, the recent upgrade of the Zengin System may see an uptick provided more public awareness and outreach is done.
If Zengin could support mobile ID like other countries and be more flexible to expand more usage for retailers, this could increase the share in spend.
Malaysia: Despite being less than two years old, the country’s IP network boasts a robust infrastructure, supporting banks, P2P and merchant payments, and is on track for aggressive future growth. Malaysia is predicted to have the most exponential growth in the next five years, with an expected CAGR of 176.5%.
South Korea: Despite having one of the longest running IP systems (1988) in the world, the country’s IP landscape is still developing, with just 9% of transactions utilising the IP scheme (mainly used in high-value transactions, and less often for traditional IP payments).
Singapore: With two established IP schemes in place, a wide range of initiation methods and 45% YOY growth, Singapore is well on its way to becoming an established IP market. However, a historical lack of government mandate has limited PayNow membership to a limited group.
This can lead to inconsistency in availability of services across the banks and financial institutions, which inhibits the development of a rich ecosystem of fintechs and integrated services, so this needs to be addressed.
Thailand: Launched in 2016 as part of its National e-Payment initiative, the country’s IP system, PromptPay, had reportedly 46.5 million registered users in 2018.
Thailand can also drive IP further by moving its scheme to the ISO 20022 messaging format, as this will provide more IP capabilities and improve interoperability.
Craig Ramsey, global head of real-time payments, ACI Worldwide said: “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.
