In the rapidly evolving landscape of financial transactions, real-time payments (RTP) are revolutionizing how money moves globally. With billions of transactions annually, RTP systems have moved beyond early adoption to become essential components of daily commerce.  This transformation is not just a technological upgrade but a comprehensive overhaul driven by a synergistic collaboration among governments, regulators, fintech companies, and banks. As countries like India and Brazil lead the charge with robust RTP frameworks, the benefits of instantaneous transactions are becoming increasingly accessible to consumers and corporations worldwide. In the landscape of instant payments, countries are charting diverse trajectories toward real-time systems. Some countries have well-established real-time payment infrastructures, while others are just starting their transformation.  This blog delves into insights from a recent webinar hosted by ACI Worldwide, where industry experts discussed the current state and future trajectory of real-time payments, emphasizing their potential to reshape the financial landscape.

Sustainable Growth in Emerging Markets

Countries like India and Brazil are experiencing sustainable growth in real-time payments, advancing beyond initial adoption phases. Sam Murrant, Consulting Director at Global Data, emphasized that these markets are now leveraging real-time payments as a standard transaction method. This shift is driven by the increased consumer and corporate demand for instant payment solutions. Merchants are increasingly adopting real-time payments due to their cost-effectiveness and the ability to facilitate swift fund transfers. Notably, real-time payments do not incur interchange card fees and provide consumers with greater control over their finances. ACI Worldwide through its Enterprise Payment Platform enables merchants to rapidly incorporate payment options into mobile checkout using the mSDK. The platform also provides merchants with real-time actionable insights, enabling comprehensive visibility and trend analysis, optimizing operations, enhancing security, and improving customer experiences across payment transactions, applications, and infrastructure.

Cross-Border Real-Time Payment Initiatives

Fred Slevin, Head of Solution Consulting at ACI Worldwide, discussed the strategic initiatives enabling real-time payments across borders. She further mentioned how India's Unified Payments Interface (UPI) is being adopted in countries like France, Indonesia, UAE, and Malaysia. In the Asian corridor, countries such as India, Indonesia, Thailand, Singapore, and Malaysia are forming bilateral agreements to deploy remittance payments. These initiatives integrate local payment applications like Malaysia's 'DuitNow' and Singapore's 'PayNow,' enabling seamless cross-border transactions.

Challenges and Innovations in LATAM and Europe

While Latin America faces interoperability challenges between local payment schemes, efforts are underway to create real-time payment solutions that can work across different countries in the region. Europe is also making strides with the European Union's mandate for instant payments by January 2025. The Netherlands' 'iDEAL' system, acquired by the European Payment Council, is set to play a core role in this ecosystem, promoting real-time payments across the continent. The 'one leg out’ rulebook will enable any payment made in any currency outside Europe to settle instantly in euros within Europe.

Technological Advances and Standardization

Rusiru Gunasena, SVP of Products and Strategy at The Clearing House, emphasized the importance of transitioning from legacy technology platforms to RTP. Since the launch of RTP in 2017, there has been significant growth across networks, including the adoption of ISO20022 messaging standards. By adopting ISO 20022, the financial industry creates a common language and model for payment data worldwide, ensuring consistency and facilitating seamless communication across different systems and institutions.

Bridging the Gap for Real-Time Payments

Mobile banking is increasingly becoming the cornerstone of electronic transactions, offering an engaging platform for real-time payments. In markets with a high dependency on cards, mobile banking bridges the gap, making real-time payments accessible for everyday transactions. For example, in India, UPI-based mobile wallets are used extensively for payments, from daily commuting to social transactions.

ACI Worldwide’s Enterprise Payments Platform serves as a hub for real-time payments, catering to both high-value and low-value transactions. This platform is fully ISO 20022 certified and supports various payment types, including SWIFT, RTGS, Instant, and ACH. ACI Worldwide’s solutions empower organizations by introducing new real-time payment options to both consumer and corporate customers. Additionally, they offer orchestration capabilities and a robust API infrastructure. Leveraging the features of the ACI Enterprise Payments Platform, businesses can seamlessly process transactions, directing them through instant payment, card, or transaction banking rails with efficiency and precision.

Analyst Perspective:

Real-time payments offer numerous benefits, including new customer segments, enhanced customer experience, cost savings, immediate fund transfers, and financial inclusion. From a customer perspective, the immediacy of funds when transacting is a significant advantage.

The future of real-time payments looks promising, with innovative use cases and technological advancements paving the way for broader adoption. As more markets transition to real-time systems, consumers and businesses alike will benefit from faster, more efficient, and cost-effective payment solutions.   Vendors, such as ACI Worldwide are investing heavily in technology and innovation to allow users to authorize utility bill payments and recurring services directly from their bank accounts, competing with credit cards for recurring purchases. ACI Worldwide also offers advanced onboard payment processing services, which enable organizations to create unique process flows by combining platform microservices and external endpoints through a low-code configuration approach. The company offers robust non-functional features such as cloud services, messaging and monitoring tools, database management, container orchestration, and the capability to integrate high-value, low-value, real-time, and retail payments within a single platform.

According to Pradnya Gugale, Senior Analyst at Quadrant Knowledge Solutions, “ACI Worldwide’s robust Enterprise Payment Platform, certified with ISO20022, seamlessly incorporates new payment methods irrespective of currencies and languages while ensuring robust fraud management for banks and merchants. Incorporating such a solution would empower users to effectively handle payments, disbursements, chargebacks, and payouts, all while adhering to evolving global regulations.”

Author: Pradnya Gugale, Senior Analyst at Quadrant Knowledge Solutions