Report finds surge in real-time payment systems
Written by Peter Walker
Deployments of real-time payment systems are surging worldwide, with 40 active real-time payment programs around the world, up from 25 in 2017 and nearly three times as many as were in FIS’ inaugural 2014 study.
The financial services technology firm’s fifth annual report found five payments programs under development, with another 16 expected to be live in the next 12-18 months – double the number of programs on the radar in 2017.
“Consumers are demanding more transparency, certainty and immediacy when moving their money, and they won’t settle for incremental innovation,” said Raja Gopalakrishnan, head of global payments at FIS. “Financial institutions are responding in growing numbers – modernising their payment infrastructures to provide real-time payment capabilities that demonstrate their value to customers.”
The research found that overlay services - chat, retail apps, instant loans and more - and open Application Program Interfaces (APIs) provide innovations that encourage consumers and businesses to use real-time payments.
A number of mechanisms have already emerged in the UK that enable consumers to pay merchants for goods and services via a direct real-time bank transfer, along with use cases that extend beyond payments. For example, one initiative marketed as #YayDelay uses an algorithm to monitor real-time train delays and offer frustrated commuters with real-time promotions for a free sponsored gin and tonic.
“The wholesale reinvention of UK Faster Payments promises to deliver strong growth beyond the financial sector as many diverse industry sectors will benefit from a more open banking environment coupled with real-time payments,” said Andrew Hewitt, senior payment solutions consultant at FIS Global.
The report highlighted three particularly innovative real-time payments programs as part of its Faster Payments Innovation Index, which rated programs on a scale of 1-5 (5 being highest), measured the comprehensiveness of real-time payments projects and how well they meet the needs of consumers and corporate customers.
India’s Immediate Payment Service (IMPS) got the report’s only 5 rating for the second year in a row. The fastest growing immediate payment system in the world, IMPS daily transaction volume grew from about two million per day in 2017 to approximately 2.8 million per day this year. The project’s high rating was based on the system’s standard, published API, and strong participation from third-party vendors.
Australia’s New Payments Platform (NPP), which went live in February 2018, received a 4+ rating. NPP enables real-time clearing and settlement 24 hours a day, seven days a week. It provides Australian businesses and consumers with a fast and versatile payments system for making their everyday payments.
Singapore received a 4+ rating for its Fast and Secure Transfers (FAST) service. Covering credit transfers, direct debits, bill payment, P2P, merchant payments, mobile and more, FAST allows customers from 20 of Singapore’s participating banks to move funds almost instantly 24 hours a day, seven days a week.
The UK’s Faster Payments System, launched in 2008, achieved a 4 rating. It enables real-time, immediate and continuous settlement 24/7. It handles over seven million transactions and transfers over £4 billion every day.
Twelve other programs received 4+ or 4 ratings in this year’s index. That includes China, which now makes 25.9 million faster payment transfers every day - up from 12 million in 2017 - Single Euro Payments Area (SEPA) Instant Credit Transfer Scheme - which expects to have 34 countries live with real-time payments by 2019 - and the US, which saw the launch of its first real-time payments system in late 2017.
The FIS report also called out Germany and Hong Kong as two countries poised to make significant strides forward in implementation of real-time payments schemes.