Why the COVID-19 pandemic might be a catalyst for further adoption of worldwide real-time payments

The COVID-19 pandemic, which has already led to massive changes in business and consumer behaviour, is accelerating the adoption of digital payments and the interest in real-time payments across the globe. During a recent webinar we organized to discuss ACI’s Global Payments Report ‘Prime Time for Real-Time’, 36 percent of attendees said that they had seen an increase in digital transaction volumes over the last few months, and almost half (47 percent) noticed a shift of transactions across digital channels.

Short and long-term developments

In the current climate, many merchants are likely to continue to increase acceptance of electronic payments, and real-time payments could offer a cheaper, faster way to pay than cards, which have interchange fees and slower settlement to the merchant. In the near-term, we can expect to see greater innovation, and the launch of many more payment services into the market to capitalise on the shift away from cash.

In terms of how banks and merchants are going to prepare for longer-term changes, I believe they are likely to step up their investment in alternative payment methods, including real-time payments. Figures also show that the growth in real-time payments goes hand in hand with the growth in other payment methods; for example, cards.

However, as with the implementation of any new payment type, this exciting period of growth does come with a warning. We will likely see a rise in fraudulent activity as criminals look to take advantage of such major shifts in market developments. Banks and payments providers will therefore need to significantly boost their fraud monitoring and prevention capabilities to ensure real-time payments are fully protected.

Increased adoption of value-added and digital overlay services

The growth in real-time payments is likely to lead to further adoption of value-added and digital overlay services. Currently countries who have seen an early adoption of real-time payments are leading in terms of implementing these digital overlay services. The UK, for example, has launched a number of successful B2B services, while P2P services are popular in Sweden. India is arguably the country that has seen the most successful adoption of overlay services so far, and also has the most explosive growth in transaction volumes.

There are a variety of ways in which countries will benefit from real-time payments. Ultimately, it will be down to the banks to take a view on what they want to focus on, whether this be financial inclusion, digitization or B2B payments, and then develop use cases accordingly.

Overall, I believe that countrywide change in backing real-time payments is a motivated market force, whether this is through a governmental or collaborative stakeholder. Real-time growth is also strong in markets where access to easy-to-use payment methods exists for both business and consumer users. When a market has a broad ecosystem acceptance, combined with the convenience of rich overlay services and strong functionality, real-time payments will grow significantly.