Research Pins Down How Soon Real Time Payments Will be Routine

With the Federal Reserve’s FedNow service having debuted in July last year and The Clearing House Payments Co.’s  RTP network in operation since 2017, just how soon can the U.S. payments industry expect widespread, routine exchange of real-time transactions?

Answers to that question are beginning to emerge. According to a report released Friday by the Faster Payments Council, a trade group, between 70% and 80% of all U.S. financial institutions will be able to receive instant payments by 2028. As for sending such payments, the report projects between 30% and 40% of financial institutions will have that capability by the same year.

The FPC, which surveyed 25 core banking vendors and payment processors for its report, documented the use cases most likely to be launched and developed soonest as banks, providers, and users become accustomed to the service. These include earned wage access, domestic peer-to-peer transactions, and wallet funding and defunding. The respondents expect earned-wage access, payroll funding, and supplier payments in response to invoices to attract the most real-time adoption.

Other services, however, will take years to be switched on, according to the report. These include e-commerce and point-of-sale transactions, which the respondents estimated will require more than four years to be made available. The respondents support some 90% of all financial institutions in the U.S. market, according to the FPC.

The report stresses that none of these projections for real-time payments will unfold automatically. Providers will be expected to develop fraud tools that can keep up with the speed of payment, the report stresses by way of example. Other needs involve improved error resolution and suitable user interfaces. While providers could be expected to introduce technology such as QR codes for point-of-sale adoption, request for payment, and additional application programming interfaces to ease deployment and adoption.

The research effort consisted of a detailed online survey that was fielded between late June and mid-August, according to the FPC.