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Big hopes for broader real-time payments adoption in the United States could be fulfilled if ACI Worldwide Inc.’s prediction of 4.2 billion in real-time payment transactions by 2024 bears out.
In its “Prime Time for Real-Time” report released Wednesday, ACI and research firm GlobalData Plc, forecast the U.S. real-time payment transaction volume will balloon from 734 million in 2019 to 4.2 billion by 2024. ACI uses the term “immediate payments,” which the report abbreviates as IP, for the broad expanse of real-time payments.
Currently, Zelle, the payment service from Early Warning Services LLC, and The Clearing Payments Co. LLC’s Real Time Payments service are the only U.S. providers, but a third, from the Federal Reserve, may greatly boost volume. That service, called FedNow, is due to launch in 2023 or 2024. FedNow is expected to enable multiple real-time payment models and be available to banks of all sizes across the country.
“There’s no doubt that what the U.S. needs now is an industry-wide drive toward [immediate payments],” the ACI report says. “FedNow has reinvigorated the conversation around IP adoption, and global experience tells us that having system choice can provide benefits in terms of driving adoption and transaction volumes. That will be a win for all parties.”
Adoption of real-time payments is part of an overall move to electronic payments. The report predicts that electronic payments will account for 81.7% of payment volume by 2024 and immediate payments will have a 1.6% share. That will be up from 74% and 0.3%, respectively, in 2019.
Merchant acquirers and third-party processors will be affected by the growth in real-time payments.
“Acquirers and third-party processors will adopt new, alternative payment methods, including IP, as their customers demand it,” say Lu Zurawski, practice lead for retail banking products at ACI. “Acquirers will begin to feel demand from merchants, particularly around the benefits of [alternative payment methods] and alternative payment initiation methods (like QR codes) which enables customers to pay in all the ways they wish, driving greater conversion and repeat/return business.”
Merchants, too, will have a role in real-time payments growth. “Merchants will also increasingly be exposed to public policy messaging about the cost-saving opportunities of new government-backed payments alternatives to traditional cards,” Zurawski says in an email to Digital Transactions News.
“We are already seeing evidence of this in Europe with the EU push (e.g. PEPSI/EPI) for an alternative to cards,” Zurawski continues. “Large, multi-national merchants in particular will see opportunities for step-change reductions in fees compared to cards, and will drive new demand from processors.”
PEPSI is a developing pan-European payment system backed by 20 European banks to challenge payment networks and large technology providers with payment services.
