As the world of digital payments rapidly evolves, the United States is at a pivotal moment in adopting real-time payment systems that could transform how money moves across the economy. Today, we’re thrilled to sit down with a seasoned IT executive and Vice President at Infinite Computer Solutions, who brings over 20 years of expertise in financial services. With a deep understanding of global payment innovations, he offers unique insights into how the US can learn from the remarkable success of systems like India’s UPI and Brazil’s Pix to build a robust, unified payment infrastructure.
Can you start by explaining what real-time payments are and why they’re becoming so important in the US right now?
Real-time payments are transactions that are processed and settled almost instantly, within seconds, rather than taking hours or days like traditional methods. They’re a game-changer because they enable immediate access to funds, which is critical for businesses, consumers, and even gig workers who rely on quick cash flow. In the US, the push for real-time payments is gaining traction due to growing consumer demand for speed and convenience, coupled with the need for businesses to streamline operations. Systems like RTP and FedNow are stepping in to meet this demand, and there’s a real sense of urgency to catch up with countries that are already far ahead in this space.
How do real-time payments differ from older methods like ACH or wire transfers?
Unlike ACH, which can take one to three days to settle, or wire transfers that are faster but often expensive and limited to business hours, real-time payments operate 24/7 and settle almost instantly. This means you’re not waiting for funds to clear—you send money, and it’s available right away. Additionally, real-time systems often come with lower costs and better transparency compared to wires, making them more accessible for everyday use, not just high-value transactions.
What can the US learn from the mass adoption of systems like India’s UPI and Brazil’s Pix?
Both UPI and Pix demonstrate the power of simplicity and accessibility. In India, UPI took off because it’s incredibly user-friendly—think QR codes, mobile-first design, and near-zero fees for small transactions. In Brazil, Pix revolutionized payments by becoming more common than credit cards in just a few years, largely due to its speed and ease for both individuals and businesses. A key lesson for the US is that adoption hinges on making the system intuitive and inclusive, ensuring everyone from tech-savvy users to small merchants can participate without friction.
How did government or central bank support contribute to the success of UPI and Pix?
Government backing was crucial in both cases. In India, the central bank and regulators worked with the National Payments Corporation to create UPI, setting policies like low transaction fees to encourage usage and boost financial inclusion. In Brazil, the central bank launched Pix and mandated participation from major financial institutions, which accelerated its rollout. This top-down support built trust and ensured widespread access, something the US could emulate by aligning public and private efforts to promote systems like RTP and FedNow.
How do RTP and FedNow stack up against UPI and Pix in terms of speed and reach?
RTP and FedNow are promising steps forward for the US, offering near-instant settlement times similar to UPI and Pix. RTP, launched by The Clearing House, and FedNow, introduced by the Federal Reserve, both aim for 24/7 availability. However, their reach is still limited compared to UPI, which handles billions of transactions monthly across nearly all of India’s population, or Pix, which dominates Brazil’s payment landscape. The US systems are newer, so adoption is still growing, and they face challenges in connecting smaller banks and ensuring universal access.
Why is interoperability such a critical piece of building a unified payment system in the US?
Interoperability means that different payment systems, like RTP and FedNow, can work together seamlessly, so a transaction from one network can reach another without hiccups. Without it, you risk fragmentation, where users and businesses are stuck with incompatible systems, slowing down adoption. It’s critical for creating a unified experience—think of it like ensuring all phones can call each other regardless of the carrier. Getting this right in the US will make real-time payments more practical and widespread.
How can standard formats like ISO 20022 help improve the payment experience?
ISO 20022 is a global messaging standard that creates a common language for payment systems to communicate. By adopting it, systems like RTP and FedNow can share data more efficiently, reducing errors and speeding up processes. It also allows for richer data to be attached to transactions, like detailed payment information, which improves transparency for users and helps with fraud detection. It’s a foundational step toward making payments smoother and more reliable across different platforms.
What are some of the biggest challenges with legacy systems in US banks when it comes to real-time payments?
Many US banks still rely on legacy systems—think outdated software and hardware designed decades ago for batch processing like ACH or wires. These systems weren’t built for instant transactions, so they’re slow, siloed, and often incompatible with modern real-time rails. This creates bottlenecks, increases costs, and makes it hard to integrate new technologies. Upgrading them is essential but tough because it’s expensive, time-consuming, and risks disrupting existing operations.
How can Payment Hubs help address issues with legacy systems?
Payment Hubs act as a central platform that connects various payment systems, old and new, into a single, streamlined setup. They help banks consolidate their legacy engines, making it easier to route transactions, monitor activity, and detect fraud in real time. Essentially, they bridge the gap between outdated infrastructure and modern rails like RTP or FedNow, allowing banks to adopt new tech without completely overhauling everything overnight. It’s a practical way to modernize while keeping operations running.
What’s your forecast for the future of real-time payments in the US over the next decade?
I’m optimistic about the trajectory. Over the next decade, I expect to see much broader adoption of RTP and FedNow, with more financial institutions—big and small—connecting to these rails, either directly or through intermediaries. Payment Hubs will likely become standard, simplifying how transactions are routed based on speed or cost. AI will play a bigger role in fraud detection and user experience, while cross-border payments could see major improvements through global interoperability. If the US can balance innovation with regulation and trust, we might see a system that rivals UPI or Pix in terms of ubiquity and impact.