Real-time payments are set to revolutionize the global financial landscape, driving substantial economic growth and fostering greater financial inclusion. As the world steadily shifts toward instantaneous financial transactions, the benefits are becoming increasingly apparent. A recent report by ACI Worldwide and The Centre for Economics and Business Research (Cebr) reveals that real-time payments will significantly enhance global GDP and create millions of new bank account holders by 2028. This potential transformation signals a profound shift in how economies operate and how individuals engage with financial systems worldwide.
Economic Growth Driven by Real-Time Payments
Real-time payments have a profound impact on economic efficiency and GDP growth. By drastically reducing transaction costs and speeding up the transfer of money, these systems enhance overall market efficiencies. Businesses and consumers alike benefit from the rapid circulation of money, which in turn stimulates economic activity. According to the report, the adoption of real-time payments could boost global GDP by an impressive $285.8 billion by 2028. The immediate movement of funds reduces financial friction, allowing businesses to operate more smoothly and complete transactions faster, which encourages more sales and economic interactions.
One of the critical ways real-time payments contribute to economic growth is through the formalization of the shadow economy. Cash transactions, often unrecorded, constitute a significant part of many economies. By bringing these transactions into the formal financial system, real-time payments help reduce the shadow economy’s size, boosting tax revenues and enabling better economic planning. This formalization not only leads to a more accurate picture of the economy but also ensures that financial policies and interventions are better targeted and more effective. Additionally, governments benefit from increased tax compliance, which can be redirected into social programs and infrastructural development, further fueling economic expansion.
Financial Inclusion: Empowering the Underserved
Real-time payments are not just about convenience and efficiency; they are also a powerful tool for financial inclusion. The ability to transfer money instantly opens up financial services to individuals who were previously excluded, particularly among younger populations, women, and lower-income groups. The report estimates that 167 million new bank account holders will emerge by 2028 as a direct result of real-time payments. This element of financial inclusion is crucial because it empowers individuals who have been on the periphery of formal financial systems, allowing them to participate in and benefit from economic growth.
Access to financial services is a critical step toward economic empowerment. For many individuals in developing countries, opening a bank account can lift them out of poverty by providing access to credit, savings, and other financial products. Real-time payments facilitate this process by simplifying transactions and reducing the cost and complexity of banking. They lower the barriers to entry for financial products, thus making it easier for marginalized groups to save money, manage their finances, and invest in their futures. This mechanism is particularly transformational in regions where banking infrastructure is either weak or nonexistent, providing a streamlined way for millions of people to join the formal economy.
Revenue Opportunities for Financial Institutions
The adoption of real-time payments isn’t just beneficial for consumers and economies; financial institutions stand to gain significantly as well. For banks, particularly in developing regions, real-time payments represent a substantial new revenue stream. The report highlights regions like Asia-Pacific and Africa, where traditional banking services have been limited, as prime areas for growth. Financial institutions in these areas can leverage real-time payments to attract new customers and enhance service offerings to existing customers, driving both top-line revenue and customer satisfaction.
In these regions, the expansion of real-time payments can attract new customers and provide additional services to existing ones. For instance, financial institutions can offer instant loan disbursements, real-time fraud detection, and quick settlement of transactions, all of which contribute to increased customer satisfaction and loyalty. These services also open up cross-selling opportunities, further enhancing revenue potential. Real-time payments can thus act as a gateway for banks to introduce more sophisticated financial products and services, catering to a growing and increasingly financially literate population, which can lead to sustained revenue growth over time.
Asia-Pacific: Leading the Charge
Among the regions analyzed, Asia-Pacific stands out as a leader in the adoption and economic impact of real-time payments. Countries like India, China, and Thailand are at the forefront, experiencing significant GDP contributions from these systems. In India alone, the adoption of real-time payments has added $50 million to the GDP in 2023, and this figure is expected to grow. The region’s rapid economic growth, coupled with a tech-savvy population and forward-thinking government policies, creates a conducive environment for the proliferation of real-time payments.
The success in Asia-Pacific can be attributed to several factors, including high mobile penetration, supportive regulatory frameworks, and strong government initiatives promoting digital payments. These conditions create a fertile environment for the adoption of real-time payments, benefiting both consumers and the broader economy. Governments in these countries have been proactive in implementing policies that encourage digital finance, while the high mobile phone usage provides an easy platform for the widespread adoption of these payments. The synergy between policy support and technological readiness ensures that the region continues to lead in real-time payment adoption.
Africa: Unlocking Economic Potential
Africa also shows significant promise, with regions like Nigeria leading the way. Nigeria’s real-time payments market is the largest on the continent, contributing substantially to its GDP. The report notes that real-time payments added $7 billion to Nigeria’s GDP in 2023, showcasing the system’s potential in unlocking economic growth. The rapid uptake of mobile money platforms and expanding smartphone use across the continent has created a robust foundation for real-time payments to flourish, thereby driving financial inclusion and economic development.
Part of Africa’s success can be linked to the rise of mobile money and the increasing penetration of smartphones. These technologies make it easier for people to access and use real-time payments, driving both financial inclusion and economic activity. As more countries in Africa adopt these systems, the region is poised for substantial economic gains. Mobile money has already demonstrated its potential to transform lives by providing financial services to the unbanked, and real-time payments can further amplify this impact by enabling faster and more efficient financial transactions. This dual advancement holds promise for lifting millions out of poverty and integrating them into the formal economy.
Europe and Latin America: Regulatory and Organic Growth
In Europe, the EU’s Instant Payments Regulation plays a pivotal role in driving the adoption of real-time payments. Countries like Turkey and the UK are prime examples of how policy-driven initiatives can align with technological advancements to generate economic benefits. Real-time payments are becoming the norm, enhancing economic activity and bringing more people into the financial system. The regulatory framework ensures that financial institutions adhere to high standards, thereby fostering consumer trust and promoting wider adoption of these payment systems.
Latin America, particularly Brazil and Mexico, also demonstrates significant progress. Brazil’s adoption of real-time payments added $24.6 billion to its economy, while Mexico contributed $10.3 billion in 2023. These figures underline the transformative potential of real-time payments in driving economic growth and financial inclusion in the region. Both countries have seen a surge in digital payment adoption, propelled by a combination of young populations, increasing smartphone penetration, and supportive government policies. These factors create an enabling environment for real-time payments to thrive, benefiting the regional economy.
Middle East: Rapid Growth and Adoption
Real-time payments are poised to transform the global financial landscape by driving significant economic growth and promoting greater financial inclusion. As the world moves toward instant financial transactions, the benefits of such systems are becoming increasingly obvious. According to a recent report by ACI Worldwide and The Centre for Economics and Business Research (Cebr), real-time payments are projected to greatly enhance global GDP and bring millions of new individuals into the banking system by 2028. This groundbreaking shift indicates a fundamental change in the way economies function and how people interact with financial systems worldwide.
Real-time payments offer several key advantages. One of the major benefits is the reduction of transaction times from days to mere seconds, allowing individuals and businesses to manage their cash flow more effectively. This immediacy can lead to more efficient business operations, reduced fraud risk, and improved customer satisfaction. Moreover, real-time payments can significantly impact financial inclusion by providing unbanked or underbanked populations with greater access to financial services. This inclusivity can help reduce poverty and promote equitable economic growth.
The adoption of real-time payment systems is anticipated to also spur innovation within the financial sector, prompting banks, fintech firms, and other financial institutions to develop new products and services that cater to the evolving needs of their customers. As this technology continues to gain traction, it is likely to create a more dynamic and resilient global economy where both individuals and businesses can thrive.