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Education

Learning from real-time 2022, up from $872 billion in 2021 (see

https://tinyurl.com/bdfscyvf). McKinsey
payments systems worldwide & Co. even reported that real-time
payments are growing rapidly in Af-
rica, driven by a surge in digitization
By Cheryl Fitzgarrald during the pandemic.
BHMI In many countries, government in-
centives and mandates are furthering
he United States may lead the world in banking stability, but it needs adoption. For example, in December
to catch up in payments innovation. While countries in Europe and 2019, Japan announced the Cashless
Asia have moved forward in the adoption of real-time payment sys- Japan initiative to double the num-
T tems, the United States still primarily relies on cards and the ACH. ber of digital transactions by 2025.
Over the past decade, regulators in
However, that trend is quickly changing. Growing consumer demand and the the European Union have taken sev-
rollout of FedNow are expected to drive rapid adoption of real-time payments eral initiatives to force the adoption
in the coming years. As a result, many U.S. financial institutions and payment of new core systems. The European
processors are scrambling to catch up and prepare for real-time payments. Commission is now floating propos-
The global state of real-time payments als that would require banks to han-
dle instant transactions and mandate
Real-time payments are any form of instant payment that can be initiated, instant versions of credit transfers
cleared and settled in seconds, with 24/7/365 availability. Global consumers without extra costs (see https://tinyurl.
made more than $100 billion in real-time payments in 2022. And Grand View com/269httkm).
Research forecasts that realtime digitization and consumer demand will in-
crease growth of real-time payments by 35.5 percent annually between 2023 Is the U.S. prepared?
and 2030. Demand for real-time payments is
Some countries leading the charge in the real-time payments space include starting to surge in the United States,
India, Brazil, China, Thailand and South Korea. India’s Unified Payments In- and in a recent survey by the Federal
terface (UPI) supported more than $1.5 trillion and 74 billion transactions in Reserve, four out of five consumers
said they are interested in faster op-
tions to pay businesses (see https://
tinyurl.com/3c3zjrej).

Since many U.S. banks and payment
processors still rely on core payment
processing systems built for checks
PAYMENT FORM GENERATOR and cards, they must adopt new sys-
tems to meet the rapidly growing de-
mand for faster payments. Part of the
problem is most U.S. banks are still
EASY TO USE: tied to clearing house and card sys-
tems. Businesses have also been slow
We Host Page to adopt new technologies because,
until recently, real-time payments
Pay Link have been more costly than ACH pay-
ments. In essence, the United States’
Embed Code robust banking and payments system
has left little incentive to put forth
the extra effort and cost to adopt re-
Inventory al-time payments. However, innova-
tion and consumer demand for faster
Level Ill payments are rapidly changing that
equation, forcing U.S. payment pro-
ACH
ACH cessors to evaluate their core systems
and processes.
Modernizing the back office
C A L L F O R T R A I N I N G U.S. businesses and financial insti-
8 0 0 - 2 9 6 - 4 8 1 0 tutions must now upgrade back-end
systems to ensure they can fully sup-

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