Real-time payments (RTP) are revolutionizing global payments and changing the way money is sent and received permanently, offering a stark contrast to traditional payment processes, which involve significant fees and delays.

The benefits of RTP include faster access to funds, reduced online payment costs for merchants, direct bank account transfers between individuals, businesses and governments, and enhanced efficiency in payments processes including the automation of previously offline tasks.

While this infrastructure is live in just 56 countries, with India and Brazil as frontrunners, RTP is gaining immense traction in what is predicted to be the next payments revolution.

Understanding the Shift

Since the COVID-19 pandemic, our 1,000-year reliance on paper currency has undoubtedly changed, with digital payments now the preferred method of taking or receiving funds by three-quarters of the world, according to the World Bank.

Implementing RTP infrastructure globally could completely revolutionize payments.

While card payments have been the primary representation of real-time transactions, particularly in developed countries, this payment process often involves multiple layers of fees and waiting periods for clearing, making it harder and more expensive for businesses to receive funds.

In some countries, like China, domestic schemes have been established to enable businesses to accept RTP through platforms like WeChat Pay. However, implementing RTP infrastructure globally could completely revolutionize payments, enabling businesses of all sizes to offer instant bank transfers, creating greater financial equality and stimulating economic growth.

Economic Development Driver

According to a study by ACI, RTP is so game-changing it can impact a country’s economy. This was the case in Brazil, the second highest transacting country of RTP, whose gross domestic product increased significantly due to the speed of transactions and improved payment rails.

Likewise, research has shown in many countries real-time payments are a driver for economic development. For freelance and gig-based workers, instant access to payments has the capacity to improve a person’s financial equality significantly.

RTP is so game-changing it can impact a country’s economy. This was the case in Brazil.

As RTP infrastructure is implemented by more countries, and as industries adapt to this new norm, the demand for RTP infrastructure is likely to grow exponentially. RTP will enable all businesses across varying sectors to innovate and operate efficiently without the need for substantial financial backing.

RTP Risks

One of the major concerns surrounding RTP is fraud prevention. The speed of RTP transactions could make identifying a fraudulent transaction much harder and more difficult to reverse. Financial institutions are currently responding with payer verification processes and other cybersecurity measures to mitigate these risks.

AI could play a crucial role by assisting with greater fraud prevention through better categorization and reconciliation of payments. Another challenge surrounding the widespread adoption of RTP includes a country’s need for advanced and scalable infrastructure for a centralized RTP system, along with nationwide connectivity.

Despite this, the global shift to RTP represents a transformative development in payments, which could pave the way for greater financial inclusion and innovation.