ACI Worldwide — GLOBAL PAYMENT TRENDS — Charting the growth of 'immediate payments'

Economic Benefits of Real-Time Payments Remain Largely Untapped

Australia recorded 970 million real-time transactions in 2021, which resulted in an estimated cost savings of $205 million for businesses and consumers. That in turn helped to unlock $932 million of additional economic output, representing 0.06% of the country’s GDP.

With real-time transactions set to rise to 2.4 billion in 2026, net savings for consumers and businesses are forecasted to climb to $628 million, helping to generate an additional $1.4 billion of economic output, equivalent to 0.07% of the country’s forecasted GDP.

That means for the 13th largest global economy, the potential economic benefits of real-time payments remain largely untapped. According to the Cebr, the theoretical impact of all payments being real-time could add 2.4% to formal GDP by 2026. However, these are theoretically modeled benefits, which do not suggest that there is no place for non-instant electronic payments or paper-based payments in the future.

Real-time payments were enabled in Australia in 2018 with the launch of the New Payments Platform (NPP) by the Reserve Bank of Australia and its Payments System Board. The system was made available to more than 75 million account holders, with more than 100 banks, credit unions, building societies and fintech companies supporting the system as of December 2021. Despite this wider coverage, real-time payments accounted for just 5.2% of the total payments transaction volume in 2021.

The high preference for payment cards and limited use cases for NPP remained key constraints hindering the overall growth of real-time payments in the country. However, with NPP now expanding its use cases with the launch of new overlay services such as the PayTo service, real-time volume is expected to gradually increase, recording a CAGR of 19.9% from 2021-2026.

Key Stats

Real-Time Payment Types

Single Instance

Initiation/Authorization Methods

Bank Account

Mobile

QR Code

Year of Real-Time
Payments Launch

2018

Availability

365

24/7

Message Standard

ISO
20022

ACI’s Take

There is much inertia on the part of Australia’s financial institutions when it comes to maximizing real-time payments. It may be that they are protective of traditional revenue streams, such as the interchange fees on cards, but many of them are overlooking the growth opportunity in providing value-added services on top of real-time payments.

However, others have not been so slow. PayTo, the new Request-to-Pay service coming from New Payments Platform (NPP) Australia in 2022, enables bank accounts to be linked to in-app payments, real- time account validation and real-time confirmation of payment. And fintech Azupay provides a real-time payments alias system that can be used for payments and confirmation of payments in retail settings, without exposing bank details to customers or staff. (This is a neat workaround the current gaps in the NPP system’s merchant offering.)

Inspired by what they’ve seen from these kinds of use cases, merchants and customers are beginning to challenge financial institutions to blend a smooth, real-time experience across every payment type. The merger of Eftpos, BPay and NPP Australia could help to accelerate the rollout of real-time payments across different payment channels in Australia. It will bring together Eftpos’ domestic card payments scheme, with BPAY’s bank-account-based bill payments and NPP’s real-time credit transfer scheme.

But for most banks and payment providers, legacy infrastructure cannot support modern payment experiences (another reason for the inertia we mentioned) and, at the very least, a middleware layer is likely to be needed as a tactical solution. At the strategic level, however, there is growing interest in how a payments hub environment could simplify the adoption of new standards, such as ISO 20022, and the onboarding of new schemes and use cases. This kind of approach would also cut costs by removing duplicate infrastructure and support services, while also allowing common risk profiles, reporting and controls to be shared across different payment channels.

History

November 2017

NPP went live for employees of participating financial institutions.

February 2018

Commercial rollout of NPP and Osko payments.

June 2018

NPP received a merit certificate for Infrastructure & Platforms Innovation of the Year at the 2019 New South Wales iAwards.

May 2019

A second version of NPP’s API framework was introduced, with new features for canceling and returning payments.

June 2019

Launch of the NPP QR code standard.

December 2019

A third version of NPP’s API framework was released, with additional features for batch payments.

July 2020

5 million PayIDs registered.

December 2020

NPP announced plans to merge with eftpos and BPAY to form a new entity. Australian Competition and Consumer Commission approved the move in September 2021.

2022

NPP set to launch PayTo service, an alternative to the existing direct debit system.

Mobile Wallet Trends

37.5%

% of adults who have a mobile wallet and have
used it in the past year (2021)

Real-Time Acceptance

Banks

Merchants

Consumers

Billers

Real-Time Total Participants

150

Population Banking Level

2.3

Number of debit, credit and
charge cards per adult

102

Index to global average

Fully Banked
Progressing
Underbanked

Real-Time Transactions

970M

2021

2.4B

2026f

19.9%

F5 Yr CAGR

Payments Fraud Rate

19.3%

Population who reported being a
victim of fraud in the last 4 years

Top 3 Payment Fraud Types

% of fraud victims	Trend
21.3% Card details stolen online
18.1% Card details stolen/skimmed in person
15.6% Bank account hacked

Share of Volumes by Payments Instrument

Transactions

Paper-based payments
Electronic payments
Real-time payments

2021

2026

Spend (USD)

2021

2026

Real-Time Payments Volume and Its Share in Overall Non-Paper-Based Transactions, 2015-26f

% of total electronic payments transaction volume

Trends + Data

Cloud Management Platform

75.0%

81.3%

Infrastructure as a Service (IaaS)

62.5%

68.8%

Hybrid Cloud

75.0%

Managed Cloud Service

93.8%

68.8%

Current priority
Planned

Platform as a Service (PaaS)

Private Cloud

Software as a Service (SaaS)

Cebr

Australia is classified as a high-income country and is the 13th largest global economy (Cebr World Economic League Table, 2022).

The 2021 share of real-time payments (5.2% of all transactions) led to a total estimated efficiency savings of $205 million for consumers and businesses, driven principally by a reduction in the payments float.

Based on real-time adoption rates, real-time payments in Australia unlock a total daily transaction value of $2.9 billion through reduced float time. This working capital facilitates an estimated $106 million of business output.

With regards to the realized aggregate economic benefits in 2021, real-time transactions facilitated an economic output equivalent to 0.06% of formal GDP ($932 million), or the output of 7,512 workers, annually.

Forecasts for 2026 estimate that real-time payments will represent 9.9% of the payments mix volume. In the same year, total estimated efficiency savings for consumers and businesses will reach $628 million. This contributes to the realized macroeconomic benefits of real-time payments increasing to $1.4 billion or 0.07% of formal GDP.