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

Economic Benefits of Real-Time Payments Remain Largely Untapped

France recorded 108 million real-time transactions in 2021, which resulted in an estimated cost savings of $27 million for businesses and consumers. This in turn – which helped to unlock $105 million of economic output, representing less than 0.01% of the country’s GDP.

With real-time transactions set to rise to 1.2 billion in 2026, – net savings for consumers and businesses are forecasted to climb to $315 million in 2026. This would, helping to generate an additional $872 million of economic output, equivalent to 0.03% of the country’s forecasted GDP.

That means for the 6th sixth largest global economy, the economic benefits of real-time payments remain largely untapped. According to the Cebr, the theoretical impact of all payments being real-time could add 2.8% to formal GDP by 2026. However, these are theoretically modelled modeled benefits; they, this does not suggest that there is no longer place for non-instant electronic payments or paper-based payments in the future.

France does not have its own domestic real-time payments network. Instead, it adopted SCT Inst in 2018 to implement real-time payments into its network. SCT Inst is a pan-European instant credit transfer scheme launched by the European Payment Council (EPC). It was developed by the EPC with the aim to create a real-time payments network within the eurozone. This linkage has the potential to facilitate international remittance and trade within the EU, which may help bolster economic activity within the bloc.

It should be noted, though, that payments within the eurozone were already quite easy compared with other international transfers. Most major banks in France, such as Credit Lyonnais and Société Générale, support SCT, and as of November 2021, it accounted for 130 participants. Despite being accepted by most institutions, it is still a small payments tool, accounting for 0.3% of total payments transaction volume in 2021.

Projections are for real-time payments to gain more market share by 2026 and reach 2.9% share of transaction volume. This growth can be attributed to a small decrease in paper-based payments, whose share is expected to decline from 31.9% to 22.8% by 2026.

Key Stats

Real-Time Payment Types

Single Instance

Bulk Payments

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 high interest among real-time payment players in R2P as an opportunity to kickstart the development of higher-value services that can drive further adoption. Naturally at this early stage, there are questions around how to integrate it with existing lines of business, but it ties in well with a mandated transition for businesses issuing paper bills to offer digital versions and eInvoicing. So, overall, the rulebook issued by the European Central Bank (EPC) has been well received and the motivation is there to pick it up and run with it.

Partners that have experience in rolling out similar overlay services around the world will be vital to solving any questions around how to manage the initial R2P solution. Malaysia and India are notable examples of successful rollouts, but closer to home, Hungary’s largest banks have adopted the domestic R2P solutions with impressive results.

The market’s interest in R2P coincides with a general need to refresh payments infrastructure to take costs out of operations and improve flexibility. As such, it offers an opportunity to think differently and ensure future use cases and changes are easier to implement.

For example, banks should consider whether procuring an R2P capability as a managed service would be an appropriate test case for the concept more generally. This would reduce costs by shifting payment processing to an operating expense, while also ensuring associated technology costs only grow in line with revenues.

With their infrastructure and compliance requirements taken care of by a managed services partner, banks would also be able to get to market faster on differentiating features and services. This will be vital, since the FPC’s Request to Pay rulebook provides ample scope for innovation around the service to drive differentiation and add value.

History

December 2014

ERPB invited EPC to develop a pan-European instant payment system.

November 2015

EPC presented its proposal to Euro Retail Payments Board (ERPB).

November 2016

EPC published the SCT Inst rulebook.

November 2017

Implementation of SCT Inst in selected markets.

January 2018

Groupe BPCE joined SCT Inst scheme in France.

November 2018

SCT Inst became operational in France.

July 2020

Limit increased from €15,000 ($18,342) to €100,000 ($122,281).

Mobile Wallet Trends

26.7%

% 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

130

Population Banking Level

1.3

Number of debit, credit and
charge cards per adult

Index to global average

Fully Banked
Progressing
Underbanked

Real-Time Transactions

108M

2019

1.2B

2026f

61.3%

F5 Yr CAGR

Payments Fraud Rate

13.0%

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

Top 3 Payment Fraud Types

% of fraud victims	Trend
25.4% Card details stolen online
15.4% Bank account hacked
11.5% Confidence trick

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%

65.0%

Infrastructure as a Service (IaaS)

65.0%

50.0%

Hybrid Cloud

50.0%

60.0%

Managed Cloud Service

65.0%

50.0%

Current priority
Planned

Platform as a Service (PaaS)

Private Cloud

Software as a Service (SaaS)

Cebr

France is classified as a high-income country and ranked as the sixth largest global economy in 2021 (Cebr World Economic League Table, 2022).

However, considering that France is one of the largest economies in the world, real-time payments usage remains low as of 2021, accounting for just 0.3% of total transaction volumes. As a result, the current overall economic impact is relatively limited, while the untapped potential is significant.

In 2021, net benefits for consumers and businesses stimulated by real-time payments reached $27 million (less than that of the Netherlands), facilitating $97 million of the total national economic output (<0.01% of formal GDP).

The primary factor generating these benefits was the ability for real-time payments to formalize activity in the shadow economy by reducing cash usage. Given the scale of the French economy, the country’s 14% shadow economy share represented an estimated $407 million of informal output in 2021. Despite the relatively small transaction share of real-time payments in France, they have the ability to formalize a relatively large level of informal economic activity ($94 million annually).

Looking forward to 2026, approximately 2.9% of the payments mix (by volume) is anticipated to be real-time. While still modest, this increases the anticipated economic benefits for consumers and businesses more than ten-fold to $315 million. The economy-wide impact also rises significantly to $872 million, representing a 0.03% share of forecasted formal French GDP, or the equivalent output facilitated by 7,725 additional jobs in 2026.