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

Economic Benefits of Real-Time Payments Remain Largely Untapped

South Africa is among the early adopters of real-time payments, with the country launching its interbank real-time payments system Real-Time Clearing (RTC) in 2006.

The country recorded 123 million real-time transactions in 2021, which resulted in an estimated cost savings of $54 million for businesses and consumers. This in turn helped to unlock $96 million of additional economic output, representing 0.02% of the country’s GDP.

With real-time transactions set to rise to 499 million in 2026, net savings for consumers and businesses are forecasted to climb to $191 million. That would help to generate an additional $314 million of economic output, equivalent to 0.07% of the country’s forecasted GDP.

South Africa is one of the countries for which real-time payments provide the biggest economic growth opportunities. According to the Cebr, the theoretical impact of all payments being real-time could add 4.5% to formal GDP by 2026. However, these are theoretically modeled benefits; they do not suggest that there is no place for non-instant electronic payments or paper-based payments in the future.

Despite being available for more than 15 years, real-time payments have not gained significant prominence due to several factors including limited customer awareness, limited participation and high fees charged by banks on RTC transfers. Consequently, real-time payments still accounted for just 0.8% of total payments by transaction volume in 2021.

Due to the limitations of the existing system, BankServAfrica, the Payments Association of South Africa, the Banking Association of South Africa and other industry players are now collaboratively developing the Rapid Payments Programme (RPP), an interbank real-time payments system. This new mobile-friendly real-time payments system will support payments using proxies such as mobile phone numbers and email addresses. It will also offer request-to-pay services.

The system is being built on the ISO 20022 messaging standard and is expected to go live in 2022 starting with 11 major banks, before being rolled out to other banks and fintech companies. The existing system will be gradually migrated to the new system. The launch of RPP is anticipated to provide a much-needed push for real-time payments market growth in South Africa.

Key Stats

Real-Time Payment Types

Single Instance

Bulk Payments

Initiation/Authorization Methods

Bank Account

Mobile

Year of Real-Time
Payments Launch

2006

Availability

365

24/7

Message Standard

ISO
8583

ACI’s Take

The story in South Africa is a familiar one to those who know the region well: one of a country that’s had an impressive measure of early success with payments modernization, but risks falling behind in not fully taking advantage of opportunities afforded by more recent developments in real-time payments.

In response, South Africa’s Rapid Payment Program (RPP) is bringing the next generation of capabilities and use cases to the country’s long established real-time payments system. The rapid payments program aims to simplify payments by adding mobile-based payments (like Request to Pay) and payment alias capabilities in addition to existing payment rails.

This will overcome the usability issues around a system rooted in account-based processing, such as a reliance on card and account numbers, and enable digital payments to consume greater volumes of cash usage (which is currently high in South Africa).

As real-time payment capabilities broaden, and volumes increase, there is an opportunity for the market to embrace a new round of rapid iteration and innovation. Through accelerating planning around ISO 20022, banks can improve user experiences and increase their reach, drawing people and institutions away from ingrained payment behaviors that don’t really benefit anyone and enable theft and fraud to persist. But to do so, banks will have to get over a reluctance to tend toward the bare minimum for compliance.

This stems from widespread but flawed thinking that real-time payment schemes are a business disruptor with few business benefits. Instead, they should be considered an opportunity to rationalize payment environments and build out services driven by a new, canonical, data-rich processing model not tied to any particular high- or low-value payment protocols.

Through this data, business intelligence will be boosted immeasurably, unlocking the chance to differentiate services from the competition, and to align with user demands and expectations. Those organizations adopting a “wait and see” approach could rapidly find a large portion of the market taken away from them by agile competitors. At that point, they’ll have lost the acquiring business, the potential to win more customers and the means to better service existing ones.

History

2002

RTC Forum was established.

2005

Establishment of RTC Payments Clearing House Participant Group.

2006

Launch of RTC.

2013

Yearly transaction volume hit 10 million for the first time.

February 2021

Tata Consultancy Services was appointed as the technology provider for RPP.

August 2022

Anticipated launch of RPP.

Mobile Wallet Trends

48.3%

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

Real-Time Acceptance

Banks

Merchants

Consumers

Real-Time Total Participants

Population Banking Level

0.8

Number of debit, credit and
charge cards per adult

Index to global average

Fully Banked
Progressing
Underbanked

Real-Time Transactions

123M

2021

499M

2026f

32.4%

F5 Yr CAGR

Payments Fraud Rate

21.6%

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

Top 3 Payment Fraud Types

% of fraud victims	Trend
17% Confidence trick
15.2% My card was lost or stolen
14.3% 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

66.7%

83.3%

Infrastructure as a Service (IaaS)

66.7%

Hybrid Cloud

50.0%

Managed Cloud Service

33.3%

66.7%

Current priority
Planned

Platform as a Service (PaaS)

Private Cloud

Software as a Service (SaaS)

Cebr

South Africa is the second largest economy in Africa after Nigeria and generally considered to be the most industrialized country on the continent. Classified as an upper-middle-income country, in 2021 South Africa ranked as the 33rd largest economy in the world (Cebr World Economic League Table, 2022).

Current business and consumer level benefits are relatively low, at $54 million in 2021. South Africa’s first real-time payments infrastructure, Real-Time Clearing (RTC), was launched in 2006, however, adoption rates have been low. Fifteen years later and real-time payments share of overall transaction volumes stands at only 0.8%. At the economy level, in 2021 real-time payments stimulated $96 million in economic output, equivalent to 0.02% of GDP.

Today, cash dominates the payments mix by volume (59.6%) and is still expected to be king in South Africa by 2026, although the share of paper-based instruments out of total transaction volumes is anticipated to drop to 52.2% in five years’ time as real-time volumes grow from 0.8% to a share of 2.8%.

Driven by this growth in real-time transactions over the intermediary period, by 2026 the consumer- and business-level benefits are forecasted to grow to $191 million. This growth will increase the economy-wide benefits to $314 million (0.07% of GDP), which is equivalent to the economic output generated by 11,399 jobs.