March 2021 Prime Time For Real-Time Contents Welcome 3 Country Insights 8 Foreword by Jeremy Wilmot 3 North America 8 Introduction 3 Asia 12 Methodology 3 Europe 24 Middle East, Africa and South Asia 46 Global Real-Time Pacific 56 Payments Adoption 4 Latin America 60 Thematic Insights 5 Glossary 68 Request to Pay Couples Convenience with the Control that Consumers Demand 5 The Acquiring Outlook 5 The Impact of COVID-19 on Real-Time Payments 6 Payment Networks 6 Consumer Payments Modernization 7 2 Prime Time For Real-Time 2021 Welcome Foreword Spurred by a year of unprecedented disruption, 2020 saw real-time payments grow larger—in terms of both volumes and values—and faster than anyone could have anticipated. Changes to business models and consumer behavior, prompted by the COVID-19 pandemic, have compressed many years’ worth of transformation and digitization into the space of several months. More people and more businesses around the world have access to real-time payments in more forms than ever before. Real-time payments have been truly democratized, several years earlier than previously expected. Central infrastructures were already making swift For consumers, low-value real-time payments mean Regardless of whether real-time schemes are initially progress towards this goal before the pandemic immediate funds availability when sending and conceived to cater to consumer or business needs, intervened, having established and enhanced real- receiving money. For merchants or billers, it can mean the global picture is one in which heavily localized use time rails at record pace. But now, in response to instant confirmation, settlement finality and real-time cases are “the last mile” in the journey to successfully COVID’s unique challenges, the pace has increased information about the payment. And at the center driving adoption. Market to market buying behavior markedly as countries around the world look to of these experiences are acquirers, a key enabler in is unique. So too is mobile phone use and the size, advance their modernization roadmaps to maximize the real-time payments value chain for developing strength and composition of the small and medium liquidity in their economies and stimulate growth. and maturing markets alike. As a result, the space is business sector—not to mention favored payment becoming increasingly competitive, particularly as types. So, while the universal top line remains that For these central infrastructures, and indeed all eCommerce has exploded. The pressure has never P2P and consumer to business (C2B) drive the payment players around the world, India, the world’s been higher for acquirers to leverage the real-time majority of transaction volume growth, business- biggest real-time payments market, remains the rails to add value beyond enabling merchants to to-business (B2B) use cases promise to create high benchmark for what’s possible when it comes accept customers’ preferred payment mediums, margin opportunities and drive higher values of to adoption. It’s also a vivid illustration of the way whatever they may be. In the year ahead, they must transactions through real-time payment networks. innovation snowballs when the market forces of proactively develop overlay services that enhance the New system operators and participants can learn demand and competition are unleashed onto a robust consumer experience, such as Request to Pay—or lessons from established markets about schemes’ real-time infrastructure. As each new use case builds risk allowing fintechs to further encroach on their functions and features. But, without real-time on the last, India’s real-time market is moving swiftly revenue streams. payment use cases that reflect and build on local past entry-level use cases, such as person-to-person factors, adoption will stall. (P2P) transfers and merchant payments, to bill, tax With all of that said, however, we are beginning to see and toll payments. the majority of real-time schemes also account for That is where this report comes in. Partnering with large corporate needs, dispelling the misconception GlobalData, we’ve expanded the scope of countries Singling out one country in a global report might seem that real-time payments are exclusively a consumer covered this year to reflect the importance of these unusual. But where India is leading, we expect most payments and P2P opportunity. It’s early stages in this local factors, as well as the growing global footprint of markets to follow, sooner or later—because it is low- process, but there’s no technical reason preventing real-time payment schemes. This unrivaled coverage value consumer payments of exactly the type seen the infrastructures being put in place from handling of the country-level trends that matter most provides in India that drive the highest volumes in almost every payments of millions of dollars. Reserve bank or vital insights for payment leaders that need to assess real-time payments ecosystem covered in this report. central government sponsorship inspires ample where growth is likely to come from, the speed with confidence in the reliability of real-time payments. which it will arrive and the payments modernizations required to capitalize on it. We’re immensely proud of our work with customers to drive real-time payments adoption around the world, and I’m pleased once again to be able to share our experience and reflections in the pages of this report. Jeremy Wilmot Chief Product Officer, ACI Worldwide Introduction Rachael Tomaney, Director Product Marketing, ACI Worldwide In this second iteration of Prime Time for Real-Time, we continue to dive into the Top 10 Markets by Real-Time Transactions (Millions) biggest trends shaping digital payments and help financial institutions to plan for the opportunities and challenges that will come their way. Mexico 942 As recently as two years ago, a national real-time Banks, processors, acquirers and payment networks U.S. 1,219 payments infrastructure was considered a luxury are under more pressure than ever to rapidly Brazil 1,330 in many markets. That all changed in 2020, as the modernize their payment systems to manage this Japan 1,676 COVID-19 pandemic dramatically accelerated accelerated change. At a national level, this means pre-existing but slow-moving trends away from migrating to modern data standards, launching new Nigeria 1,911 cash and checks and towards greater reliance on real-time systems and new value-added services, U.K. 2,827 digital payments in general, and real-time payments such as Request to Pay. And once the infrastructure Thailand 5,241 in particular. is in place, the next imperative is for merchants to have more access to new payment services via the S. Korea 6015 Countries with robust digital payments infrastructure real-time rails. This year’s research identified a new China 15,741 already in place have coped better than those without focus on digital payments acceptance and enabling India 25,478 when it comes to containing the economic impact real-time payments at the point of sale—both as of the pandemic. Real-time payments form a key the initial use case for a new system, such as PIX in part of that infrastructure, as they serve needs not Brazil, or as a modernization plan for existing real- Millions 0 5,000 10,000 15,000 20,000 25,000 30,000 supported by traditional card or ACH rails. Real-time time environments, such as the planned European payments have enabled governments, working with Payments Initiative. Markets that have a clear their financial institutions, to accelerate much needed focus on the priority use cases for their consumers, disbursements and economic stimulus payments merchants and financial institutions are among those Top 10 Markets by Real-Time Transactions Growth (five-year CAGR 2020-2025) to their citizens. They have also enabled real-time experiencing the most rapid growth of real-time liquidity to businesses that had to adapt to disrupted payment transactions. supply-and-demand patterns, including developing Kenya 55.8% new supplier relationships with whom lines of credit What is clear from this year’s research and analysis had not yet been established. is that the rate of change isn’t slowing. Even in Belgium 58.8% historically sluggish markets, 2020 was a catalytic Agentina 58.9% The spotlight cast by the pandemic on existing year, resulting in new volumes, services and demands Oman 61.7% payment infrastructures emphasized the systemic with which financial institutions must keep pace. importance of digital payments; global volumes Managing this need for rapid innovation alongside UAE 63.1% rose drastically, condensing a decade of anticipated serving the existing needs of customers calls for an Finalnd 71.4% innovation into one year and creating human agile approach to payments modernization. We see Peru 74.4% behavioral changes that will not reverse as we emerge success in this approach by regulators, networks and from the crisis. The accelerated adoption of mobile financial institutions around the world. Malaysia 83.9% wallets, particularly in markets like the U.S., show that Colombia 112.7% these kinds of unprecedented market events can alter Croatia 374.4% cash and check trends even in the markets with the strongest grip. 0 50% 100% 150% 200% 250% 300% 350% 400% Methodology Using a global sample of 48 markets, ACI Worldwide and GlobalData present the developmental state of the market based on the various dynamics at play in each country. We’ve identified the total transactional size of real-time payments per country in 2020, and provided our forecast for 2025, as well as the future five-year CAGR. We’ve detailed share of volume for real-time payments—both transactional and dollar—as well as other statistics contributing to real-time payments adoption.